Tech-enabled sustainability: Closing the execution gap

Transcript

[00:00:00] Karen Dumville: Welcome to Pragmatism in Practice, a podcast from ThoughtWorks where we share stories of practical approaches to becoming a modern digital business. I'm your host, Karen Dumville, and I'm here today with Kathleen Walker, sustainability advisor in our Digital Transformation and Operations team. Andy Nolan, Director of Emerging Technology at ThoughtWorks Australia, who some of you may recognize as a previous guest on our episode about innovation.

Today we're here to speak about a slightly different topic: how to achieve your sustainability goals through technology. Welcome Kathleen, and welcome back Andy. Let's kick off. In your experience, what are some common challenges that organizations face when trying to execute sustainability goals and how can technology help address these challenges?

[00:00:51] Kathleen Walker: Thanks, Karen. Happily, we are seeing global confirmation that sustainability is now a mainstream commercial and social concern, and we're using the term sustainability here to refer to the broad spectrum of environmental, social, and governance considerations that an organization might deem to be material or relevant to their own impact.

The example here is an organization that's primarily digital will assess the sustainability impacts of their organization and are likely to determine that things like cybersecurity or the protection of customer data are really high as a material issue for their sustainability performance compared to an organization with a much stronger or larger environmental footprint, like a retailer or a manufacturer, who are much more likely to rank something like the mitigation of downstream impacts, like waste or packaging as very high material matter to their organization.

When we're talking about organizational sustainability here, we really are talking about a very large potential area of issues that an organization might be concerned with. Each organization will do the work to determine a much smaller scope for that organization to then use the term sustainability to refer to their opportunity and their challenges in this space.

Gone are the days when organizations really are asking the question, should we be engaging in our sustainability performance? They're now asking themselves how and how quickly can we engage with the impact that our operations and our business and our people have on social environmental concerns.

This is due in part because we are seeing a global swell in legislation and regulation around organizations in this space. This is particularly true of climate issues, but it is absolutely the case across the sustainability domain that organizations are being held accountable and will be required to track and report on their performance on a number of issues. This is great news. It's great news for the planet. It's great news for people. It's great news for profits because we know organizations that can really harness the potential of this new mindset and opportunities around sustainability will realize value in new ways. It's all great news.

Alongside this, we have seen a proliferation of organizations publicly committing to their targets and their sustainability strategies. These targets are often very large, long-term aspirational goals, which is really, really important. However, there is a catch, we're seeing a challenge, and that is that these organizations are rarely at the moment set up to meet those sustainability aspirations. We're referring to this as the sustainability execution gap.

In the main organizations are not at the moment understanding how to establish the kinds of cross-organizational transformative programs of change that are required to meet those targets. This is a big risk for these organizations. As the pressure from external and internal stakeholders increases, as the deadline for some of these targets draws at the near, these organizations are now really asking the question, how can we move the dial and accelerate our ability to meet these sustainability targets? How do we track and make our performance in these areas visible? How do we engage and empower people across our organization to meet those goals? How do we ensure that we are sending the right messages externally, particularly around our performance? That's where technology is going to be really important.

[00:04:21] Karen: Thank you. That was a really great snapshot of the landscape in some of the challenges. A second question I had, and you just mentioned that there was technology being able to help? Andy, can you give us a bit of a sense at a high level how technology can help address some of these challenges?

[00:04:40] Andy Nolan: Yes, thanks Karen. There's a critical role technology can play in helping organizations break down the complexity of achieving or making meaningful progress on these targets that they have set. Embedding sustainability into the way organizations operate and make decisions is a key contributor to them actually making meaningful progress. Technology can play a key role in actually providing the data that supports this decision-making process, and it will also play a key role in helping them assign accountability to different parts of the organization. If we're setting up things like KPIs to help incentivize leaders, just think about sustainability in the material matters of their organizations, data will be a key component in that.

We're seeing organizations start to think about how data platforms and the tech function can start to collect this information and surface it in meaningful ways to make that decision-making process a little bit easier. Sustainability shouldn't be an afterthought within these organizations. It should be part of the daily routine. We're starting to see these skillset organizations typically have in the tech function to measure things around customer engagement and other metrics being leveraged for sustainability, data collection, and management.

[00:06:13] Karen: Now, you've both mentioned that word accountability, and of course, we need accountability in everything we do. Kathleen, maybe you can talk to us a little bit about the importance of assigning accountability for our sustainability outcomes and how can organizations ensure clear ownership and responsibility across the teams that are working on sustainability.

[00:06:39] Kathleen: Thanks, Karen. This goes to the heart of a really critical issue here when we are thinking about challenges for sustainability execution. We can learn a lot from tech-led thinking and technology when we think about how to advance and meet this challenge. Key is empowerment, and the empowerment of teams across an organization to take part of an organization's sustainability strategy or challenge, make it their own, measure their performance, and then track and report on that.

What we're seeing in organizations generally at the moment is that organizations have small, dedicated, but small organizational corporate sustainability teams who have a very large role. They have a very big job at the moment, which is to deliver on these large organizational sustainability strategies. They do struggle in the main to have the kind of influence they need in order to achieve those outcomes.

The opportunity here is not to simply build bigger sustainability teams, although there's absolutely a case for that, particularly as we think about what kinds of skills are going to be needed in these teams to deliver on sustainability, but that's another podcast. This question really is around how do we ensure that organizations can make the most of the tech-led thinking and the technology capability they have today.

Really this is about ensuring that organizations can break down complex goals into smaller pieces of work that can then be allocated to various parts of a business or an organization so that they can own and have accountability for the outcomes of that piece of the puzzle. Leading the sustainability team with the critical and very significant role of ensuring that those pieces of work all do marry up and do line up to achieve the value that the sustainability strategy is seeking.

That's what's really exciting, I think, about the role of technology and tech thinking here is we know that technology and technologists and tech functions do a great job of breaking down large pieces of work, huge aspirational goals around outcomes for customer, around outcomes for business. This is very similar. This is exactly the kind of thinking that we need our organizations to apply to their sustainability strategy, particularly as Andy has mentioned around the role of measuring and ensuring that each of those pieces of the puzzle are clearly defined, are measurable, are tracked, and reported back to allow these organizations to have the autonomy that they need in order to achieve that part of their sustainability strategy.

[00:09:13] Karen: Thanks. That makes a lot of sense. You touched on that point around measurement. Andy did refer earlier to data being so important to being able to measure results in sustainability efforts. Andy, maybe you can talk a little bit about how organizations begin to implement continuous monitoring and make those data-driven decisions in their measurement.

[00:09:38] Andy: Yes, it's a really key point. When we talk to organizations at the moment, many of them are collecting this data manually. There might be information on invoices from certain suppliers. There might be spreadsheets being used across the organization to pull this all together, and because it's a manual process, it's often really costly, it's time-consuming, and it's not something they do frequently. This is one of the key areas that organizations struggle with when they're trying to make progress, is in order to have enough information that's timely and it's relevant, we need to automate as much as possible.

Sustainability teams, like Kath mentioned, they're very small at the moment, and they just don't have the time to do this continuously. Where technologists can come in is to help them automate as much as possible to make sure that we're surfacing the information to help other stakeholders within the organization make those decisions. Moving from a really low-tech approach, spreadsheets, Excel, manual data collation, formulas and things like that, and applying the skills that we have in other parts of the organization to automate as much as possible is one of the key areas where we see tech leaders and tech teams playing a role.

One of the factors that we often see is there's a lack of communication between those two teams. Sustainability teams have a need, have a tech needs that aren't being addressed, and technologists aren't aware, or the tech teams aren't focused on or incentivize to make sure that their pain points are addressed. Starting that conversation is one of the first steps, including technology in sustainability conversations, whether that's on an ESG committee with inside an organization, is a really great way to make sure that when technologists and tech leaders are thinking about developing platforms, they have sustainability as one of those key metrics they're trying to solve for as well.

[00:11:42] Karen: Just digging a little further into that topic around technology specifically, as with a lot of things the intersection of sustainability and technology can be complex. In your opinion, what are the key considerations when choosing and implementing tech solutions for sustainable practices? Kathleen, I might ask you.

[00:12:04] Kathleen: It's a great question because the world of technology solutions for the sustainability leader and the sustainability team really is a double-edged sword. This is because there is a growing awareness as we've talked about already today, that the role of technology and tech solutions is critical for the delivery and execution of sustainability strategy, and nobody knows that more than the sustainability team. However, in amongst the growing and swelling market for technology tools and solutions to help organizations meet their sustainability challenge, there is a lot of confusion and uncertainty.

As the opportunities and the tools and solutions continue to grow in number, often these tools are focused on specific elements of a sustainability strategy or a sustainability value chain. It's unclear for many organizations how to best select a tool or build a technology solution internally that will really drive the return on investment that these organizations need. For the sustainability leader, this is particularly challenging as it is often difficult for a sustainability leader to have the kind of detail that he or she needs to have about the organization's existing technology strategy or stack in order to be able to have meaningful conversations with third parties or even others who wish to bring in technology into the organization to help with the sustainability strategy.

What's happening here is that organizations really are risking over-investing in technology and doing that without knowing how existing tech or tech solutions might help solve some of the sustainability challenge or bringing in large expensive tools for whom the value is not easily recognized for whom the users is quite a small group. It's not an easy ask to expect a sustainability leader to stand in front of his or her capital funding allocation committee, and say, "I'm very certain that bringing in this tool today, spending this kind of money on this solution is the right decision for my organization." We're finding that organizations and sustainability leaders are in a bit of a difficult position where it is hard for that organization and for that leader to confidently determine the way forward regarding technology solutions.

[00:14:22] Andy: I think the proliferation of sustainability tools with inside the organizations does present a challenge for tech leaders. We have this real risk of shadow IT where different parts of the organization, whether it's procurement, finance, or risk are looking to purchase tools that solve a particular subset of needs with inside the sustainability space. They're doing so without taking into consideration the broader tech strategy of the organization. These tools will eventually require tech supporting in the future and will become partly supported by the tech function themselves.

Trying to bring those two worlds together as quickly as possible is a great way to make sure that the tools we're purchasing can be leveraged with inside the broader ecosystem or the broader tech stack with inside an organization, and that we can actually extract the data from them and integrate them into our existing data platforms to make it a lot easier to embed this sort of information into the regular decision-making processes using the standard dashboards and all of these other systems that we already have with inside organizations. We're not duplicating effort inside different siloed tools.

[00:15:47] Karen: It sounds like there's a lot for some of these business leaders to take on and there's a lot of tech capability and confidence required, that's emerging for sustainability leaders. What are some strategies that companies can deploy for upskilling and empowering sustainability leaders and teams to effectively leverage the technology that they have for sustainability initiatives? Kathleen?

[00:16:14] Kathleen: Thanks, Karen. This is an area of focus across the sustainability domain at the moment. I referenced it earlier that there's a real challenge in ensuring that our sustainability leaders today and into the future have the breadth of capability and knowledge they need in order to influence change at the kind of organizational pace we're talking. That is as true for technology as anywhere else in the organization.

The challenge for sustainability professionals, however, is that the world of technology is generally quite removed from their day-to-day. In engaging with tech leaders and tech solutions, sustainability leaders are being exposed to new ideas, new capabilities, new practices, new language, and concepts. For those of us who don't interact with technology and tech leaders on a regular basis, that can be quite a daunting space to engage.

There's also often, particularly for larger organizations, clearly established processes around engagement of technology teams and leaders and capacity. Processes around prioritization and planning, which are often quarterly in length or duration. Technology teams and functions will have set up processes that allow them to best engage and enable other parts of the business so that the tech teams can pick up that work and deliver on them.

If a sustainability leader and a team isn't well versed and isn't confident in this space, it's really difficult to get the sustainability initiative on the right agenda at the right time in order for it to be considered and picked up by a technology team. As we've advocated the approach where we see as a best fit forward is not to extend the technology capability in a sustainability team, but to rather empower a sustainability team to leverage the tech tools and leaders that already exist in their organization.

A strong message here for the sustainability leader is not to expect to rely on the goodwill of the tech leader that they'll be engaging with along the way, even the most ardent sustainability, committed person who runs a technology team or function will require and expect that the sustainability team participate and engage in the technology systems and processes in the way that's set up so that technology system can operate optimally.

We ask that sustainability leaders determine what it means to be a good customer of their technology function, whatever that looks like for their organization, how is it that the tech teams have set up work intake and delivery so that the sustainability team can really align and work most closely with a technology team in the way that suits that technology function.

[00:18:55] Karen: Thank you. Very good advice for sustainability leaders. You've talked a little bit there about partnering with their tech counterparts. Andy, on the other side of the coin, we have the role of tech leaders increasingly becoming critical for the execution of sustainability goals. What advice would you give tech leaders and their teams as they acquire new accountabilities for sustainability initiatives?

[00:19:22] Andy: Yes, I think sustainability presents a really exciting opportunity for tech leaders. It's a new area that maybe they haven't thought a lot about before, but as was spoken to, previously, the role of technology in scaling sustainability initiatives is huge. The role of data in helping people make better decisions is also huge. If we think about the complexity of any organization, whether it's in the supply chain or the manufacturing processes, or the way they interact with customers, these are all opportunities to leverage technology to help make better choices around sustainability, optimize things, whether it's for cost or emissions or whatever the metric we're looking for. There's enormous opportunity there. However, some of the challenges we have when we talk to tech leaders about sustainability, their minds quickly go to what are the impacts or contributions does the tech function have to emissions within inside the organization?

I think their brains are trying to figure out where they can mitigate the use of cloud compute, for instance, as a source of emissions. That is a good place to start. That's a really relevant thing for them to think about. However, often when we look at the carbon inventory of organizations, the technology function itself and the emissions associated with that doesn't even get into the top 10.

The opportunity for technology leaders isn't actually in reducing their own contribution to emissions. It's actually to leverage technology to help other parts of the organization. This is really exciting, like I mentioned around the supply chain tracking and tracing and helping suppliers on their sustainability journey, whether that's interacting with customers, whether that's the internal operations of an organization, technology is the common piece that cuts across all of those areas.

How can technology leaders position themselves to be a key part in the future of an organization that is striving to be more sustainable? To me, I find that incredibly exciting, and I'm sure once other technology leaders understand what the opportunity looks like, they'll also start to lean into this a little bit more and start to put up their hands when there's sustainability initiatives being spoken about and start to consider it in their daily work.

[00:21:52] Karen: Amazing. Thank you. What I've taken away from what you've both just said, it's the collaboration between sustainability and technology is critical for successful execution. I know both of you work day-to-day on our clients in the business. I wonder, can you share an example of a company or a project that you've seen that effectively aligns sustainability and technology strategies, and achieved some impactful sustainability outcomes? Kathleen, I might ask you first.

[00:22:27] Kathleen: Yes, as you've mentioned, we are fortunate enough to see up close how many organizations are grappling with the opportunity around technology and sustainability, and how the two might come together to achieve some really exciting things. A particular example from this year, from here in Australia is some work that we undertook this year with an organization called Xero.

Xero is a fabulous organization. Anyone in the market around digital software and accounting capabilities will be well familiar with them. Xero essentially provides an ecosystem of connected apps and connections for small businesses to undertake banking and financial elements of their operations. From the start, Xero has had a strong customer focus and has very much been committed to promoting sustainability both social and environmental outcomes across the diversity of their operations, and being global, they really have an exciting opportunity to do that.

They've had a strong track record in this area, well reflected in global rankings and other indices that have indicated they're a leader in their field, and internally, both from the board and leadership level, right down to our grassroots movements around sustainability, Xero has a lot to be proud of.

The challenge that they were facing, and as we've talked about today, is a very similar challenge for organizations across the market is an impasse around how to move forward and really make a significant impact on some of the sustainability challenges that they've set themselves. Over the last number of years, they have made great progress in a number of areas, but really have found themselves asking, how can we make a greater achievement and accelerate our sustainability strategy in new ways? We were fortunate enough to partner with them to really explore how technology might enable the acceleration of their sustainability strategy.

We looked at three key areas. The first area we looked at was an examination of the Xero technology strategy, alongside analysis of the Xero sustainability strategy. We were looking for a few things. We were looking to see how the organization's commitment and roadmap around technology would present, as Andy mentioned, opportunities to embed sustainability and sustainability outcomes. We're also looking at the sustainability strategy and applying our tech thinking on that strategy to try to determine ways in which technology focus or a tech solution or a tech approach might meet that sustainability outcome. The second area we were looking at, we've talked about again today, is how to improve and help align the sustainability team and the technology function so that they can work together in an optimal way. Being a digital company, many parts of the Xero organization would consider themselves technology or technologists, and so the opportunity to drive sustainability through that part of the business is huge for Xero. What the sustainability team came to us to help them work out is how can they best enable and leverage those relationships and existing technology focus to drive sustainability outcomes.

The third area, very much linked there to the second, is around how do we activate and enable tech leaders to play their part in this overall strategy. As Andy pointed out, the role of tech leaders is going to be critical for organizations like Xero, absolutely harnessing the power and the thinking and the influence of those tech teams is critical to the overall sustainability performance.

It was fantastic to work with that organization to help them understand how to drive greater outcome through those elements of their sustainability approach.

[00:26:07] Karen: That's great. Thank you. Andy, did you have anything you wanted to add to that from your experience with Xero?

[00:26:14] Andy: Yes. Like Kath mentioned, Xero is a digital native, and data and technology is the core of what they do. It's no different with how they approach sustainability. We worked with the team to understand their current state and the tools they have in place at the moment, and how they're reporting externally on sustainability initiatives, and also incentivizing people internally.

We worked with them to develop really a hybrid approach of using best-in-breed tools to address some of their sustainability concerns and initiatives, maybe around climate or risk or procurement and things like that, and how we can take those tools and also leverage their internal data platforms. It's a hybrid approach of tooling, working well together to create a suite of ESG tooling in collaboration with existing data platforms.

That approach will allow them to extract as much data and value as possible from those tools, and integrate it with internal systems and internal organizational data to really drive that impact. There's no point locking up all of these insights with inside tools and with inside certain teams. How do we surface them to the right people to help them make the best decisions?

One of the key areas where we were helping Xero is around their climate action and carbon accounting tooling, and helping them come up with a strategy to start to collect that in a more automated approach so that they can move from just data collection through to the analysis phase, and hopefully start to predict what things might look like in the future to help them make those decisions a little bit better.

[00:28:05] Karen: Terrific. Thank you. That was a great insight. I hope people get a sense for what's possible in their organization from that example. Before we wrap up, lastly, let's talk about the role of technology partners in accelerating the execution of sustainability strategies. Why do organizations need to consider the role of technology partners to support their sustainability efforts? Kathleen.

[00:28:33] Kathleen: It's true to say, I think that many types of organizations and many thinking and many specialists are going to be needed in order for organizations to really meet their sustainability objectives. This is really true of technology partners. As we've talked about already today, the execution gap that these organizations are facing is not just a challenge for the sustainability team, it's an organizational-wide challenge. Meeting that challenge really does involve tech-enabled thinking and tech approaches.

The right technology partner can help an organization understand where it is that an organization should focus its tech efforts in order to achieve that sustainability outcome, but also help an organization understand how to bridge this gap between sustainability teams and a technology team, between aspirations and action. Sustainability teams will really benefit from working with a partner who has deep tech expertise, understands how tech functions work, what motivates tech leaders.

Similarly, a tech leader is really often in a position, as we've talked about today, really keen to pick up and embrace the opportunity around sustainability, but really does need guidance that's very contextual and specific to the tech leaders' challenge and the tech function. That's why a tech leader has such an important role to play for both parts of the business.

[00:30:00] Andy: Yes, for sure. The role of the tech leader will be critical like we've mentioned previously. Helping organizations move from strategy through to execution will be delivered via tech partners and working with the internal tech functions. Organizations have set lofty goals to be net zero by 2030 or whatever their sustainability initiatives and goals are, but to make meaningful impact in those areas, we need to develop tech systems that are supporting the organization in transitioning from where they are today to where they need to be tomorrow. Tech leaders and tech partners will play a key role in helping organizations through that transition.

This transition isn't just about technology, it's also organizational change required. How do we structure our teams, people, and processes augmented by technology to really make a difference and start to move from the strategy piece where we're seeing people stuck at the moment really into that execution and making meaningful progress.

[00:31:11] Karen: Well, that wraps up our discussion today. Thank you, Kathleen and Andy, for the informative discussion on sustainability. Thank you to our listeners for joining us for this episode of Pragmatism in Practice. If you'd like to listen to similar podcasts, please visit us at thoughtworks.com/podcasts, or if you enjoyed the show, help spread the word by rating us on your preferred podcast platform.

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