As with all talk about corporate net zero goals, it’s important to remember that zero is a number — it needs to be calculated, not estimated. This is why accounting and auditing are important for making corporate sustainability pledges a reality.
But when it comes to carbon accounting and emissions auditing, a whole industry of financial accounting has evolved to make financial reporting easier, the task arguably even more complex and laborious – and no persuasion of professionals to help. Not an established industry.
Enter technology. From carbon accounting software to supply chain sensors, digital innovations in areas such as artificial intelligence (AI), blockchain technology and the Internet of Things (IoT) can help businesses measure and monitor their progress toward sustainability goals.
For many businesses, the immediate focus is on tackling their carbon footprints. But determining whether a company is responsible for taking into account not only its direct operations and energy consumption (so-called Scope 1 and Scope 2 emissions), but also emissions produced along its supply chains and by end consumers Is. use of its products and services (known as Scope 3 emissions). This means not only obtaining robust data, but also ensuring that it is comparable and can be combined, aggregated and mapped.
“The first thing companies need to do to become sustainable enterprises is to understand their environmental footprint based on facts and figures,” says Jan Gilg, an executive and head of product development at business software firm SAP. He was speaking at the launch of one of SAP’s solutions and tools designed to help companies track their full environmental and social impact.
At the heart of all technology to measure, monitor and manage carbon emissions and other sustainability indicators is the truism that what is measured gets managed. So here are some examples of how cutting-edge technology can help businesses see a more complete picture of their impact on the environment and society – as well as the wider world’s impact on their business:
ID and traceability technology
Auto ID and traceability technologies can be used to track raw materials, components and manufactured products to ensure supply efficacy and to certify products as ethically sourced – for example when organic. When it comes to materials like cotton and sustainable palm oil. “Technologies such as QR codes, micro-printing, holograms and chemical fingerprinting can identify real products and materials at the source,” says Stuart Higgins, partner at BearingPoint, a management and technology consultancy that recently led SAP on Carbon and Environmental Solutions. partnered with. “Manufactured goods can be given unique serial numbers and an associated digital certificate of origin to ensure authenticity, often within the blockchain for added security.”
Blockchain technology may be better known as the digital architecture behind cryptocurrencies, but blockchains are essentially distributed digital ledgers that can verify and authenticate anything from transactions to personal identities. Thus, blockchain technology is emerging as a key factor in improving supply chain traceability and provenance of provenance – ensuring that each player along the value chain generates data points with labels and is shared securely. which clarifies ownership and cannot be changed. As Jonas Lundquist, CEO of blockchain platform Hadron explains: “In the food supply chain, for example, a record of the journey from farm to fork is available for monitoring in real time, while disclosure of data provides accountability for trading transactions. and agricultural practices to support claims such as organic, freshness and superior quality. Data recorded on a blockchain ledger could eliminate the possibility of a non-organic component that could later be reported in an organic product. Is.”
In a recent Funding Climate Future report, the Organization for Economic Co-operation and Development (OECD) outlined specific areas in which continued blockchain integration with sustainable infrastructure could be beneficial, including emissions certification, decentralized infrastructure funding to do and to make better use of. existing infrastructure assets. “Blockchain will play an important role in intelligent value chains, and while technology and sustainability do not always go together, the rise of blockchain and the demand for improvements in ESG [environmental, social and corporate governance] Reporting can change that,” says Lundqvist.
Artificial Intelligence and Digital Twins
AI technologies have become vital for sustainable business performance. Their self-learning algorithms can improve the accuracy of forecasts and thus aid in business decision making. Used in conjunction with smart sensors, AI can improve supply chain stability, for example, by monitoring manufacturing equipment. AI-enabled systems can receive data from smart sensors placed within equipment, identify issues and even flag them to the plant operator and the end business customer at the top of the supply chain.
AI could also help improve the so-called digital twins – virtual models designed to accurately reflect a physical object. In supply chains, digital twins can help businesses acquire dynamic emissions data to automate emissions measurement and reporting. AI can improve their ability to simulate future states, to properly model emissions reduction initiatives and evaluate their current and future impacts
internet of things
IoT refers to the billions of physical devices around the world that are now connected to the Internet, all collecting and sharing data through smart sensors – allowing businesses to potentially use that data to improve sustainability. gets permission. For example, factories, warehouses and retail outlets can result in wastage or over-consumption of energy if equipment is left on when not in use. Like AI, machinery equipped with IoT sensors can identify supply chain issues in advance and improve product transportation fuel efficiency by detecting the most fuel-efficient route for goods and reducing last-mile emissions. Is. More significantly, for the purposes of carbon accounting and auditing, it can generate data that can be measured.
Satellite measurements of Earth’s temperature, sea level, atmospheric gases, shrinking ice cover and forest cover have long played an important role in understanding the climate crisis. Now, innovations in satellite monitoring are giving businesses insight into hidden emissions along their supply chains — particularly the greenhouse gas methane.
Climate Trace is a coalition of global organizations that can track methane, carbon dioxide and other human-caused greenhouse gases in real time to specific sources. Launched in 2020 by former US Vice President Al Gore, it uses AI algorithms to find indicators of greenhouse gas emissions in satellite imagery collected by various space agencies and organizations to create a new set of emissions intelligence. The ability to track methane hotspots around the world with such high accuracy enables fossil fuel producers to rapidly cut emissions at a low cost.
collecting, collating and reporting
SAP has developed a range of sustainability solutions and tools to help businesses monitor, interpret and use sustainability data. For example, its cloud-based SAP product footprint management allows companies to gain visibility into carbon footprint data across the product’s supply chain. Carbon footprint data is collected during production, material sourcing and transportation – and can be used by other SAP solutions, such as the SAP Integrated Business Plan for Supply Chain. In addition, it enables sharing of data with customers, suppliers and business partners – helping to bring transparency in business Scope 1, 2 and 3 emissions. As Thomas Souresig, an SAP executive responsible for product engineering, put it in a blog post: “Supply chain emissions average 11.4 times higher than operational emissions. So focusing only on individual operational emissions is no longer enough.”
Similarly, the SAP Sustainability Control Tower helps businesses automate their ESG reporting processes by integrating financial and non-financial data on an ongoing basis – allowing companies to manage and drive their performance with minimal processes. Enables access to data. “When we embed emissions data into the underlying business processes, leaders can drive real change by making conscious decisions across the entire value chain,” explains Soaresig. “These activities are interconnected and should be done together to get maximum effect. Our business software applications bring together material, energy and financial flows to drive businesses holistically.”
In addition, the company has introduced SAP Responsible Design and Production, a solution for designing products in a sustainable manner that enables businesses to move from linear production lines and product use to a “circular” economy with continuous recovery and recycling of materials. Might help with the transition depending on the use. As Soaresig noted, “measuring, monitoring and reducing carbon emissions across the entire value chain means inventing entirely new value chains. And these will no longer be linear.”
Find out more at sap.com/sustainability