In this episode we take a look back at another talk from our Decarb 2023 Event while we’re all on the New Year break at the GSF. Titled Driving Climate Change Solutions with AI, Charlotte Degot of CO2 AI and Diana Dimitrova from Boston Consulting Group talk about the Third Annual Carbon Emissions Survey titled Why Some Companies are Ahead in the Race to Net Zero. 

TRANSCRIPT BELOW:
Asim Hussain: Hello and welcome to Environment Variables, brought to you by the Green Software Foundation. In each episode, we discuss the latest news and events surrounding green software. On our show, you can expect candid conversations with top experts in their field who have a passion for how to reduce the greenhouse gas emissions of software.

Chris Skipper: Welcome to another episode of Environment Variables. Happy New Year, and I hope you are all enjoying this holiday period and looking forward to 2024. Seeing as we're all on a bit of a break here at the Green Software Foundation, we've got another highlight from the recent Decarbonize Software 2023 event.

We'll be showcasing a talk on driving climate change solutions with AI. From Charlotte Degot, CEO and co founder of CO2 AI, and Diana Dimitrova, managing director and partner at BCG. They are introduced by the wonderful Namrata Narayan, director of communications and member relations at the GSF. So it will be her voice that you hear first.

So, without further ado, here's driving climate change solutions with AI.

Namrata Narayan: Now we're going to hear from another steering member, BCG, and their partner, CO2 AI. I'd like to welcome Charlotte Degot from CO2 AI and Diana Dimitrova from BCG. The GSF is focused on addressing the environmental impact of software. With the rise of AI, we wanted to take a moment at Decarb to discuss how this technology can assist our efforts to decarbonize software.

Charlotte and Diana are here to cover this topic and highlight the results from the Carbon Emission Survey Report that was just released. Charlotte and Diana, over to you.

Diana Dimitrova: Great. Thanks so much. And thanks so much for hosting us today. We're super pleased to be here. And as you mentioned, today was the launch date of our third annual survey that actually found some fascinating insights around green software and how that propels climate action globally. So Charlotte and I are thrilled to take you through it.

So maybe as a first step, we can just introduce ourselves. Charlotte.

Charlotte Degot: Yes, very nice to have us, I'm Charlotte Degot, I'm the founder and CEO of CO2 AI. Just in a few words, CO2 AI is a sustainability platform that helps large organizations on their end to end net zero journeys from measuring and reporting their emissions down to reducing and proving their impact.

Diana Dimitrova: Excellent. And, um, I'm Diana Dimitrova. I'm a managing director and partner, uh, in BCG, and I focus on building digital solutions for clients, um, that advance their climate goals, um, that's specifically in our unit called BCGx. I'm going to kick us off with the main findings, um, of the report, and, and let me just contextualize that a little bit.

So, we publish a third annual report around carbon emissions, uh, and measurement. It includes. 1,850 organizations that reported back to us. It does represent over 20 countries in 18 major industries. And based on the reported emissions, it's about 40 percent of global emissions. And the report is called Why Some Companies Are Ahead in the Race to Net Zero.

Now what we found, the unfortunate bit, which is the first column, is that comprehensive measurement of scope 1, 2, and 3 actually hasn't improved. It was 10 percent this year, it was 10 percent the year before, and 9 percent the year before that, so real stagnation there. Now, we did see some elements that gave us quite a bit of hope, and that was really in scope 3.

So in scope 3 measurement has landed at 53 percent or partial scope 3 measurement has landed at 53 percent which is up 19 percentage points in two years. So we are seeing organizations actually be selective of which categories they measure but really starting to get at scope 3. And more interestingly is they've actually set targets and that's the 12 percentage points that you see on the bottom there.

Organizations at this stage are setting targets for scope three categories at 35 percent rate, which is a notable improvement. And regionally, we are seeing changes and we are seeing certain regions pull ahead in the race. And again, this is a scope one, two, and the comprehensive measurement that they have.

South America, APAC are really pulling ahead when it comes to their measurement. And then finally, the most important bit is why are companies doing this? And 40 percent of the folks who responded are telling us, well, they do this because they're seeing a hundred million or more dollars in annual financial benefit when they get on the reduction journey.

So there's a real financial incentive for them to be tackling these massive challenges. And then let me tell you a little of how they did it on the next slide. So these companies are doing four things twice as well as the average organization. The first thing that they're doing well is they're collaborating with their suppliers, meaning they have workshops together, they have joint targets, they have joint programs.

So they're engineering products together for a lower carbon solution. The second bit is Digital solutions that allow you to measure at a product level, so it's not good enough to just know what Apple's total emissions are, it's actually much more interesting to know what the iPhone's emissions are, and getting at that product level is fundamental to enable consumers to make a greener choice.

And the highest number on this slide, as you see, is the use of digital technologies, and Charlotte will give us a few examples of that, but those that adopt digital solutions or green software really make a dent versus those that don't. And then lastly, I heard our host kick it off, regulation, and those that view regulation in a positive way, catalyze around it, really are seeing those benefits when it comes to meeting their reduction targets.

Now, to give you an example, I'm going to take you through a client where we've done this. The client is called Klöckner & Co. What does Klöckner do? Klöckner actually distributes steel. So steel is a heavy emitting sector. It represents 7 percent of the world's emissions. We all have a stake in the ground to really decarbonize steel.

Unfortunately, there is no net zero steel, but there is a lot greener steel than what we use on average. What Klöckner did is recognize that they needed to get to that product carbon footprint element, which is the second pillar I just talked about. So they actually built a software that was able to calculate their product carbon footprint for over 200,000 products, and you see that's called Nexigen PCF algorithm.

It's cradle to gate emissions. And it covers, as I said, 200,000 products, and it is certified, which makes it really important that whoever gets a number actually gets a certification. And then they decided that wasn't good enough, they needed to push a little bit further, and then they created Nexigen Data Services, which is an online purchasing platform where anybody who's buying steel can log on and look at what the carbon footprint of their basket was in the last purchase, and how, what greener alternative is available to them.

And so this platform allows procurement individuals to actually really arbitrage where they're going to spend their carbon because they're given the transparency and the choice to make the lower carbon solutions. So it's a great example of leveraging technology and getting at product carbon footprints, which is still a bit of a panacea that organizations are gunning towards.

Having said that, I'm going to hand it over to Charlotte and she'll take us through some of the other details on digital.

Charlotte Degot: Yes, thank you. So, as Diana was saying, one of the four key things that companies will succeed better on their reduction journey do is adopting digital solutions. As you can see on the left part of the slide, what we see is that companies who use automated digital solutions are actually two times 2.5 times more likely to comprehensively measure their emissions.

And this is very important because what gets measured gets done. This may look like a basic, but it's a basic that just sets the foundations right for you to then decarbonize. And what's also encouraging is that when we ask the 1,800 companies who answered our survey, what is the number one enabler that they see and that they think they need to adopt to accelerate on emissions reduction, they quote, technology, uh, as the first enabler.

Before leadership buy in, before sustainability focused, uh, culture. So it really means that they have, uh, perceived the importance of digital and that, uh, we can hope for a wave of adoption in the years to come.

I just want to give you one example from real life of what it means to be using tech and how it can bring value to a very large and complex organization. We are talking here about The Economist Group, so the press media group as they are very large and they, um, they issue a lot of newspapers. They are very committed to sustainability and what they do with technology is using CO2 AI to help them steer their end to end net zero journey. So what they use it for is first to measure and automate their carbon footprint calculations. They have a very complex carbon footprint. They need to capture a lot of data points, and CO2 AI helps them collect those data points, structure those data points, and get to a level of granularity in their footprint, which is really good and really helpful to make decisions.

The second thing that they do with CO2 AI is to really set up a road map. And define the hotspots and the reduction levers that go with the roadmap so that they really have a plan and they can cascade the plan across the organization. This is a big pain point that sustainability face team, um, sustainability teams face today.

They tend to have targets, but high level plans and no resources to actually make that happen. Technology can really help broadcasting the information, make sure that operational teams get involved into the decarbonization journey. And last but not least, as we were saying, scope three. So the emissions that come from outside the direct operations of the company, typically the emissions from the supply chain, the suppliers, et cetera, are, um, extremely important.

They are on average 90 percent of total emissions. And those are the hardest to tackle. What The Economist is doing with CO2 AI is mapping suppliers and being able to really prioritize with who, with what suppliers to engage and what to discuss with them to go at a level of granularity. We were talking about product level at a level of granularity, which is good enough to have proper discussions about reductions and, and impact measurements.

Finally, I want to say a few words about AI before taking questions. We talked about tech and digital in a broad sense, which is extremely helpful and will drastically help us accelerate on our sustainability journey. In this field, artificial intelligence is Extremely important. You see here on the page, 30% of respondents who plan to adopt AI, uh, to, uh, steer their net zero sustainability and journey moving forward.

Uh, they see artificial intelligence and, uh, as an enabler and a helpful way on many that different dimension. Uh, a couple of ones are making intelligent decisions. Typically on energy usage or decarbonization initiative. Artificial intelligence is a key lever to automate and increase the quality of carbon footprints.

This is what we do at CO2 AI, and I could talk for hours about that, but there is a huge accuracy issue and granularity issue with carbon footprints. On carbon footprint when made manually, and artificial intelligence can really help solve this topic. And finally, making predictions and making sure that roadmaps ahead, both from a business and from a sustainability standpoint, are optimized.

So we're reaching the end of our presentation. You have two QR codes here to go deeper into either the report or what we do more generally. And I think it's time to take questions.

Namrata Narayan: Thank you so much for sharing. I know we've got a ton of questions to follow up with, but first, I do see we've got a few audience questions, so I'm going to ask you both. The first one is from Jean Luc Bonnet, and he's asking about the baseline. He said two times of 10 companies is not so great, but two in 100,000 companies is a great achievement, so could you comment on that?

Charlotte Degot: I think the question is related to the four levers that accelerate and that multiply by two the likelihood of managing your reduction journey. So what I can say is that what we ask for in the survey is what percentage of companies are measuring the emissions comprehensively. And as Diana was saying, this has not moved and this is stagnating at 10%.

And the other key metric that we asked for in the survey is how, what percentage of companies have actually managed to reduce their emissions in line with their ambition. And here this number is 14%. So I will I will see the glass half empty on this question, and I will say that the baseline is not high enough, and we need to really accelerate the adoption of those four levers, and that will increase the baseline.

Namrata Narayan: Thank you so much, and then we have a question with regards to the carbon emissions survey, a couple which I'm going to you know, group together. So, one is, how many companies were part of the survey, and did the survey find any advice regarding how to decarbonize AI itself, since it's also a cause of emissions?

Diana Dimitrova: Great, so let me take the first part and Charlotte, I think you can comment on AI itself. So it was 1,850 organizations up from 1,600 last year and up from 1,450 the year before, so we have been seeing a steady interest in folks giving us this information back and the sample is hoovering for some of the kind of large organizations that are between 10 and 25,000 employees, and it said based on their self declaration it was 40,000 percent of global emissions, so we're quite comfortable with the sample that came through this year.

Charlotte Degot: And on, uh, uh, how to reduce the footprint of AI, this was not part of the questions we've been asking, uh, on the survey, but what I can say is that, um, there are, uh, many ways to optimize the carbon emissions of any model. Also, tools that exist like CodeCarbon, et cetera, I'm not going to teach anything to this group about it, but clearly, the impact of AI needs to be monitored as any other type of impact, and it needs to be used wise.

Namrata Narayan: Well, Charlotte and Diana, thank you so much. There are several more questions, so we might have to come back to you at a later time to get them answered. Thank you so much for joining us at DeCarb.

Chris Skipper: So, that's all for this episode of Environment Variables. If you liked what you heard, you can actually check out the video version of this on our YouTube channel. Links to that, as well as everything that we mentioned, can be found in the show notes below. While you're down there, feel free to click follow so you don't miss out on the very latest in the world of sustainable software here on Environment Variables.

Bye for now!

Asim Hussain: Hey everyone, thanks for listening. Just a reminder to follow Environment Variables on Apple Podcasts, Spotify, Google Podcasts, or wherever you get your podcasts. And please, do leave a rating and review if you like what we're doing. It helps other people discover the show and of course, we want more listeners.

To find out more about the Green Software Foundation, please visit greensoftware.foundation. Thanks again and see you in the next episode.