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Technology leaders at profitable companies spend more time building complementary enterprise business capabilities, such as risk management or digital innovation, than those at unprofitable businesses.
With carbon emissions reduction a top concern, tech leaders are adding emissions-tracking practices to that list of business capabilities, according to a new research briefing from the MIT Center for Information Systems Research.
Many companies create emissions reduction metrics based on three categories as outlined in the Greenhouse Gas Protocol. Scope 1 emissions are from company-owned or -controlled sources. Scope 2 emissions come from purchased electricity, heat, steam, and cooling. Scope 3 emissions are generated by corporate suppliers, partners, and customers and are the largest, most complex, and difficult to track.
As with other complex metrics, tracking emissions means relying heavily on digital technology coupled with accurate data. Based on interviews with leaders and examples from three global companies, researchers Ina M. Sebastian, Thomas Haskamp, and illustrate three opportunities for technology leaders to build capabilities that can help companies reduce their own emissions and those of suppliers and customers.
1. Track and optimize technology emissions.
Technology leaders who were part of the study focused on reducing carbon emissions related to IT. This includes making data centers more energy efficient and replacing old, inefficient equipment with less carbon-intensive options.
For example, after health care company Bupa committed to becoming a net zero company by 2040, it aimed to move systems onto cloud platforms and work with suppliers who have similar net zero goals. Bupa defined this key performance indicator internally and encouraged employees to use this information in choosing suppliers. By the end of 2023, 66% of IT spending was aligned with the company’s net zero targets, and the goal for 2024 was raised to 75%.
2. Track and optimize product emissions.
Companies need to have transparency around product development and manufacturing emissions, and technology leaders can play a key role in tracking this information and making data-driven decisions.
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Specialty chemicals company Clariant embarked on two efforts to reduce emissions from product development. One was tracking monthly energy data from 80 manufacturing sites; insights from this initiative led to 175 emissions-reduction projects. The other was the creation of a carbon footprint platform that helps product development teams anticipate emissions based on factors such as the chemical composition of products and the energy required to make them.
3. Open up emissions-tracking capabilities as a digital offering.
As technology leaders develop digital capabilities to reduce carbon emissions, they can also offer those tools to customers and suppliers to help them reach their own sustainability goals.
Last year, building materials company Cemex launched a pilot initiative for customers that includes using artificial intelligence to optimize drivers’ travel distances and make immediate changes to delivery plans in real time, an effort that reduces carbon dioxide emissions and saves gas.
Read the research briefing: Creating an enterprise capability for digital sustainability
