In an interview with the BBC last week Arnold Schwarzenegger, who as governor of California introduced the far reaching environmental legislation known as AB32, said that leaders who claim combating climate change hurts the economy are either “stupid or liars”. He said that the measures created jobs, rather than destroy them, and that the state remains one of the richest economies in the world with a GDP of $3.3 trillion. I think Schwarzenegger is seeing things very much through the eyes of someone who lives in a rich country where there are options, infrastructure and capabilities but I agree with his sentiment and I believe inaction will cost countries a lot more.
In this post I look at the risks, the costs, examples of government action to come, and how organisations can do their bit and prepare for regulatory requirements by adding environmental objectives to continuous business improvement and efficiency programmes.
Back in 2006, Nick Stern’s review on the economics of climate change estimated that if “we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more.” Nick Stern later said that he had underestimated the risks of global warming and should have been blunter in his report. More recently, in its Net Zero Strategy , the UK government stated that its decarbonization plans will support up to 190,000 jobs by 2025, and up to 440,000 jobs by 2030.
The connection between money, jobs and combating global warming is clear for all to see and yet this week COP 26 got underway in Glasgow against a backdrop of continuing political machinations by some governments in an attempt to commit to as little as possible. Others are pushing ahead with legislation and targets to follow. The UK government’s Net Zero Strategy is an example. The objective is to empower people to make informed choices about the goods that they purchase and the services that they use with better labeling of the relevant emission intensity and environmental impact, as well as the durability, repairability, and recyclability of products, and their environmental footprint. The same is going to be applied to labeling food production, and disposal, including the most accurate methodologies to monitor and verify the carbon emissions, and environmental impact, of food items. Point 1 of the 10 point plan for net zero is “we will work with the grain of consumer choice.”
The Net Zero Strategy illustrates the type of governmental measures that are starting to come through and for which enterprises will need to prepare. Businesses will have to adjust to consumers’ decisions made on climate footprint as well as the price and the quality of products and services.
Corporate managers and decision-makers have two choices, either do nothing and wait for the legislations to come into effect, or prepare for the inevitable. There is another important aspect to preparing early and that is about the choices that we make and doing our bit. Executives are in a position to voluntarily make a difference by taking environmental measures today rather than wait to be pushed into them by their governments. The kind of steps that they can take include:
- Leading by example and implementing effective environmental policies, e.g. green recycling of hardware, and optimising energy consumption in factories and offices
- Asking suppliers to do the same and to report their progress
- Making environmental outcomes one of the key drivers of efficiency initiatives and measuring your progress
Business efficiency has been a quest for organisations for centuries and there is a clear link between money, jobs and environmental benefits. Why not join the two to drive environmental outcomes as well as business ones? This is a sure way to get support and funding from the Chief Finance officer. Eliminating waste and duplicated effort lead directly to reducing energy consumption, shorter process cycle times, and process improvements all in one go and no executive can ignore such benefits. Moreover, enterprises can document their environmental objectives and monitor their progress along with other efficiency targets.
The question is what needs improving and how. Here I return to my favourite subject of data for insights and decision support – you cannot improve what you do not measure. Knowing your processes is key to increasing their efficiency and levels of intelligent automation and augmentation. The deeper you dig into your processes the more opportunities for improvements can be unearthed e.g. hundreds of variations in processes that were thought to be highly standardised. Mining process data can show you what is wasteful and where efficiencies can be achieved.
A few examples follow that show how environmental savings can be factored into other drivers for investing in next generation process mining.
Making fast food delivery greener
A fast food delivery company in North America wanted to cut down on wrong orders being delivered to its customers. Aside from improving customer service and reducing costs of errors, the initiative could go some way towards reducing traffic and related pollution, and minimizing food waste. These can be measured and monitored as part of the efficiency drive and to provide data for the company to map its environmental footprint.
Streamlining supply chains
A food manufacturer uses next-gen process mining to improve its end-to-end procure-to-pay processes. This can be combined with Value Stream Mapping to improve on-time and complete deliveries in the supply chain. The result would mean a reduction in the number of times that the same supplies have to be reordered, cutting down on the number of returns, leading to energy and fuel savings and a reduction in food and other waste associated with this supply chain scenario.
Increasing product life
A mobile phone operator has improved its customer service by providing its contact centre staff with better data and augmentation technologies. These measures are helping customers make better informed buying decisions. With the durability, repairability, and recyclability of products becoming a priority and soon to be mandated by governments, the mobile phone operator could take advantage of the very same measures to help its customers keep their devices for longer. This would reduce electronic waste and the life cycle management processes that it entails, as well as help the operator meet the forthcoming legislative requirements.
To summarise, while governments continue to be slow in taking action, some measures to combat climate change are on their way and will require enterprises to act. Corporate executives and other decision-makers will need to establish strategies and practices that reduce the impact of business on the environment. They will need to provide data to their customers on the environmental footprint of their products and services. As many business efficiency measures also generate environmental benefits, it is a no brainer to join the two. In that way we can increase the scope of the environmental goals that we aim to achieve and measure progress towards them. The benefits can add up in more ways than one and are a sure way to help you get support and funding from board-level executives.