This blogpost is authored by Josh D’Addario (Principal Consultant, ODI), Volker Buscher (Former Chief Data Officer, Arup & Founder & CEO, ds30), Sherrelle Parke (Senior Researcher, ODI) and Ian Cheng (Consultant, ODI)
A panel discussion from ODI Summit 2022: Data Decade chaired by Volker Buscher, Former Chief Data Officer at Arup. Volker and his guests (Gavin Starks, CEO, Icebreaker One, Robert Barbour, Data & Insights Director, Travis Perkins, Professor Irene Ng, CEO, DataSwift, Justin Gillis, Director, Generation Investment Management) discuss how to enable governments, consumers and investors to make better decisions.
It’s no longer news that the climate and biodiversity crises are real and imminent, and that there is an urgent need to contain the rise in temperature above pre-industrial levels to less than 1.5°C. Many countries and sectors are developing strategies to reach net zero – cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere.
Achieving this net zero goal requires rethinking how we collect, use and share data at business, sectoral, national and global scales. Data at scale has been transforming retail, banking and media for the past two decades. A process that will not only unlock economic growth, but provide critical environment and social benefits by helping reach net zero.
Without the right data, at the right granularity, speed and scale, we have no hope of putting in place the activities needed to avoid further climate catastrophe.
Why we need net zero data strategies
We know that a data strategy for any business is essential for organisations to stay relevant, competitive, and innovative amid constant change. A data strategy gives businesses a competitive advantage because it aligns data practices with business strategy and helps define how not only collecting data, but sharing data, can help a business achieve its goals.
Sharing data helps leaders improve operations, open up new markets, develop innovative new services, and build new business models. Sharing data is helping businesses make valuable contributions to tackling global challenges like achieving net zero, and nowhere is this truer than the built environment.
Businesses in the built environment are facing the challenge of becoming net zero organisations in order to fulfil their role in society’s shift to a less carbon-intensive world. In order to do this while continuing to be a successful business, these net zero strategies need to be aligned with and informed by their data strategies.
Having a net zero strategy supported by your data strategy yields benefits for organisations in three major ways: improving internal operations and external offerings; increasing transparency and trust; and enabling collaborative innovation.
Towards ‘data-enabled’ business
Businesses need actionable insights informed through real evidence and suitably granular data in order to drive low-carbon growth and innovation. Much like in the sectors of finance, energy and beyond, businesses in all sectors must move towards data-enabled business and data-informed strategy. This culture change within an organisation is critical for commercial success – data powers decision-making on how to run internal operations, what types of products and services to design, which markets to enter and what channels to use to reach customers.
The same is true for a business’s net zero strategy. Companies can only achieve their net zero targets by understanding all of their direct and indirect emissions, including both up and down their value chain. This requires collation, monitoring and interrogation of robust and consistent data to see their own progress and allow them to compare across the industry. A net zero aligned data strategy can help shift businesses towards lower-carbon outcomes by improving energy efficiency and shifting to renewable forms, lowering their operational carbon footprint.
Operations is not the only area where businesses can significantly decarbonise. With the data, emissions forecasts for offerings such as construction projects could be as commonplace as financial forecasts. These insights can help companies make choices around inputs, distribution and sales channels that make their products and services more environmentally sound, lowering their embodied carbon footprint.
There is a clear societal benefit for organisations being more aligned across their net zero, data and business strategies – improving individual organisations’ carbon footprints contributes towards broader net zero goals. Sometimes less obvious is the business benefits this accrues as well. Increases in energy efficiency and decreases in waste can reduce costs, while being able to go to market with low-carbon offerings can boost revenues. Being net zero data-driven no longer just makes sense for the environment, it makes good business sense too.
From an internal to an external focus
For an organisation to achieve net zero, it is essential that it sees itself as a data-enabled business. But organisations do not exist in a vacuum. They are a part of sectors and industries, and are situated in cities, regions and countries. Standards around transparency are sharpening and expanding. Markets will soon want to see clear company performance against net zero targets as an indicator of trustworthiness and to justify funding; employees will want reassurance that they work for a climate conscious organisation; and customers will likewise be more interested in green credentials. Lack of focus towards net zero is completely out of step with investment, labour and consumer trends.
For these sectoral and national net zero goals to be achieved, businesses must look beyond their office walls. These data-enabled businesses must move from only looking internally at how data can improve operations and offerings, to looking externally – seeing data sharing as a means to becoming a more trusted net zero organisation in a wider ecosystem.
Businesses are increasingly sharing data as a means of demonstrating that they are working to achieve net zero in a trustworthy way. Data sharing with regulators and the government is commonplace for businesses in regulated industries, with climate-related disclosure requirements becoming more widespread in the UK. Making carbon data and other net zero commitments available openly to potential consumers and partners can help organisations build trust across the wider ecosystem. Data-enabled businesses should push to be more open in order to demonstrate trustworthiness to customers, and provide decision-useful climate-related data to policymakers.
Although there has been more carbon monitoring and reporting than ever before across businesses, selective reporting still exists as widespread practice in the industry, and a lack of clarity about data provenance or standards leads to incomparability between accounts of different organisations. It is not enough for businesses to be open and transparent about their carbon data. For meaningful carbon disclosure, businesses have to be open about their emissions accounting processes.
Openness and transparency around carbon levels and carbon accounting is important for broader net zero strategies beyond organisational boundaries, and needs to be a part of every business's data strategy. More open and transparent markets will drive better policy making by government and better product selection by customers. This same openness and transparency can improve business opportunities as well by helping organisations be more trusted, and their products and services more desirable, by partners, customers and other stakeholders.
From transparency to open innovation
In mature data ecosystems, data strategies evolve beyond the vision to use data internally, or only externally for reporting and transparency. For example, in the banking sector with Open Banking, and increasingly to the energy sector with Open Net Zero. These data strategies begin to foreground the benefits that can happen from data collaboration among supply chain partners and even competitors and other forms of open innovation. Actionable insights from data in addition to transparency will lead to scalable open data sharing that stimulates innovation and growth, illustrates trustworthiness and facilitates an open market economy.
Our research shows that businesses are becoming increasingly aware that sharing data in different ways can help them achieve their business objectives, such as increasing market reach, improving efficiencies and optimising supply chains. Similarly, data sharing beyond carbon reporting can help businesses achieve their net zero objectives too, reducing carbon footprints along supply chains and collaborating to deliver renewable energy solutions.
Historically, data sharing has occurred primarily through bilateral data sharing agreements. However, for businesses to share data, innovate collaboratively at scale and do so in a trustworthy manner, there needs to be a market architecture that can facilitate this. Sometimes this can be achieved with data pooling through data institutions, where common technical platforms or analysis and use of data across multiple organisations are needed. Examples of this include the shipping industry and the pooling of safety data for benchmarking and insights.
However, given the size and scale of the problem, there will also be a need for decentralised data publishing – industry-wide collaborations publishing or sharing data directly using open standards or via an open licence, such as in Open Banking. These decentralised initiatives should be used to build data infrastructure when access to the same data from many sources is needed in a more loosely collaborative way than collected by a central institution. Businesses with mature net zero data strategies will not only be focused on internal processes or transparency, but also on how their companies plug in with this data infrastructure, such as existing standards, policies and platforms.
This type of forward thinking data strategy, conscious of the net zero opportunities of open innovation, has benefits for society and the business. Data collaboration at this scale facilitates geographic and sectoral initiatives to reduce the carbon footprint of regions and supply chains. Creating new data-driven partnerships can reduce costs by using a shared data infrastructure and power new services to bring to market, such as with the Skywise data platform by Airbus, or the myriad of new propositions created across the Open Banking ecosystem.
How to implement net zero data strategies
Now we know the benefits of having a net zero data strategy, the question is how to achieve it. In our next blogpost, we will discuss how organisations within the built environment can implement net zero data strategies. We will explore what the key activities and considerations are for:
- Building and maintaining strong data infrastructure, such as data catalogues, data access technologies such as APIs, open standards and more
- Implementing robust data governance, ensuring organisational alignment with the net zero data strategy and defining responsibilities for net zero data actions
- Cultivating data literacy and skills, not just data science but thinking critically about data and examining the impact of different approaches to collecting, using and sharing data
- Operationalising data ethics, evaluating data practices with the potential to adversely impact people and society throughout data collection, sharing and use
- Starting a cultural change, promoting data leadership, valuing data assets, and focusing on whole system user experience