Sustainability: industry’s most pressing, burning platform

In the first of two connected articles, Ekimetrics’ Théo Alves da Costa and Laurent Félix consider the role that industry can play in tackling the climate emergency. By measuring their environmental impact today, by deciding where they can make the biggest impact fastest, and by optimizing their business models across complex, global supply chains, companies have the opportunity to harness the power of AI and data science to change the paradigm on sustainability.

Why and why now?

We stand at a pivotal moment in human history. Sustained, coordinated action – by governments, by individuals, and perhaps most pressingly by industry – is required to prevent the current environmental crisis becoming a permanent catastrophe for our planet. The prevailing paradigm of economics – with its fixation on the single key metric of Gross Domestic Product (GDP) – is broken and risks inflicting irreversible damage on the ecosystem we exploit to satisfy our needs and desires.

This paradigm needs to be replaced quickly by a new model. A model that, by design, moves us from a linear to a circular economy, from extractive to regenerative, from exploitative to contributive; where the waste from one industry becomes the food or fuel for another. To thrive rather than simply survive in increasingly hostile conditions, we must recalibrate how we produce and consume in a way that meets the needs of everyone within the means of the planet.

Doughnut economics

One of the leading thinkers in this space, Oxford University’s Kate Raworth, has established a roadmap to evolve economic thinking for the future. Her approach has been popularized in her TED talks and manifesto for change, the 2017 book Doughnut Economics. Her model identifies the safe space for economic activity, between the social foundation of human well-being and the ecological ceiling of planetary pressures on external boundaries. This safe space is what she describes as “the doughnut” (see below). Raworth has argued compellingly that the world now needs economies that are regenerative and distributive by design. The challenge facing today’s and tomorrow’s leaders, however, is that: “citizens of 2050 are being taught an economic mindset that is rooted in the textbooks of 1950, which in turn are rooted in the theories of 1850.”

Kate Raworth’s doughnut model, showing the global shortfall in provision in the social foundation and the global overshoot into and beyond some of the nine planetary boundaries

For businesses looking to play their part in mitigating their contribution to climate change and reducing their impact, this is where data science comes in. The climate crisis provides businesses – and the economies to which they contribute – with the opportunity to move from a simple indicator (GDP growth) to a dashboard of different indicators that need to be measured and reconciled.

To achieve this and play a meaningful role, businesses need to (i) measure these new and multiple indicators, (ii) learn how to make decisions when some indicators can be contradictory and some degree of compromise is required, and (iii) enter the doughnut in the best way for them and for the planet. This is the essence of the Measure – Decide – Optimize approach, and at Ekimetrics, we’re combining our data science expertise, our business strategy know-how, and our deep understanding of sustainability to help companies evolve in the emerging new economy.

What pressures do companies face on the journey to sustainability?

The cumulative and increasingly serious negative impacts of human industrial activity on the nine planetary boundaries are well-established and represent the scientific consensus. It may be too late to reverse or mitigate some of the damage already done, and without concerted, joined-up, cooperative action, the consequences will be catastrophic. To date, the focus has been on governments and citizens. To effect meaningful change, the focus now needs to switch to corporations, and at Ekimetrics we are committed to enabling industry to harness the power of AI and data science as the engine of transformation towards sustainability.

The imperative for businesses to change their business model is not just the result of CEOs ‘doing the right thing’, responding to the climate emergency as a means of securing competitive advantage, perhaps. Indeed, in the age of social media scrutiny, that is the fast track to justified accusations of greenwashing (see ‘The perils of greenwashing’ below). Evolving a business model to be fit for the new economy is an act of enlightened self-interest. This is because the alternative for industry – particularly the high-polluting industries most at risk, from automotive to transportation, from aviation to petrochemicals, from fast food to fast fashion – is extinction. For many, it’s change or die.

There are also a wealth of external and internal pressures on business to change, also known as transition risks.

External pressures

• The conclusions of regular monitoring and reporting by independent NGO, scientific, and academic sources, notably the Intergovernmental Panel on Climate Change (IPCC)
• Traditional and social media coverage of research, reports, and extreme weather events triggered by climate change
• Government/other regulators taking action on behalf of citizens to mitigate climate change
• Scrutiny, criticism, and direct action – from pressure groups, media, activist investors, and activist consumers
• Natural disasters caused by climate change, from drought and forest fires to hail, from heat waves that make it impossible to work to rising waters that threaten factories or even cities
• Resource shortages, exacerbated by systemic disruption, that threaten supply chains, as well as the reduction or complete exhaustion of non-renewable resources, from lithium to silicon

Internal pressures

Many of those who have recently entered the workforce – particularly younger employees who will be business leaders by 2040 – are looking for companies to make a meaningful contribution in addressing the climate emergency. Corporate purpose is about very much more than fine-sounding words. To attract and retain the best talent who can help to deliver sustainable businesses in the new economy, companies need to become an active part of the move from linear to circular, extractive to regenerative, bringing business back within the nine planetary boundaries.

In summary

With a wealth of internal and external pressures bearing down on businesses in multiple different industrial categories, the moment is now for companies to address sustainability properly and once and for all. AI and data science provide industry with the chance to address the issue right across complex, interconnected, global supply chain pathways. In the second article in this short series, to be published next week, we will detail the ways in which businesses can make the best use of AI and data science to transform industry towards sustainability.

Théo Alves Da Costa is Head of AI for Sustainability & Climate at Ekimetrics (LinkedIn), and Laurent Félix is General Manager, France, & Partner at Ekimetrics (LinkedIn).