Gathering and analysing millions of data points can be challenging, but as John Hsu explains, big data can show business where to focus its sustainability efforts
More and more frequently we are seeing examples of how properly understanding data leads to success, whether this is Moneyball in sport, or Nate Silver’s predictions of the American elections. This is because recent advances in data gathering, computing power and connectivity mean that we have more information than ever before at our fingertips. IBM estimate that by 2020 there will be 300 times more information in the world than in 2005 – a total of 43 trillion gigabytes.
We are only just starting to scratch the surface on how businesses can process, analyse and otherwise make use of all this information to help them make money, save money and become more sustainable.
And when it comes to sustainability the great thing about Big Data is that it is unlocking the ability of businesses to understand and act on what are typically their biggest environmental impacts – the ones outside their control. For example with pharmaceutical giant GSK then only 20% of its carbon footprint is within its own boundaries, 80% comes from indirect emissions, with 40% of that coming from the use of its products, such as propellant inhalers.
At its most basic, the reason that Big Data can have a big impact on sustainability can be boiled down to three simple points:
- Taking meaningful action on corporate sustainability requires an understanding of all the impacts that the business world and the natural world have on each other.
- The business world is a very complicated place, with lots of interactions between consumers and companies and suppliers and markets.
- The natural world is even more complicated, with lots of interactions between people and resources and ecosystems and climate.
Until relatively recently businesses struggled to get a full picture of the sustainability impacts of their own direct operations. The information required to get an accurate understanding of even something relatively simple, such as energy consumption, was kept in separate documents, in varying formats across multiple sites.
But now leading businesses such as Nike and Ikea are trying to understand the entire end-to-end impact of their businesses, throughout the value chain. This includes looking at a huge range of things that are happening outside of the boundaries of the business, including raw materials, suppliers, employees travelling, customers using products, how waste is dealt with, and investments that have been made.
Businesses know that measurement is one of the keys to effective management. Collecting and understanding data about how an organisation operates leads to insights that can improve decision-making, helping to refine goals and focus efforts.
At the Carbon Trust we worked with BT to look at the whole carbon footprint of its business, finding that emissions outside its direct control accounted for 92% of the total. To give a picture of the data complexity, around two-thirds of those emissions are from BT’s supply chain, which involves 17,000 suppliers around the world providing products and services worth £9.4 billion.
But by getting to grips with that huge amount of data BT was able to effectively highlight carbon hotspots - areas where it could focus its efforts to create opportunities for carbon and cost reduction. It has also allowed the business to set its Net Good 3:1 goal, with the company aiming to help its customers to reduce their carbon emissions by at least three times the end-to-end carbon impact of BT’s own business.
Big Data genuinely has the opportunity to transform how large businesses – the ones with big environmental impacts and access to large volumes of information – can take action on sustainability. And a drive for data collection can also incentivise smaller suppliers to be more responsible in their own operations, creating a domino effect. Companies such as Hitachi are already providing an online platform for suppliers to submit how they meet sustainability criteria.
Providing quality data in the right format is becoming an increasingly important factor in whether a supplier is chosen. The worlds of data collection and analysis, sophisticated business software applications, and accepted measurement standards are coalescing to help drive transparent and improved sustainability performance for companies and their supply chains.
Measuring and understanding how doing business really does affect the natural world will open up new opportunities for bringing sustainability inside an organisation: creating change, cutting costs and boosting long-term profitability in a resource-constrained world.
It isn’t easy, there are significant challenges around gathering external data, as well as in analysing and interpreting hundreds of thousands, or millions, of data points. But we are already seeing the pioneers in sustainability leading the way, bringing suppliers and customers along for the journey.
Find out more about how our expert advice can help you green your supply chain, to achieve reputational and efficiency gains, savings to the bottom line and ultimately increased revenue.