Transcript
Speaker: Welcome to Green IT on a Cloud, a podcast that celebrates the success stories of sustainable practices in IT. Going green does not have to mean business sacrifices. In fact, cutting waste can be a competitive advantage as well as being good for the planet. This podcast features interviews with experts and innovators who are shaping the landscape of sustainable engineering. And today, I have the pleasure of introducing Donal Daly from Future Planet. Welcome, Donal, and thank you for joining me today.
Speaker: Hey there, how are you? Thanks for taking the time. Why have an introduction would be great to hear about your background and why you started future planning. Yes, thank you. I'm a software guy. I've been in technology forever. I started my first AI software company in 1986.
Speaker: when AI was interesting and cool and then it wasn't for 25 years and now it's kind of cool again. So I've been in software and I've been fortunate enough to have a number of successful software companies. Always in tech, always engaged with kind of mid to large corporates, helping them kind of fundamentally change business behavior and business performance. And when I had sold my last company in,
Speaker: in 2019. I was done. It was coming number five. I was done. I was finished. And my son, who at that time was, I guess, 15 or something, said to me, he asked me one evening, he said, should I be worried? And I said about what? And he said, will the planet still be OK when I'm your age? And of course, that gives you pause for thought.
Speaker: I'd like to think I've had a socially conscious of some shape for a long time. I've been involved in human rights for maybe 20 years now. And when I think about climate change and the consequence of climate change, I probably see that as the greatest kind of human injustice that exists, the things that many of us do in
Speaker: the worlds that you and I live in impact people in less developed, less privileged, less capable worlds. So thinking about that in kind of a broad humanitarian sense, but also specifically to be able to answer the question of my son, to say, yes, we have some challenges to overcome as a world. And I should take the experience that I've gained with the corporate world and see if there's something I can do to make that
Speaker: impact positive as opposed to negative, having contributed to the problem for a long time. So that's kind of what started Future Planet, and there's some underlying kind of philosophies that go beyond that, but that's really the essence of it. Okay, great motivation from your family. I can certainly
Speaker: relate to that flying around and, you know, racking up air miles thinking, you know, we're doing a great job in the corporate world and then sitting down and actually looking at it and thinking, well, actually, is this really necessary? Is there a better way to
Speaker: to get work done and be productive. And I certainly feel the reason, certainly, that the technology we've got now is going a long way to help us all do things in a more responsible way. So you mentioned future planning. And I had a look at the kind of grid concept. It'd be really interesting if you could sort of expand on how it works and what the goals are.
Speaker: Okay, for sure. So if we kind of go back to the reason why we live, why we exist in the business, right? So at the highest level, and it feels grand, but I think you and I understand like what you do, it's kind of, we're really trying to build a better world for future generations. I know it sounds grand, but if we can empower kind of purposeful customers, kind of the word that I live in, kind of transform,
Speaker: And that's kind of where we start from. And our software, the FuturePlanet, a great platform that you refer to, helps companies to shape their sustainability strategy. It's kind of where do I start from, what are the things I should focus on, those kind of things.
Speaker: to manage their ESG data. And it's important to talking about sustainability as you know, sometimes when you talk about sustainability, people think about emissions, they think about environment. The E, the S and the G are all important. The environment, the society and the governance are all important. And the data behind all of that. So managing that data is important. It's not as difficult as people think it is. I might come back to that, but it's important.
Speaker: And then they need to create an ESG transformation. So they might want to deal with one of their environmental topics like emissions or waste or water or one of their social topics like human rights or employee welfare or the community health and transform that to get to a better place. And then the final thing, which is becoming the stick
Speaker: that's beating many corporates, that's causing many corporates to act right now, is delivering their sustainability statements. So the ESG reports are, as you will know, what is topical right now is their CSRD report. Now the corporate sustainable reporting directive report based on the ESRS, lots of acronyms in this world, you know, the European Sustainability Reporting Standards.
Speaker: So four things, if I can replay that back, we help the software, and it's built on AI. It helps people shape their sustainability strategy, which is our guide piece, manage the ESG data, which they need to do so that they can create the transformations.
Speaker: and deliver sustainable statements, i .e. the reporting. So it's kind of the four bits. If I put it in grid parlance, it's guide, report, improve and deliver. So that's how we try and think about it. Okay, so one of my favorite sayings is what gets measured is what gets done. And it's certainly true if you don't have goals, you can't achieve your goals. So
Speaker: With your methodology, how do you actually quantify an improvement? When we talk generally around reducing carbon, for instance, there's a lot of people term as greenwashing, which is, okay, I'm just moving it from one place to another effectively. You're not actually reducing it. You're just ticking a box or meeting a made up target. So I'll be interested in your experience of how
Speaker: you actually quantify making a real impact on reducing your carbon emissions. Yeah. And I'm going to come to that in just one second, but I just want to make one kind of, I'm going to call it philosophical point, right? Sometimes people say, how do I improve if I can't measure? And some people say, I need to measure before I can improve, right? So it's kind of those kind of things. And
Speaker: There has been a lot of measurement that's not necessarily tied to improvement, but things that people talk about which leads to screenwashing. So I like to kind of say to people, so do you want to measure or do you want to improve? Okay.
Speaker: and the progressive inspired ambitious people say well of course I want to do both. So the great thing about this space that we're in right now is there's a lot of metrics and regulations that apply.
Speaker: Right. So if I stick with the European standards and the works that the EU standards, which are pretty applicable in the UK, similarly, materially, they're the same. Right. But in the European, the ESRS European standard reporting standards, there's 1178 metrics or disclosures.
Speaker: They're stated, they're listed, they're grouped by some general governance pieces. There's five environmental ones of which one captures climate change and emissions, which I'll come back to. So five environment, four social and one governance, they kind of what lead to the 1178. So the data is
Speaker: the data that you have to measure to change is prescribed to a very grinder level of detail. And has been for quite a long time. So has been, for example, you will know that the frameworks that
Speaker: have preceded the current ones would be in Europe, the GRI in the US, SASB, SASB, SASB. And within those, if I take one of the elements that I care about, like, for example, let's say water, and if you're working with a data center, as an example, right, as I know you have experienced in, then I need to care about the water that I use. Now, I know that
Speaker: in GRI language, which is what was the main reporting standard up to recently. That's called GRI 3031 -1. I know in SASB, it's called 140A. I know on the Sustainable Development Goals, it's 6 .3. And I know that in ESRS now, it's E3. But that kind of shouldn't matter because what I should care about is how much water I'm using
Speaker: how much water I'm discharging, and the quality of the water. So to decide how I measure, I think back to your question, how do you measure the change that you make, is you decide what it is, what at the end of the day is the key metric that matters. In this case, my water example, and I always pick water, I don't always pick water, but I try and pick water that's not, I try and pick something that's not,
Speaker: something that people automatically say is a carbon emissions number, right? Because we need to have people think beyond just emissions and energy, right? So anyway, that's kind of a tangent. But I need to know what is the metric that I care about. And the good news is that in any of the standards today, they are defined and prescribed to what I have to measure, what I have to disclose about those measurements, and what I have just disclosed about my strategy
Speaker: to kind of transition or transform my approach to that particular topic and how I report on it. So there's a prescribed way of doing it that you have to do and report. Simply push if we're thinking about energy
Speaker: our emissions, there are standards that exist that have been around for a long time. ISO standard to manage energy, 50 ,001. ISO standard to do my environmental management, 14 ,064. ISO standard for sustainable procurement, ISO 20 ,400. So there are standards and practices. And what we try to do is to enable people to drill in on the actual metric that matters.
Speaker: and let the kind of smash software take care of all the disclosure stuff so I can actually get to improve. So that's back to my measure and improve piece. So there are things that I have to measure and then there are initiatives and actions and transition plans like come up with that I have to prioritize that are going to have most impact.
Speaker: So that was a long answer and I don't know actually if I answered your question. Yeah, you did absolutely. I think fundamentally having some goals and the industry's laid down some elements that we should measure. And it leads on to my next question is it, my daughter's an accountant for one of the large accounting companies, obviously.
Speaker: part of the role of these large companies is to audit the financial results. So I'm kind of interested in your experience and how that works in the environmental world. That's an interesting one.
Speaker: So I think there's good and bad in this, right? So the good in this is, and what I'd say to folks who come from the business world is we need to start thinking about sustainability reporting, sustainability reporting in the same way you think about financial reporting. It's a place to start because you have to do it every year.
Speaker: There's a structure in the format that you have to do. There's specific bits of data you have to disclose and report on. And the way you have in your financial statements, you have the director's notes and the obligations and all those kinds of things. All those things apply. However, no company is run on their financial reports. The financial report is a picture of what they did in the past, right? So you can't change your financial results from last year, unless you're doing something fraudulent or magic, right?
Speaker: So what you do in your business, as you're coming into, let's say your financial year calendar, coming into January 2024, sometime in the last quarter of 2023, you start planning your business strategy. In the meantime, your accountant is counting the numbers that needs to be done and audited to make sure that it's all appropriately recorded and measured, and they come up with your financial performance of the year.
Speaker: In the same way, your sustainability accountant or your head of sustainability or whoever that sits in the organization is counting your emissions, is counting your gender pay gap, is counting your percentage of products that are made using circular economy principles. So it's counting all those things, and all those things happen.
Speaker: So what has happened is in the financial world, I can't go and say that my debtors are $3 million when they in fact were $1 .5 million. I can't say that because my auditor goes and checks the numbers and goes, sorry, Donald, those numbers don't add up. Similarly, if I'm looking to assure my sustainability statement,
Speaker: And it's interesting that it's become a sustainability statement as opposed to a sustainability report, like you have your financial statement instead of financial report. If I'm assuring or auditing my sustainability statement, I need to be able to go back and say, there's my emissions from water with X. And it's from X because here's how I calculated it. Here was my approach and methodology.
Speaker: And your daughter will know that, for example, in your financial world, when you think about doing stock calculations or your inventory management, there are standard methods of calculating the value of inventory.
Speaker: You know, some will have amortization when it's sitting in a warehouse, some will have last in first out valuation and all those kind of valuation mechanisms. The same things apply in sustainability. So, I've seen this work well when you have people who understand sustainability doing the assurance.
Speaker: That's not always the case today because in reality, how long has this been a thing? The assurance of sustainability hasn't been a thing for a long time. So what's happened in a number of the large firms is they've taken a lot of their audit staff and sent them to sustainability school.
Speaker: Right, and I don't know how else they could do this, by the way, unless there's a whole bunch of sustainability graduates out there and there's not, or certainly not many with experience. So the assurance works well if, I suppose, if we stay with the financials analogy, if my partner is good and actually understands the essence of what it is that I'm assuring,
Speaker: But if you're counting the numbers, it's really hard for someone to count the emissions from waste on a building site, unless they really understand what they're doing. So I think it's good to have it. I think I'd like to see more science and benchmarks and data applied to how it's done so that it's transparent and you can benchmark and there's no green mashing. Yeah, it's interesting. When I have this conversation with my daughter,
Speaker: just finished her ACA exams. And obviously that's a very, yeah, it's very regulated and it's a well understood methodology and it kind of holds everybody accountable to a similar worldwide standard of accounting. And I kind of see an envisage that will come and there will be some equivalent where it'll
Speaker: It'll be, as your example, it would be difficult to misstate your impact. So hopefully that'll come in time. But I think very soon. I think really very soon. I mean, if you look at what's happening in the U .S. right now, right? So what happened in the U .S. back in March of 2022, I think.
Speaker: Right, the SEC came out with a statement to say, all your sustainability reports that you're doing, all that stuff that you say, you know, and all with the best will in the world and the best intentions, let's just say that for a second. Right, the companies will come out and say, we love to plan it. We love the people. We're doing all sorts of green things. And it's exciting. And here are some numbers. Right. And then in March of 2022, the SEC came out and said, anything that you say in your sustainability report, you now need to back up in your financial report.
Speaker: Yeah, that's good. And the world changed, right? So two things happened. Some people who were, I'm going to say trying to do sustainability right, got more diligent about how they counted their numbers and how they tied it to the financial costs and how they linked financial and carbon costs together. Others said, oh, if I have to back up my financials, I think I say I'm out of the sustainability report, I'm not going to say anything.
Speaker: because they weren't obliged at that time to say anything. What your daughter and probably yourself will know, in the US, the standard in the US is largely ISSB, which is now owned and managed by the IFRS, which is the International Financial Reporting Standards. It's no coincidence
Speaker: that the sustainability standards are going to map to the financial standards. And in the US, which is a lot more financial driven than environmental driven, and the Europe would be more on the environmental end.
Speaker: But there's a really tight link between financial reporting and sustainable reporting. And with the other legislation that's happening throughout Europe right now, directors and officers of companies become personally liable for activities under sustainability. So I've been in businesses for a long time. I've never seen something evolve as quickly as this.
Speaker: So I would say, you know, this is happening really fast. That's very encouraging that it is happening at a pace because introducing any kind of standards is always a struggle. So we've talked a lot about the quantifiable and some of the technical elements of measuring and how we
Speaker: how we approach this subject. It'd be quite interesting to talk about some sort of practical and maybe real life stories that you can share. I don't know if you can share it with your customers. You don't need to mention them if it's not missing. But I'd love to hear about the impact has actually happened to the organizations you work with. If people go through the whole journey, they'll do strategy first.
Speaker: Then they will do some level of baseline analysis or gap analysis to see kind of their gap to good. And then they'll take on some improvement journey, and then they will go and kind of hopefully operationalize that within the company. There are lots of topics and issues that people can do. In the European standards, there's 41 things people can do, literally there's 41, and then a bunch of sub -items under those.
Speaker: And people will say to me, what should I do first? And I say, well, if you've been driven by compliance, you got to do a materiality assessment and do it correctly. And we help a lot of people with that. But at the end of the day, you need to think about how you reduce your resource usage. If I stay on the environmental piece, how do you reduce your resource usage through your complete value chain?
Speaker: So that means everything I use within my own operations, so what I have in my office and my buildings and my manufacturing sites, everything I buy for my suppliers and everything that I sell and provide to my customers. And within that, it is highly likely that the majority of the impact you have on the planet comes from your supply chain.
Speaker: Right, so you'd be familiar with this, right? People talk about their scope three. Yeah, scope three is always the difficult one. Well, and it's 80 % of the problem, right? So scope three, for anyone who's listened to this who doesn't know what that is, right, is you've got scope one and two, which largely talks about emissions from, let's say, energy sources within your own operations.
Speaker: are energy that you buy, fundamentally, if I call it that. So if I have a utility bill to heat my building, that's going to be a scope two number. If I have a furnace that's generating energy or heat in my building, that's a scope one number.
Speaker: Everything else, broad speaking statement, but things like my logistics. When I buy a product or a component to go into the product that I make, then there is embodied carbon in the product. There's carbon in the logistics of the truck that brings it to me. And then there's carbon in the manufacturer that I use. And then when I send that out to my customer, there's logistics.
Speaker: uh again transport that happens there and then there is also uh the operational carbon that when someone turns on if i make laptops turns on the laptop the energy that it uses and all those kind of things write down to when it gets just disposed of so that's a brief kind of scope three picture most of your
Speaker: emissions is coming from scope 3. So logically I will often say to people one of the things that you should do first is think about sustainable supply chain which might be sustainable procurement and sustainable logistics.
Speaker: because typically 70 % of your spend is going to be in stuff that you buy from your suppliers. It can be between 50. In manufacturing world, that's certainly true. So it doesn't make sense that I should look at that. So if I can put in a sustainable, and we've done this many times, a sustainable procurement process,
Speaker: that talks about a couple of things. How do I strategically work with my suppliers to co -create, co -design products that are less carbon intensive? That can reduce the carbon. Typically, when I do citadel procurement, and this is why it's a good place for people to start, they will also do procurement better.
Speaker: When they do procurement better, they will save money, typically 17%. That's across a large number of companies that we've done that with. They'll basically take the money that they spend, and they'll knock 17 % off. And at the same time, they will knock 17 % off the carbon, but also from a cost -saving point of view, because it kind of comes with that, but also because they're now designing collaboratively with their suppliers,
Speaker: uh products that they're buying and saying we need to have simple example we need to have x number of sustainable x percentage of sustainable components in the products that we buy from you
Speaker: That's not hard intellectually, right? No, it's not. But that connection between being aware of the supply chain impact on sustainability and then linking that to actually being great for your business in terms of saving you money is a link that's, I don't think, that clear in a lot of organizations.
Speaker: Certainly when we talk to organizations around what we help with, it's more on the scope two side of it. If you improve, for instance, your cloud infrastructure, so you've got more efficient machines, then obviously you reduce your carbon, but you reduce your costs as well. So I think that link is, it's there, but sometimes it just doesn't seem to be quite as,
Speaker: Of course, publicize as it should be, put it like that. Well, yeah, and to be honest, I think that's our fault, not theirs. I mean, I'm talking about you and me, kind of, and the other folks who do that. I think if, because it's, I'm speaking to someone, one of the scope three upstream scope three candidates are categories in UBware app is business travel. Yeah.
Speaker: Right? And the poor head of sustainability who has to manage getting the emissions down and goes to the CEO and says, do you know how we're spending on business travel and emissions in carbon? And the C -suite is going, God, they're going to take away my first class flights now.
Speaker: Right? And connecting that to carbon and cost, and it doesn't have to be, it has to kind of do it smarter, you know? And we have to get much better at doing the messaging. So we know, for example, sustainable procurement without exception saves money, without exception, right? And it saves carbon.
Speaker: Right? So because people are more considered about what they buy than organizationally and people as well. Here's a test, right? Here's a test, Rob, for your listeners. I was speaking to an American colleague of mine just in the last few days. And
Speaker: wants to do better in personally, but is a real consumer. And if I'm taking a stereotype, which is unfair, but if I take a stereotype, a real consumer who needs to buy more throat cushions for their couch and the latest version of this and that. And I said to them, here's a test. Would you do me a favor?
Speaker: Would you try and get through the rest of this month? This was just three days ago. Would you try and get through the rest of this month and not buy anything that's not food? Or fuel for your car? You know? That's an interesting challenge. Yeah. And I spoke to them today, coincidentally, and they went, I saw this thing in the store and I thought, God, are we great to have? But then I'm going to have to tell Donald that I bought it.
Speaker: Right, this is true. So she said, so I didn't buy it. And then she said, I was going to my my daughter who got a new who's who's who's going to have a baby and blah, blah, blah, in X months time. And I thought, wouldn't be great if you got this. And then she went, but you know what, they have lots of them already. They don't need it. And I'd have to tell them I bought it. You know what I mean? Right. And it's a really interesting challenge. You know, and then from a
Speaker: I remember listening to a presentation unrelated to sustainability, but I remember the CEO of Schneider Electric at a, speaking at a conference one time, and someone was saying, how do you get people to be productive? You know, and he said, give them fewer resources. Right. Now we have, we have all.
Speaker: grown up in, when I say all, most of your listeners, I'm guessing, Western world, privileged, and I'm guilty of all of this, right? So with the options to say, I can buy this, or I want to buy that, or I need to have, right? And in organizations, I remember in organizations, we buy a lot of stuff we don't need. I remember I sold my first company in 1997 to an American public company.
Speaker: And what struck me about it was they had a closet full of Post -its. And I'm going, how does somebody afford the money to have all those different color Post -its? Because I was a startup, right? And, you know, I'm going, oh, my God, they have a laminating machine.
Speaker: I couldn't afford one of those because it cost 700 euro back in the day. So and you learn how to get by. So sustainable procurement is a structural way of doing that for your organization. And as a consequence, you save money, you save carbon, you build better, more resilient relationships with your suppliers.
Speaker: which right now is probably one of the key risks for corporations right now, because with Brexit, with the pandemic, with the broken supply chains, with where China is going, getting a robust supply chain is really important. But if I'm a supplier and I'm working with an organization who's co -creating with me a long -term solution, I'm going to be much more inclined to have them as a preferred customer.
Speaker: So I can have a more robust supply chain, and I can save money, and I can reduce emissions. And that's just thinking about the environmental piece. And when I extend that into the human piece, and I start thinking about the workers in the supply chain, and I think about those kind of things, you're probably familiar with the
Speaker: right now the debate that's gone on in Europe around the CSDDD, the corporate sustainability due diligence directive, where company officers and companies are going to be held responsible for environmental impact and human rights impact of their supply chain. Now it gets serious. And I have to think about what's happening when I'm buying garments from a factory in Bangladesh where people aren't getting paid a living wage.
Speaker: Yeah, and it's offshoring your responsibilities has been a problem for a long time and it's just been moving the problem from one place to another.
Speaker: So the practical examples I've seen certainly are things around sustainable procurement. I've seen carbon with all the things you'd expect, like replace your fleet with EVs, which isn't about just buying the cars. It's about how you manage and having a user -ship model rather than an ownership model. By that I mean, if you've got 20 people on the road in your company, it's likely that I'm doing some
Speaker: of broad assumptions. A percentage of those folks aren't on the road all of the time. So having 12 cars that are used by the pool use less resources than having everyone having their own. I mean your car, let's say, assuming you have a car, right, and my most cars sit in driveways for 80 % of the time. Absolutely. So the usership model
Speaker: where the provider of the asset, in this case the car, might always own it and you and I just use it, you know, in Shipwell Airport in Amsterdam. They never buy their lights. They rent the light service from the lighting provider and the lighting provider owns the problem and owns the delivery of the solution.
Speaker: You know what I mean? So they never have to have spare parts on site. They never have to, you know? So thinking about the usership model is something that applies heavily. The other thing that I've seen work really well is when people start thinking about circular economy principles early in the cycle. So in construction, as an example, construction is really hard to dispose of things.
Speaker: So people start thinking about, how do I use aggregate concrete? How do I think about how that plays into the next phase of a building I'm doing? It's all in the design that makes the change. And you can have dramatic cost savings and also, of course, dramatic resource savings, which converts to emissions reductions.
Speaker: Yeah, the whole supply chain thing, there's so much involved in it to optimize it. Absolutely fascinating. Thanks for that insight. Just to sort of wrap up, because we're kind of getting up to the end of the time.
Speaker: It would be great to get your, just your high level advice on how organisations should start. I think we've talked about there's a lot of compulsion coming, there's regulations there, but there's still a general resistance, let's be honest, around doing this. What would be your advice at a high level? Where should you start to make the biggest impact?
Speaker: I mean, I would go to sustainable procurement if I didn't know the company. And I'd say if you spend a fair chunk of money on buying stuff from suppliers, you can make a big impact on your missions and on your P &L in one go. That's not a business case. That's hard to write, if you know what I mean, right? So that's one thing that's easy to do. I think more strategically, I think there is a
Speaker: They're quite well defined methods to come up with understanding what topics, sustainability topics are most material to your business. And when I say material to your business, I mean both from risk to your business
Speaker: And also the impact that your business has on people on planet, right? And you'd be familiar with, that's the kind of double materiality term, the inside out and outside in. So there are structured methods. It's probably the thing we do most work on this quarter, which is crazy because it's just kind of started this quarter for many people. Double materiality, can you help people kind of get to figure out what are the topics that matter most?
Speaker: So figuring that out, we've been fortunate to be able to use AI to kind of cut weeks and weeks out of that process to say, here's what you should do. I can look at you from the outside as a company and I can probably tell you what you should do because it's been done before in most cases. So that's one thing. And then you need to decide how you can measure baseline, either behaviorally, like I'm good at doing sustainable procurement or I'm not, or
Speaker: carbon footprint. My carbon footprint today is this, which is a question of understanding the data that contributes to that and the conversion factors that converts water to CO2 equivalent to those kind of things. But the behavioral stuff even gets down to metrics at the end. So for example, if I stay with my sustainable procurement example, one of the key metrics that you measure under any of the standards is how much stuff you buy locally.
Speaker: It's not something people think about necessarily. If I buy stuff locally, then the body carbon by the time it gets to me is smaller because it's traveling a shorter distance and so on. So to answer your question, strategically do a double materiality assessment. That'll tell you the topics, measure your baseline and commit to it, commit to a transformation. That's what I would suggest.
Speaker: Fantastic. Really appreciate your time. Your insight is, you know, I'm sure everybody listening to this has learned something. So I certainly have. So thank you so much. And thank you for joining us once again.
