Transcript
Speaker: Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends and opportunities.
Speaker: Make sure you're subscribed to stay up to date with new episodes.
Speaker: Thanks for listening.
Speaker: And now onto today's show.
Speaker: Hi, Justin, and thank you for joining us in this MSS270 podcast series.
Speaker: Justin, you are Managing Director for Global Sustainability at Google Cloud.
Speaker: And arguably, in a world where demand for more energy capacity keeps increasing, the role of big tech is very crucial, both in managing your own emissions by coming from AI and data centers on one side, and on the other side, helping accelerating innovation in energy technologies.
Speaker: So my first question will be asking you about the role of Google overall sustainability strategy.
Speaker: And in practice,
Speaker: Where are you focusing your energy and time?
Speaker: Great.
Speaker: Thank you, Patrick.
Speaker: And really delighted to join this podcast.
Speaker: So as you probably know, Sundar Pichai, a Google CEO, has been very explicit that climate change is the greatest challenge that we face.
Speaker: And that's why we're now in our third decade of climate leadership, which started with our commitment to carbon neutral back in 2007 and 2017 to matching our global electricity consumption with 100% renewables.
Speaker: There are three parts to our strategy.
Speaker: First is empowering individuals, because we have many products that reach over a billion users.
Speaker: And if you think about Google Flights, where we're surfacing carbon footprint data together with the price of the flight, or eco-routing in Google Maps, these are examples of where we can use that brand influence to impact users.
Speaker: The second is we're working with partners like yourselves, like governments and academic teams to harness Google's technologies to help deliver their sustainability goals.
Speaker: So, you know, tools like Google Earth Engine, where we're seeing dramatic uptake as companies want to kind of, and organizations want to embrace,
Speaker: geospatial analytics.
Speaker: And then the third is obviously operating our infrastructure and our business more sustainably.
Speaker: And you'll be aware that we've committed to net zero by 2030 across our business and our value chain.
Speaker: And then we've also launched a new goal, which we call 24-7 carbon free, because it was very apparent whilst we've done this matching of our renewable energy since 2017, we've done that every year,
Speaker: We haven't seen the grids decarbonizing at the speed that we wanted to.
Speaker: And so we realized we needed a different metric that was much more granular and more regionally based.
Speaker: And so 24-7 carbon free is making sure that each hour of every day in each region where we operate,
Speaker: we want to be sourcing carbon-free energy.
Speaker: And we can talk a bit more about that.
Speaker: But those are three key pillars.
Speaker: And in cloud, I'm obviously focused very much on unlocking our technologies to help our partners deliver their sustainability goals.
Speaker: Yeah, I would like to pick up on the operating infrastructure and 24-7 carbon-free.
Speaker: Clearly, we see the proportion of businesses that are prioritizing AI and machine learning in their CapEx or capital expenditure is increasing.
Speaker: And in our annual CapEx report that we just published, we see that number going from 24% of the companies last year.
Speaker: 41% in 2024.
Speaker: So that's really a big challenge for companies like yours.
Speaker: I would be very interested to see how Google is working to decarbonize their own infrastructure and reaching this 24-7 carbon free.
Speaker: Yeah, I mean, it's an extremely ambitious goal.
Speaker: Thomas Kurian, Google Cloud CEO in April this year, reiterated publicly that we're still absolutely committed to delivering that goal.
Speaker: And we're making progress.
Speaker: So we've maintained global average of about 64% carbon free energy across our operations from 2022, even though our energy consumption has increased.
Speaker: And we've got 10 regions where we operate where we're now at least 90 percent carbon free energy.
Speaker: So there is an aggressive plan to deliver on those 2030 goals.
Speaker: We recognize that increasing demands of our infrastructure, particularly from AI, makes that a challenging goal.
Speaker: But it's one that Google is absolutely committed to.
Speaker: And there are a number of levers that we can pull.
Speaker: Obviously, we can start the workload.
Speaker: So we have tools that allow us to help customers move workloads at different times of the day to regions where there's more carbon free energy on the grid.
Speaker: You know, that supports our carbon free energy goal.
Speaker: Secondly, we can invest in our processing technology.
Speaker: So Trillium, which is our most recent tensor processing unit.
Speaker: is 67% more efficient, more energy efficient than its previous version.
Speaker: So we're seeing obviously increasing energy efficiency in the processes themselves.
Speaker: Then the data centers, you know, typically a Google data center is 1.8 times as energy efficient as a typical data center.
Speaker: And then there are things that we can do to ensure that the way we manage the energy and all the other ancillary parts of the data center best in class.
Speaker: So last year, our average annual power usage effectiveness, which is a measure of the efficiency of how we run the data centers, was 1.10 compared to an industry average of 1.58%.
Speaker: So these are good examples of where we continue to push the best practice in how we manage energy.
Speaker: But of course, we understand there's challenges ahead as we see increasing demands for our technology.
Speaker: Yeah, and this challenge is obviously beyond Google is for the entire world to decarbonize and in a context where population is growing, where standards of living are growing and
Speaker: where demand for more technology and AI is growing.
Speaker: So that's really the conundrum we are facing.
Speaker: Now turning into more positive side and solutions as well, you know, that you are developing, harnessing the power of AI actually, and so to create solutions, we're helping to accelerate decarbonization of your clients.
Speaker: So can you tell us a bit more?
Speaker: I mean, you mentioned efficiency, which is an obvious area, very important area.
Speaker: I'm thinking also about, you know, climate adaptation.
Speaker: And resiliency, for example, in agriculture and food, typically, as it looks like the 1.5 degree target and even two degrees might be a challenge.
Speaker: Hopefully we can still get there, but it looks more and more unlikely.
Speaker: Those areas are more and more critical to reach our targets globally.
Speaker: Maybe can you give us some example to bring it to life in that?
Speaker: Yeah, of course.
Speaker: I mean, firstly, I would say, look, I think we believe that AI is
Speaker: will play a key role in helping to drive climate mitigation and adaptation in the markets that we serve.
Speaker: BCG and Google released a study just over a year ago that estimated that AI has the potential to help mitigate between 5% and 10% of global greenhouse gas emissions by 2030, equivalent to the total annual emissions of the EU.
Speaker: So we really want to, within cloud,
Speaker: focus on harnessing that potential.
Speaker: And for those of you who don't know, Google Cloud is one of Google's product areas.
Speaker: So think about Android and search and YouTube.
Speaker: And in cloud, we're bringing cloud computing to help businesses modernize and transform their businesses.
Speaker: And we have a suite of 150 or so cloud products that do everything from kind of cloud storage, data storage, analytics, and in particular, unlocking all of these new generative AI technologies.
Speaker: Now, we launched earlier this year a narrative that we're calling AI for impact.
Speaker: And this is very much about how we're applying these cutting-edge technologies to help our clients address their big sustainability challenges.
Speaker: And you're right, we see that in four ways.
Speaker: The first is about measurement.
Speaker: So companies are having to manage increasing volumes of sustainability-related data.
Speaker: often outside of the boundaries of their organization, you know, into supply chains.
Speaker: With advanced in technology, we're now gathering primary data.
Speaker: So think about telematics in vehicles, you know, sensors in manufacturing plants, satellite data, all these novel sources, which is providing all sorts of new insights for companies, which is great.
Speaker: It's helping them to much, you know, measure these performance attributes in a much more granular way, but they are reliant on
Speaker: technologies like cloud and AI to manage and interpret that data.
Speaker: The second is about optimization.
Speaker: So once you've got that primary data, we can apply AI to drive efficiency.
Speaker: So it might be using Google Maps, APIs, and analytics to optimize your routing of vehicles.
Speaker: It might be about how you're managing energy in your manufacturing.
Speaker: It might be how you're managing your supply chains and traceability.
Speaker: And then the third area is around growth.
Speaker: So we're all very clear that industries are in transition.
Speaker: And that's been very visible in the energy sector.
Speaker: And that's opening up all sorts of new value pools for companies.
Speaker: And we want to use, again, our technologies to help companies understand where those new growth opportunities are.
Speaker: and exploit them.
Speaker: So one example is we have an environmental API on Google Maps, which is a solar API, and it allows companies to very quickly understand whether a particular rooftop is suitable for solar, can configure the right number of panels, it will give you details about the pitch of the panels, etc.
Speaker: All of that is being enabled by AI and is unlocking that growth opportunity we're seeing in solar technology.
Speaker: And then the fourth area is around building sustainably on Google Cloud.
Speaker: So we're bringing AI to help companies optimize their workloads on Google Cloud to divert to regions certain times of the day where there's more carbon-free energy on the grid with a view to help them measure and reduce their cloud carbon footprint.
Speaker: So those are the four ways in which we're
Speaker: harnessing AI in Google Cloud.
Speaker: That's fascinating.
Speaker: Thank you.
Speaker: Thank you, Justin.
Speaker: And basically, there are endless possibilities to optimize and to improve how we produce goods and services with much less energy, obviously.
Speaker: Now, a question around the financing and the funding, because what we see is
Speaker: A lot of the technologies needed to decarbonize do exist.
Speaker: And I think 65% of the emission reduction, according to IEA, are aligned to technologies that do exist already.
Speaker: Obviously, there are still 35%, which is a lot, but 65% is even better.
Speaker: So how do you, as a tech company, work with banks?
Speaker: And obviously, we work a lot together and we have a few initiatives across HBC and Google Cloud in various parts of the bank.
Speaker: Do you want to tell us a little bit more on that and how banks and financial institutions can also play their part to helping you and augmenting that?
Speaker: Yeah, of course.
Speaker: I mean, I think, you know, we all recognize that when it comes to some of these big challenges like climate, we need to drive scale.
Speaker: And scale can come from lots of places.
Speaker: It can come from, you know, a stronger consumer pool.
Speaker: It can come from regulation, but it can also come from how capital is allocated.
Speaker: And it can come from advances in technology.
Speaker: And I think between HSBC and Google, and we've had a very long-term partnership, we both believe that we can leverage both technology and finance to help scale, particularly the emergence of these climate tech solutions in the market.
Speaker: And so about 18 months ago, the back of a bunch of workshops, we decided that we wanted to launch a partnership between the two companies that would bring together
Speaker: our cloud and AI technologies and your financing capabilities to support the climate tech community.
Speaker: And so in February this year, we launched a public partnership to support the growth of a technology ecosystem that we're building in Google Cloud that we call the Google Cloud Ready Sustainability Program.
Speaker: And this is a program of best-in-class
Speaker: sustainability software solutions, growing that to 50 this year.
Speaker: And we're bringing the support of HSBC with your goal of financing a billion dollars in climate tech financing to support that community.
Speaker: And we announced our first venture debt deal with one of those Google Cloud Ready partners called Level 10.
Speaker: We've just provided an update in September this year at New York Climate Week with a further provision of
Speaker: core banking services from HSBC to that community with another one of our Google Cloud Ready partners, Atlas AI.
Speaker: So we're seeing this partnership grow.
Speaker: It's great to see real deals being done in the market together.
Speaker: And I think we're very much at the beginning in terms of the potential.
Speaker: Yeah, absolutely.
Speaker: Financing is obviously a very important part of the equation.
Speaker: You mentioned New York Climate Week, which was very recently and still fresh in our memories.
Speaker: What have you seen there that is, I mean, directionally?
Speaker: What are the key takeaway?
Speaker: I think my main takeaway is a very powerful move beyond the kind of big corporate announcements around goals to actually a more granular insight into the progress that companies are making in delivering their goals.
Speaker: And, you know, sharing lessons like what's working, what's not working.
Speaker: I think we're also seeing this really exciting emergence of the climate tech community.
Speaker: And we were very delighted to host HSBC at our Sustainability Leaders Forum.
Speaker: We were showcasing many of those climate tech partners who are really driving impact.
Speaker: and in particular harnessing our mutual capabilities.
Speaker: So those would probably be the two big things that I'm very excited about.
Speaker: And obviously we're now also looking ahead to COP29 in November.
Speaker: And then, you know, next year, I think will also be a big year with COP30 in Berlin.
Speaker: There's lots to do, but the conversation is very much shifted towards taking action and harnessing some of these tools that we've spoken about to drive scale.
Speaker: That's great.
Speaker: And yeah, there was a lot of buzz around New York and, you know, big crowd and a lot of initiatives.
Speaker: Do you feel that, you know, given the overall context, macro context and some of the net zero challenges that compound also on top of the macro context, do you feel any slowdown in commitments or in engagement in the climate agenda?
Speaker: I don't think so.
Speaker: I mean, you know, obviously there's been some uncertainty about geopolitics globally, not least in the US, but I do see our clients continuing to be very, very serious about this agenda.
Speaker: And, you know,
Speaker: prompted partly by growing regulation, for example, CSRD or the EU deforestation regulations.
Speaker: That's kind of raising the bar for everyone.
Speaker: But I think companies still remain very, very committed to delivery of their goals and obviously looking to some of these new technologies as tools to help them deliver their goals.
Speaker: And we want to play an important role together with partners like HSBC to be ready to support those businesses.
Speaker: Yeah, thank you.
Speaker: And I agree with you.
Speaker: I think we are in a phase of now delivery.
Speaker: I think the first phase of building commitments and measuring what can be done, et cetera, is partly done, progressed well.
Speaker: And now it's really about delivering and going into the granular side of things, as you said.
Speaker: So maybe to finish on a forward-looking note, we'd be interested to hear from you an area of focus that gets you really excited in the future.
Speaker: Yeah, I mean, there's been a lot of talk about generative AI, and I think we're very excited about the possibilities that that's opening up as companies have to manage much, much larger data sets.
Speaker: So, you know, now we have the possibility to be able to have conversations with that data.
Speaker: For example, we've been testing the use of generative AI with climate risk related data.
Speaker: So as a facilities manager, for example, you'll be able to ask your data, which of my facilities in a particular region are at risk of, let's say, flooding.
Speaker: So rather than having to be an expert in GIS, geospatial analytics, we can start to make these tools more accessible to non-specialists.
Speaker: We're seeing the rise of agents that can support non-sustainability managers.
Speaker: So you might be a sourcing manager in a CPG company and you're wanting to engage your suppliers on the corporate's carbon reduction targets and you can
Speaker: use these agents to help you have quite technical conversations, but in a way that's much more accessible than it previously was.
Speaker: We'll see generative AI taking on some more mundane tasks in managing cleansing data, extracting insights from documents like utility bills.
Speaker: So we're really interested in this growing set of use cases around applying generative AI to sustainability data.
Speaker: Thank you.
Speaker: I like those examples.
Speaker: And I think the right of agents to help the non-specialist.
Speaker: This is a key area to get broader engagement than just a handful of people who are specialized in this area.
Speaker: And back to the climate risk and physical risk, which we've seen materializing recently in some of the events in the US.
Speaker: One area I quite like, and I think you're doing some work around that, is precision agriculture and using technology basically to improve
Speaker: the way we do agriculture and yield crop as well.
Speaker: Certainly we can do things at a planetary scale.
Speaker: So, for example, we have a project together with an organization called the Forest Data Partnership, together with other companies to use Google Earth Engine and some of our AI tools to monitor oil palm plantations, for example.
Speaker: And we can do that daily for every oil plantation globally.
Speaker: These were things we just couldn't do before we had some of these incredible tools to process vast amounts of data.
Speaker: Another example is the Global Fishing Watch, who are using Earth Engine and BigQuery to monitor ocean infrastructure and all vessels in the sea, even those not disclosing their location every day.
Speaker: Again, a great example of where we can apply AI information.
Speaker: and clouds to do things at scale.
Speaker: And the case of Global Fishing Watch, that's unlocking the opportunity to be able to track live emissions from vessels, can be used for marine protection.
Speaker: So all sorts of important use cases can be applied from these technologies.
Speaker: Absolutely.
Speaker: Thank you very much, Justin.
Speaker: That's extremely interesting conversation.
Speaker: Clearly, a lot of challenges, especially related to AI and use of energy associated to technology, but also solving a lot of problems in various areas, including agriculture that we just mentioned.
Speaker: So a lot of exciting things to come.
Speaker: Thank you.
Speaker: I'm looking forward to the next conversations.
Speaker: Great.
Speaker: Thank you very much for having me.
Speaker: Thank you for joining us at HSBC Global Viewpoint.
Speaker: We hope you enjoyed the discussion.
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