Technology
Data is key to achieving a low carbon economy
Global Banking and Finance Review
Company
By Paris Dufrayer, Chief Revenue Officer, Finboot
As we hope the pandemic retreats, the use of data and digital systems will continue to grow exponentially. Digital systems ‘fuel’ is data, which will never dry up – unlike oil, which we are trying hard to transition away from. Once we are powering digital systems with renewable energy, the circle will be complete.
Our reliance on data is also changing. The abundance of data we are currently experiencing makes it difficult to derive the truth as we are lobbied by external, and often commercial, interests – from political interference to ecommerce marketplaces. They all seem to know what we are thinking before we say it. How do we navigate this world of data overload to ensure that we are being presented with the truth, no matter its message?
Furthermore, organisations (both public and private) were not structured to be transparent – yet it is transparency that builds trust and value in brands, institutions, and governments. There is also the question of who is responsible for data in an enterprise? The IT professional who services the computer systems infrastructure or the CIO whose job description included implementing and managing the companies IT systems?
Drawing analysis from collected data is not straightforward. Data driven decision making works well when it can be contextualised, which is part of the reason why systems were built in silo’s collecting data for a particular use. This changes with the use of Enterprise Resource Planning systems such as SAP but were limited to internal use and occasionally extended to just tier 1 supplies due to heavy costs and infrastructure needs.
Advancements in the cloud and with blockchain are reshaping the landscape when it comes to collecting, storing and presenting data. Today, enterprises are capable of building a data backbone capturing data internally and beyond. Data collecting requires low barriers to adoption. Gone are the days where large enterprises can require everyone in their supply chains to adopt that same ERP.
The myriad of small suppliers needs simple, cost effective platforms to join the digital ecosystem. Here the smart phone revolution is powering the data j-curve. Collecting, recording and analysing data has never been easier as we place the equivalent of a supercomputer in the hands of every employee, entrepreneur and official for less than $25. Anyone of any size and any digital capability can now participate in a wide digital ecosystem, moving data along the digital chain as the physical product progresses through the physical one.
Collecting all data will drive accurate data analysis and decision making, enabling companies to be data-driven and smarter. Furthermore, if the data collecting and recording can be done so with standards then it will drive quality and timely output and also ensure that data analysis is not siloed but can be organisation wide to offer a more accurate, bigger picture of a company and the sum of its parts.
Those first to adopt and apply data standards across the supply chain will reap the benefits and may be able to use its data chain as a competitive advantage when consumer’s and regulators are demanding greater transparency and proof of provenance.
Areas most set to benefit from increased data integrity include Environmental, Social and Governance. However, to achieve integrity we need accountability and to ensure collected data is not sanitised or adjusted, be it wilfully or otherwise. The data needs to be analysed ‘as is’ rather than adjusted to fit any report.
ESG is not a tick box exercise but a new paradigm, which when applied effectively gives companies a competitive advantage. Trusted data is the key – enterprises need to throw away their reliance on spreadsheets and phone calls and move to a platform of trusted data. After all, if we cannot trust the data that they use, how can they substantiate claims about their ESG standing?
Measuring ESG performance effectively needs quantitative metrics – standard data formats and metrics – that benchmark the progress and they need to be recorded to ensure they are auditable and immutable. Enterprises should assume that their ESG claims will be scrutinised by regulators as well as ever more socially and environmentally conscious consumers. Moreover, consumers particularly Gen Z are demanding more granularity of the product, it’s provenance, manufacturing process and social standards adopted through the supply chain. If you don’t collect the data, you cannot present it.
Blockchain databases provide transparency and enable the supply chain agility required in the new normal. For companies, blockchain can be used as a private permissioned framework for a group of stakeholders, such as suppliers, customers and regulators, to manage the sourcing, production and movement of goods dynamically throughout the supply chain. Unlike, public blockchain networks, private ones could be more efficient than current legacy systems when you consider the amount of processing, time and money spent checking the data. This brings synergies across stakeholders, which if implemented effectively, can reduce their environmental footprint.
The risk of not collecting all data is worse than collecting poor data. Only when we identify the true picture can we take steps to rectify and improve. Imagine if we all were found to be exaggerating our decarbonisation claims? The damage would be irreversible. Claims made after the damage has been down doesn’t help Mother Nature.
Data quality will also improve as we see new advances in tagging technology, collect more data from IoT devices and costs are reduced from volume usage. Combining Blockchain with IoT to collect data and AI driven analysis will start to transform the way we do business globally.
The rebuild of our supply chains around ESG measurement, monitoring and management will help bring about widespread acceptance of blockchain as a database that can capture and represents a single source of truth while at the same time driving cross-enterprise transformation and digitalisation.
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