recent

What’s next for B2B platforms

Digital transformation after the pandemic

How multicultural experience makes effective leaders

Credit: wayra / Shutterstock

Ideas Made to Matter

Climate Change

How Salesforce, Amazon, Google measure climate impact

By

From unusually high temperatures to pervasive wildfires, the effects of climate change are becoming more and more common. Pressure is increasing for companies to show how they are taking action to address the global problem.

“Nothing is going to test the navigational prowess of every company, every industry, every geography like climate change will,” said Patrick Flynn, MBA ’12, vice president of sustainability for Salesforce. “It's a storm hitting every company at the same time, and companies have a choice: Lean into it, steer the ship into it, or get swept aside by it.”

In 2019, 90% of companies in the S&P 500 index published sustainability reports, up from about 20% in 2011, according to Governance & Accountability Institute, a New York-based consulting firm. However, not all organizations are setting targets for how they will reduce greenhouse gas emissions. 

The need to match data with targeted action is becoming increasingly important. Measuring sustainability is not easy, but having the right metrics and knowing what to measure help immensely, said Dara O’Rourke, SB ’89, a senior principal scientist at Amazon who founded its Sustainability Science and Innovation team.

This year, “the climate conversation moved from denial and debating the science to debating strategies for action,” but “we have to show real metrics, real investments in projects right now,” said O’Rourke, who was one of several panelists at the 13th annual MIT Sustainability Summit. This year’s virtual event explored how metrics and standards can be used to define and practice sustainability across industries.

Data can help companies take action

Many companies are tracking their emissions and using what they’re learning to create change. “As geeky as it is, data is at the center of this,” Flynn said. “We need impact measurement,” along with trusted data that’s “visualized in a way that it creates compelling forward progress.”

Amazon measures its carbon footprint, said O’Rourke, who is also an associate professor at University of California, Berkeley.  

And while that’s important, he said, “it’s not fine-grained enough to actually take action on” and “not useful for a business leader to figure out what can they do in their business to decarbonize.” What is important is metrics that allow companies to track their investments and their progress for decarbonization. “The total numbers don't really help with that,” he said.

Amazon built detailed models for its businesses to show factors such as the grams of carbon dioxide released per unit shift and the electricity required to power data centers. Having this kind of information allows the company to see fine-grained details on its businesses — such as the amount of carbon dioxide and electricity used in everything from transportation to data centers and packaging — and then share the results with business units. For example, transportation logistics could use that information to address vehicle and fuel types, vehicle use rates, and route optimization.

Tracking data across a company can be challenging

One big problem many companies face: Sustainability data is usually located in different places in different systems and requires many parties working together to get the right metrics.

“A lot of times, there’s many different systems, they don’t talk to each other, and that amalgamation needs to happen manually,” said Laura Franceschini, a member of Google’s global sustainability strategy and operations team. Even at Google, a big tech company, “people always think, ‘Oh, you must have these really sophisticated systems, like great databases and things that just automatically track this data.’ No. Spreadsheets, done manually, like at pretty much every other company,” she said.

Google’s data centers demand “fairly constant” energy usage, but the company matches 100% of its global electricity use with purchases of renewable energy, Franceschini said. (Amazon recently announced a plan to purchase enough renewable energy to cover all the company’s activities by 2025, and Salesforce, Danone, and Bunge also have renewable energy plans in place.)

“The next stage in our climate journey is trying to figure out how to get to a point where our energy use is carbon-free every day of the year, night and day,” Franceschini said. “We’ve established a metric called carbon-free energy, which we’re now tracking, and we’re currently at about 60% carbon-free, and our goal is to get to 100% by 2030.”

Companies have to track what’s going on upstream and downstream

Another challenge is collecting sustainability and emissions data for business operations that aren’t within your own company, said Robert Coviello, chief sustainability officer and government affairs for Bunge, an agribusiness and food company headquartered in Missouri. 

While “getting the data within our own operations is relatively clear,” Coviello said, “much of the data that we're having to collect is out of our control,” such as data from the farmers that the company works closely with. Standardizing calculations for Scope 3 emissions, that is, emissions from companies’ suppliers and end users, isn’t easy.

“That’s the biggest challenge — continuing to get firsthand data on what’s actually going on with our farmers,” Coviello said.

Deanna Bratter, head of sustainable development for Danone North America, echoed that sentiment.

As a food company, “a significant amount of our footprint is within our supply chain, and within our farmers,” she said. The company has a collaborative relationship with farmers, she said, where both parties have to understand the farmers’ data and the opportunities for transformation. The company is responsible for “ helping finance the change at the farm level in partnership with farmers,” she said.

What can companies do to move the needle?

  • Communicate and incentivize sustainability goals within the company.

After developing metrics, companies need to communicate them to employees and stakeholders. “There's a really close connection between data, and metrics, and narrative,” Franceschini said. “You have to back up claims and communicate what the data is saying in a way that makes sense.”

Danone, which is increasing its focus on renewable energy in place of oil and gas, has set companywide goals that are embedded throughout the business, Bratter said. Ways to spur action include making sustainability goals “tied to incentives and ‘bonus-able’ objectives of not only leadership in the organization but stakeholders throughout the organization,” she said. “Those who sit on the finance team [should] be incentivized to help create the next generation of carbon accounting within the finance team.”

“Our company's funding mechanism for bonus pools has one of the key metrics: our carbon target,” Coviello said. Because the metrics impact bonuses companywide, everyone’s mentality is aligned toward that target. “The metric helps set the mind shift,” he said. 

  • Involve policymakers.

Lawmakers are essential to moving the needle on climate change, Coviello said, and companies need to share their data with them.  

“We can't miss the policy element of all this,” Coviello said. “Getting this data in front of the right policymakers to make sure that we implement the policies that are going to be needed to move this at a faster pace than it is today.”

  • Take a stand.

Flynn said that he searches for moments “where there's both risk if you don't act and leadership if you do act.”

Related Articles

Finding positive impact and returns in clean energy
4 COVID-19 lessons for climate change
3 hurdles to sustainable investing — and how to overcome them

One such moment was Salesforce's decision to implement a blackwater recycling system in one of its buildings in San Francisco — the largest such system in a commercial high rise in North America. The system collects wastewater from toilets and sinks, treats it, and sends it back through the building.

 

Going forward, companies can use metrics to drive change, which will be essential as more and more consumers call for action.

“The customer is demanding action and trusted data to show the credibility of a company's climate action, and how that shows up in the products that they purchase, the goods and services that they purchase,” Flynn said.

Related Articles