DECARBONIZATION: HOW DATA IS CRITICAL TO REALIZING YOUR NET ZERO AMBITION   ​

Decarbonization is now firmly at the top of the C-suite agenda. Legislation is evolving fast, and civil society is increasingly sensitive to the carbon catastrophe we face. Citizens, customers, and the whole of society is demanding climate action, right now.

Consumers, investors, and employees expect organizations to be accountable and transparent about climate action. Greenwashing is a major issue, for example, with fossil fuels being marketed as carbon neutral [1], and 59% of sustainability claims by fashion brands having been found to be greenwashing [2].

Promises and platitudes are no longer enough. The carbon cost of every activity is scrutinized intensely, since reports on climate risks and social impacts are now expected to be disclosed in routine corporate accounting.

Finance and asset managers are using ESG performance as a decision-making criterion. During the height of the global pandemic in 2020, large funds with ESG criteria outperformed the broader market. In fact, the most carbon virtuous companies can expect positive impacts on corporate financials, enjoying more favorable financing terms and being seen as more resilient in times of crisis.

Increasingly, organizations face legal demands to act and even more importantly, to prove their actions. In May 2021, a ruling by the Dutch Supreme Court ordered Shell to reduce its carbon emissions by 45% by 2030 for failing to deliver formal proof that it was keeping its commitments. This legal thunderclap warns all companies that lip service is no longer enough. Action is everything.

We are entering a new era of carbon accounting, and carbon is our new currency. There is no doubt that enterprise needs to be fully equipped for carbon accounting, as it is for financial accounting now.

The critical role of data in reporting on ESG commitments

While many businesses and governments have set net-zero targets, data-powered intelligence is key to bridging the gap between net-zero ambition and action. The shift towards action – and proof of action – demands a super refined level of ESG data management.

Simple in theory, less so in real life. First, we make sure that all the data is complete, consistent, and compliant with the taxonomy and frameworks, cataloging to build a trusted foundation.

Next, we move from a one-off, batch collection logic to a recurring collection logic, or even continuous integration. This allows us to create a real data platform dedicated to the net zero program designed for analytics and optimizing its value using data science. Not forgetting, throughout the process, to implement the governance required to manage the project over the long term.

Net zero intelligence supercharges decarbonization

Evolving frameworks, regulations, and standards require that organizations make their emissions data transparent and visible. Not so long ago, this data was reported annually. Today environmental data is a new parameter that feeds into real time decision-making processes, enabling us to make the optimum compromise between cost, time, quality, and now carbon.

Data, AI and analytics are key levers to secure and execute the enterprise sustainability agenda.

Data is an essential lever to build resilience and reduce climate and business risks by addressing three main objectives:

• Measure to steer progress
• Improve to reduce impact
• Anticipate, adjust the climate action plan

 Data for Net Zero

Capgemini has developed a seminal net zero program, underpinned by an enviable track record in data analysis, governance, and the deployment of data solutions and products. These experiences have convinced us of the power of data to fuel the decarbonization process through the creation of Data for Net Zero.

We translate the carbon assessment into tangible insights to monitor and report your ESG commitments at scale through industrialized measurement, powered by our trusted data and AI platforms.

Data for Net Zero enables simulations and advanced analytics that provide centralized real time enhanced insights. These enable organizations to transform their ESG commitments into a pragmatic and viable action plan.

Create a data strategy for net zero

First, your data vision needs to be seamlessly integrated into your overall net zero trajectory. This means breaking down your net zero objectives into key data projects and indictors, then sharing them right across your business.

To anchor your data challenges, you’ll need to review the best calculation methodology for GHG emissions and define the optimum organizational model and parameters of governance. To achieve your data ambition, you’ll also need to select the right technologies and solutions. And finally, you’ll need to create and nurture the optimum data partner ecosystem, which means focusing on seamless data collaboration.

For example, a large American retailer asks its suppliers to formalize the improvements it has made, from one year to the next, on key environmental indicators, as a condition of their partnership. For large industrial companies, fulfilling this simple request would usually take months of work, collecting information and creating an appropriate response. A foundation of data collaboration focused on sustainability, activated across a data ecosystem, revolutionizes the process, quickly identifying those business needs and organizing data and systems accordingly.

Establish a sustainability data hub

It’s crucial that businesses set up a Data for Net Zero nerve center at the crossroads of their enterprise functions. Creating a Sustainability Data Hub will enable you to identify granular data to feed your data hub, from sources such as operational data, the operating system, and external sources, including the emission factor database and suppliers’ carbon data.

We’ll help you design and set up the optimum technological platform for sustainability related data, based on your current data estate. You’ll be able to measure data founded insights and report the environmental impacts of your activities, including scope 3. And you’ll soon be packaging data models to enhance advanced analytics and help business functions to simulate reduction paths to reduce their footprint powered by AI driven use cases.

In the automotive industry, one of our clients is applying this analytical platform to its inbound and outbound logistics activities. Until now, it reported its carbon footprint annually. Today, in its decision-making, sustainable development is on the same level as the safety of the vehicles it designs.

Activate ESG data performance

Your ESG data performance can be harnessed and put to work as a corporate asset. First, you’ll need to set up a cross-organizational ESG performance steering infrastructure and choose relevant the ESG reporting framework to meet mandatory disclosing process from SEC, EU, HKEX, TCRD, and ISSB to name of few. Then you’ll need to measure the ESG insights of all your activities, projects, and transactions, as well as those of third parties.

Once this is in place, you can industrialize and automate ESG reporting to comply with evolving regulations. And in the process, you’ll be able to extract a specific environmental dataset to meet and exceed the increasing expectations of investors, customers, and other stakeholders.

Cross-functional projects require cross-functional skills

It’s a fact net zero is a cross-function responsibility that needs a holistic approach. In addition to creating a solid data and AI foundation, it’s critical that senior managers in information systems management, data, and corporate social responsibility (CSR) are fully invested and committed to the cause. You’ll also need the full buy-in of decision makers right across the business, in operations, purchasing, supply chain, and sales, who need to track their respective sustainability performance.

Going forward, collaboration with an external partner, like Capgemini, with cross-functional expertise in strategy and operations transformation, industrial process engineering, data management and AI, ESG, and sustainability will transform your approach to put decarbonization in action and at scale. We’ll facilitate cross-functional exchanges, helping you to technically embrace sustainable performance and measurement in your data roadmap.

In truth, ESG is no longer an “optional extra” or a “nice to have.” Instead, it’s now a given that businesses will deliver clear and transparent ESG reporting. A business that doesn’t deliver a comprehensive ESG program is likely to experience poor investor satisfaction, as well as a negative impact on its financial results.

Wherever you are on your ESG journey, Capgemini is the perfect partner to help you reach the first stage of compliance maturity level, or to help you accelerate towards high value creation.

In short, we’ll ensure you maximize the full benefits of decarbonization, far beyond delivering basic annual carbon footprint statistics.