Embrace "Green IT," AI and auditable data to accelerate your ESG journey

In our latest episode of our Energy Transition Talks series, Marion Braams, Vice-President, Consulting Expert at CGI sits down with Peter Warren to share her expert perspective on emerging trends in IT, sustainability regulations and reporting. Specifically, they discuss different ESG initiatives across regions, the evolution to and impact of legally mandated standards and certifications, plus the role of green IT and AI for optimizing data and ESG reporting. 

New laws mandating ESG reporting create fairness and accountability

Environmental, social, and governance (ESG) factors are becoming increasingly valuable for businesses beyond just sustainability objectives, as they can impact risk management, stakeholder expectations, innovation and operational efficiency. 

Until now, greenhouse gas (GHG) reporting and emissions reductions have been voluntary for companies, meaning companies that invested in being "greener" faced higher costs than those that didn't. However, new laws, like the CSRD in Europe and the ISSB in the US, are making GHG reporting mandatory, creating a more level playing field and fostering more consistency and accountability across industries.

As Marion explains, without standards developed to measure GHG emissions, people were measuring things in their own ways. “You can't just look at something and know how much greenhouse gases (GHG) it contains, like a beer. You cannot just look at your beer and know its cost or energy use. It depends on how it is made, how much time it was stored, for example. It becomes really complicated to calculate things.”

Companies can apply for certifications from organizations like EcoVadis or the Carbon Disclosure Project to verify their GHG emissions. These certifications require companies to use standardized methods to estimate and report their GHG emissions.

Visit our Energy Transition Talks page

Transcript

Pete (00:01)

Hello everyone, welcome back to another installment on our continuing story about energy utilities, the changes we're going through. And today we've got a great opportunity to explore environmental social governance, commonly referred to as ESG. Certainly our industry is going through decarbonization. Carbon tracking has become a huge issue for us. The source of minerals from around the world for electric vehicles is a concern.

All of this comes back to hitting us in the wallet at times on taxation and other components. And Marion Brahms is our expert today. Hi Marion, do you want to take a minute and introduce yourself?

Marion Braams (00:43)

Yes, thank you, Piet. Yes, I'm Marion Brams. I'm a vice president consulting expert at CGI. I'm with CGI now for seven years. And my specialty is complex problems. So I really like to do complex problems, especially if they're on the safety or sustainability field. And my background, I have a master in informatics.

Pete (01:11)

That's really cool. Well, we're going to try and make ESG less complicated today. Thank you for your expertise on this. But because you've looked at the complexity of this, I mean, it really breaks down to a bunch of areas. Why don't we start with standards? There's different standards in Europe and North America. Maybe you could give your viewpoint on those and how they sort of apply to this.

Marion Braams (01:16)

Yeah.

Yes. So what you could say is that you don't know how much greenhouse gases are in something if you just look at it. So if you just had a beer, how much did it cost? You don't know. And so standards have developed to measure things because people could measure all in their own way. And it didn't make any sense. So standards evolved.

And also, you could write that you had ambitions, but nobody knew if you really were following these ambitions. So you also have standards, but you also have certificates. So there are certifying companies like Ecovades or the Carbon Disclosure, or there are many. And so what you can do is you can apply for such a certificate. And then they also ask,

that you use these standards to estimate or model your greenhouse gases emissions. And at the moment, we see that laws are coming. So I'm actually very happy with the laws because what you saw is that it was all voluntary until now. So companies who had, let's say, a green CIO that could do these things and companies who didn't want to, they didn't.

And so let's say that there were some costs involved in being more green. Then the companies who were more green had more costs than the companies who didn't do that because everything was voluntary. And now laws are coming. And that means that everybody has to follow the same rules. So it's more a level playing field. And so what you see is.

Europe has a law which is called CSRD, which is easy to remember because CSR is also part of ESG. It's corporate social responsibility, but it doesn't stand for that. But CSRD. And so the Americans have something which also has four letters, which is ISSB. And they look sort of the same. But obviously, everybody has to have their own standards. But then obviously, they are sort of nearly the same.

Pete (03:58)

I know it's very interesting and what we're seeing in a global economy too is the interconnections between those things. The ISO has also released 147 which is now a way of tracking carbon intensity of any energy source from source to completion effectively from making it right through to FOB freight on board the dock of whoever you deliver to whether it goes through a pipeline, a truck, a boat, however you get it to them.

And so the aspects here are very interesting. And the fact that it's sort of been made a common playing ground even has affected the banking industry. We know that some banks have actually cut back on some of their ESG funds because they were not getting the data as you referenced. Inequality or convenience way that they could actually certify that, you know, these investments are there. So it affects more than just our industry.

How do tools and materials play into this and how are the calculations done to actually simplify this as the laws come forward? Is it well understood? Is it relatively straightforward?

Marion Braams (05:03)

No, it's not relatively straightforward. It's rather complicated. And so let's go back to the beer you had or didn't have. And so obviously you have a long supply chain before you had your cold beer. And there are lots of steps. And in all these steps, there is the energy used. But not everything is as obvious as it is. So you cannot just look at.

your beer and know it. It depends on how it is made, how much time it was stored, for example, all that sort of things. And so it's really complicated to calculate things. And so what you see is that when a number of companies start to disclose their ESG and then make reports, obviously there are others who also think, well, this seems to be a very good marketing thing.

Let's also make reports. They don't have really results, but they just want to report. And so as long as you don't have any data in your report and you have a lot of beautiful stock photos, it could look like OK, but you don't do anything. And so the calculations are really complicated. And there are a lot of standards which you can use, but you really have to get into it and to see what is relevant. And.

In the European laws, relevance is called material. So if it is material, which means it's cyclic vacant or it's relevant, then you only calculate that. You cannot calculate everything. That would be impossible, I think.

Pete (06:46)

Yeah, no, it's breaking it down. I think the initial aspect of a lot of executives was ESG would be an accounting job. You know, you put some people together, they read a few things and then they say, here's my report. And I think that's how the first generation of a lot of reports were done. But now it's really getting into the systems, having the data, the audibility of tracking that both internally on the things that you're making, Scopes 1 and 2, but also into Scope 3 you reference there. So...

You know, we talk about green IT, just talk about the shift that's happening. You know, people talk about the rainbow of energy colors, green, red, green, purple, gray, and so on of different things like hydrogen and so on. Getting away from that a little bit in our industry and moving towards more truly tracking the carbon intensity of the energy source and looking at it. But green IT and optimizing the back office as well as the operation systems is still a big thing.

What's your viewpoint on how that plays in, the changes in the computer systems and so on?

Marion Braams (07:47)

Yeah, so I think you have to see that there are two different ways to look at it. You have green IT and you have green by IT. So if you want to have green IT, the first thing you have to ask in my business is IT significant? Is it material in the first place? So is my industry IT intensive? And so if you have a website where you...

have a lot of customers and you have... That's very different than when you have an industry where you have a lot of energy use on production of your materials, but you supply in bulk to only a few customers. So then maybe IT is not your biggest worry. And so if your IT is not your biggest worry, then green IT is really not so important for you. The other thing which is green by IT,

is something else, which means you are using IT to become more green. And I think that is really very important because one of the things is that the new laws which are coming, they want auditability. And so it means that you have to show that what you did is correct. And as I said, you know, you don't know exactly. So what we do is we do a lot of estimations.

But then maybe two or three years later, you could say, you know, we did not do our estimations correctly. So you would like to reassess the data of three years ago, but you still need the data. If you don't keep the data, you cannot reassess. And so you can use IT in a number of ways. And so the first one is the data gathering, storing, retrieving, the reporting. And so.

how your IT portfolio looks helps you to be that it's easy or difficult to get all this data. And so if your IT is all over the place, that is more difficult than when you have really your portfolio, you have spent energy in doing the digital transition in the years up to now. So that is one way IT can help you to really be sure of your data.

Then you can use IT to do trend analysis or what if hypothesis. So if I change something in my production process, something in my transport, something in my supply chain, would it even matter? And so you can use IT for that. And then also you could have less waste. If you optimize your business process and you do digital twin or whatever, and so you know what you're doing,

It could be that you find ways to reduce waste and waste is obviously also wasted energy to produce the waste in the first place. And cybersecurity sometimes is seen as something else. But actually, if you have a manufacturing company and you have an incident on cybersecurity, you could have a lot of waste on that moment in time.

And so if you don't want that, that would be a very different reason why you don't want cybersecurity. And also if you have a cybersecurity incident and you have to go from one extent to another or whatever, there is a lot of energy involved in having a cybersecurity incident. So it could be a very different reason why you also would like to have this done.

And I don't know, Peter, do you want me to talk about AI in this or AI has maybe also already been spoken about enough?

Pete (11:38)

Yeah, let's, no, we'll touch on AI in a second. I just wanted to maybe highlight a couple of points you made that I love. One is, it is about the ecosystem. So it's beyond just looking at what I have. I'm looking at my role in the entire ecosystem and achieving specific outcomes. And it's also the shift from ESG being something that's being done to me. I remember hearing one executive talk about, oh, this is going to bankrupt us.

to what you've actually done is a highlight of the fact that ESG drives out, if you do it properly and look at it right, bake it in like security. You bake in security, now you don't add it on, bake in ESG and it actually drives efficiencies to your point. It drops costs, whether it's simply less processing time on a computer.

or actually reducing losses out the back door of a warehousing facility. It's the same thing. It drives it out. It gives it a different focus. So it should be used more as a tool. And AI is, of course, one of those interesting tools everybody's talking about. It always starts with the use case, and do you have the data to get it done? How do you see that playing into here? That'd be a great thing to touch base on.

Marion Braams (12:49)

Yeah, so the first thing you could look at is, let's say that you have to start a journey on ESG reporting because these laws are coming and you think, you know, I'm not going to wait for it to be mandatory. I'm going to use this year as a sort of trial year. And so you look in your ERP or CRM or whatever and no CO2 data is to be found anywhere. And so, and what you could do,

not only look at your structured data, but also unstructured data. And so AI would be great to say, you know, we publish all our interviews, all our podcasts, everything on our website and ask AI, do you mention anything about mobility of our employees anywhere on our website? And then you could ask AI. And so you could really easy use AI to

find a starting point on what you already published anyway on mobility, on material use, on where your offices are, on green energy, on energy reduction, on whatever you did. And so that would be, for example, one thing. Obviously, another thing would be to look at what others do. So you could not only use it for your data, but then you could say,

OK, now I have somebody who's in the same industry, and this is the website of them. What do they say they are doing? And that could really help you to see what realistic and unrealistic ambitions would be. And so that would be just two examples of how AI could help you to start on your ESG journey.

Pete (14:30)

you

Yeah, that's brilliant. It's about, and I think that's the beautiful thing about AI is that we're applying now, the data probably exists in various formats in the organization already. How do I free it up and making it meaningful to the specific application I want in the use case? And that we're doing that across the board. Time's ticking on this, so we'll wrap up in a second. Any final thoughts or areas you'd like people to think about and I'll give you the final word here.

Marion Braams (15:04)

Yes, thank you. Well, one I think is when you start on your ESG journey, it can be daunting to find the data because when you start, you find nothing. And so it's not your fault. That's just what you should expect if you start a completely new journey. It's like learning a new sport, the first lesson you think I will never learn. And so that would be one thing. Don't be disappointed the first day you don't find anything.

That's just how it goes. And also, it doesn't matter where you start. So in ESG, if S data, social data, is easier to find, start there. If there is something your CEO already finds very interesting, start there. Because the journey will be the same, and don't spend too much time looking at where to start. Because at the end, you will have to find all the data. And so.

Just start. Starting is, I think, the important thing and expect setbacks. That's how it's going.

Pete (16:11)

I think that's brilliant. I heard the phrase years ago, it's paralysis through analysis, that people stop moving because they so caught up in what to do and where to get it. I think your recommendation of just get started with what you've got and then find the gaps as you go is probably the best agile approach to getting the outcomes they want. Thank you very much, Marion. I appreciate you hugely. Great working with you and everyone on the call. Thank you for your time and we'll see you in the next one. Bye -bye.

00:00 Introduction to ESG and its Importance

01:11 Different Standards in Europe and North America

04:25 Tools and Materials in ESG Calculations

07:42 Green IT and Optimization of Computer Systems

11:31 The Role of AI in ESG Reporting

15:04 Getting Started with ESG Reporting