Sustainability-Research

December 29, 2022

Strategic Research on Weather and Climate Risks

In 2021 I performed strategic research on Weather and Climate impact on organizations with asset intense operations using predictions on weather and climate to estimate operational risks

Objective

The design objective of this research was to perform research across environmental, climate, and sustainability topics across executing and operational roles to identify risks in operations.

The expected outcome was to
Identify a short list of operational high-impact climate risks.
Identify primary industries with operational high-impact climate risks.
Operational success factors, product needs, and value proposition.
Synthesize research outcomes into strategies for sustainability strategies.

The hypothesis is that shorter term extreme weather and longer term climate change have a major effect on Operations. Organizations are using predictions on weather and climate scenarios to estimate short and longer term operational risks.

Industries

Interviews were performed across a broad view of industries

Insurance

Insurance companies are highly impacted by extreme weather conditions increased by climate change.

Cyclones, Storms, and Winds
Hail, Flood, and Fire
Earthquakes and Tsunamis

Insurance companies need predictions on extreme weather events to predict cash flow from Cost, Rates, Claims, Expenses, and Cash settlements with insurance customers. Products need to support weather, risk, and impact predictions, integrate with emergency authorities, and evacuation zones from wildfires, floods, cyclones, and drill into customer evacuation information.

“We need predictions on business impact quantification of weather risks, and automation capabilities that lead to an efficient claims-handling process and an enhanced end-to-end customer claims experience.”

Utilities

Utility companies, like power distribution, express their need for

3-day to weekly weather predictions for mobilization of the crew and direct operational work planning.
Seasonal and sub-sessional risk predictions for maintenance planning.
Predictions on # of impacted customers or % of population

The most frequently identified risk parameters on outage and safety are Cyclones, Wind, Wind gusts, % Wind increase, and Lightning. Also causing constraints in transmission capacity. Interviews indicate that Weather is one risk area causing risks for operational incidents and emissions. We are mainly impacted by Storms, Thunderstorms, Long periods of cold, Hurricanes, and Floods. Incident reports are rolled up annually and submitted to governmental authority.

Mining

Mining companies need predictions on

Inversion causing an increase in hazardous dust particles.
Flooding causing damage to open mine pits and raining dams.
Water stress in areas where the water demand exceeds the available amount.
Heat stress in areas where the air temperature, humidity, radiation, and wind speed exceeds a wet bulb globe temperature.

Risk Analysis

Many organizations perform longer-term climate risk analysis on their business to quantify climate induced risks on corporate assets.

Climate risk assessments use the IPCC models to create predications up to 2100 using climate scenarios with, for example, a 2.5 – 3Cº global temperature increase scenario (RCP4.5) or a 5Cº increase as a result of a worse-case ‘business as usual’ scenario (RCP8.5).

The models predict Physical and Transition risks

Physical risks

Temperature Extremes
Coastal Flooding
Fluvial Flooding
Droughts
Water stress
Wildfire
Tropical storms

Transition risks

Carbon pricing
Litigation
Technology
Reputation
Market

Climate risk scenarios provide opportunities for organizations to assess risk levels for new financial investments in facilities and asset intense operations.

Conclusions

“Provide a platform for organizations on a sustainability journey, that quantifies financial and operational risks to the business from weather and climate change, from today to the end of the century.”

Extreme weather conditions, induced by climate change, are presenting operational risks to almost all industries.

Weather predictions are traditionally used by skilled operational staff to take preventive actions. Requirements on environmental intelligence are to move from weather predictions to quantification of short-time-frame impact to operations and longer-term risk to the asset value.

New climate solutions need to quantify the business impact of weather and climate risks across the asset lifecycle, for example:

Operations shutdown (outage, production loss)
Customer satisfaction (reputation, fines)
Sustainability (incidents, emissions)
Asset value (damage, repairs, property value)

“Extreme weather conditions occur more frequently with higher costs.”

“I use weather predictions when approving production units to go off-line for maintenance.”

“I only care about weather during current shifts.”

“Weather conditions may damage our mine, transportation, energy infrastructure, and equipment, which in turn will disrupt operations.”

December 2, 2022

Strategic Research on Sustainability

mats Sustainability-Research

In 2022 I performed strategic research on Sustainability in asset-intense industry operations and solution strategies for operational sustainability.

Enterprise Importance of Sustainability

Companies

Globally, major corporations to small companies are looking to become more sustainable, to reduce their environmental impact while remaining competitive. Companies are being held responsible for all Environmental, Social, and Governance (ESG) aspects of their supply chains and operations.

Investors

Sustainability and ESG have also become topics in the trend toward responsible investing. Investors are increasingly using sustainability scores and ESG metrics to evaluate potential investments given the promise of higher returns. This has pressured companies to be responsible with their resource allocation, strategic in their decisions, and transparently report their sustainability disclosures. Se IBM ESG reporting on www.ibm.com/impact.

Policy and Regulation

Global policies and regulations have increasingly aligned with international commitments toward ESG. The UK has established an environmental and sustainability policy that allocates resources and staff toward implementing established measures for ESG practices. The European Union (EU) has been a global leader in enacting ESG regulations, making clear that sustainable development will be an utmost priority in its decisions. It presents a holistic approach to the United Nations’ (UN’s) 2030 Agenda for Sustainable Development across member states, with clear measures coming from the European Council and European Parliament and budget allocations toward these goals.

Customers

As companies are becoming increasingly customer-centric as part of their competitive strategy, customers are increasingly demanding sustainable products and services. This strengthens the brand and reputation of companies with transparent supply chains that can guarantee fair labor practices and environmentally friendly operations. In an unprecedented way, customers now have a voice that can influence management decisions through their buying power.

International Community

With the global consensus brought about by the UN SDGs and the initiatives they have prompted, the international community has become a powerful force to mobilize funds and enhances cross-sector agreements for the implementation of cross-cutting ESG initiatives.

Sustainability maturity

Sustainability maturity levels.

Organizations are initially in a Compliance stage, reporting on mandatory regulations using manually collected data, often challenged by data at scale and low quality. Actions are taken to start collecting environmental impact operational data from existing environmental critical assets and operational workflows.

Most organizations move to an Optimization stage, with a defined sustainability strategy, and started taking optimizing actions by defining goals, monitoring targets, running conservation projects, and acting on KPIs based on data analytic insights. Actions are taken to identify and act on bad environmental actors and start operational change programs to improve carbon footprint through emissions, consumption, sourcing, and waste in operations by environmentally impactful assets and workflows.

Some organizations transition into an Innovation stage, with investments in product and service innovation or a sustainable business transformation. New products are created through a holistic sustainability viewpoint across supply, operations, and product delivery.

Sustainability, Environmental and Operational Processes

Sustainability, Environmental and Operational processes are often to be organized into separate process areas and process owners.

Sustainable enterprise processes, owned by the corporate sustainability function, including definition and management of sustainability goals, metrics, and reporting. Strategies are defined at the corporate level and reported using sustainability disclosures and standards. The granularity of goals and metrics is by year, using a base year, target year, and trends per year. Metrics are decomposed and reported by the significant regions or lines of business. ESG metrics are given in absolute and relative terms often using a coarse-grain classification of emission sources and types significant to the industry.

Environmental processes are owned by Safety and Environmental corporate functions and the Operations business units. In the Safety and Environmental corporate functions, we find process owners as the environmental manager managing environmental policies, goals, impact, permits, consents, and compliance. The environmental manager also manages incident investigations and resulting changes to operational and environmental processes. The focus is set on optimizing the performance of environmentally critical assets and identifying outliers across instances and operational types of locations and assets.

Operations teams are responsible for implementing and complying with environmental policies on incidents with environmental impact, taking corrective actions, and reporting on environmentally impactful operational activities. Such activities may be the consumption of energy and material, emissions through combustion and incidents, and waste generated from maintenance. Asset lifecycle presses involve purchasing, supply, transport, storage, usage, and waste management.

Operational sustainability data is recorded and managed at a fine-grained resolution through the operational workflows. The tracking of ESG metrics enables environmental performance analytics and resulting corrective actions to be taken by the operational team at the scale of asset instances and asset classes. The fine-grained data managed in operations are synchronized with synchronized management systems and reported through sustainable enterprise processes.

Design Considerations

“Provide a platform for organizations on a sustainability journey, to report on environmental impact and manage improvements, using their existing asset infrastructure and operational asset management workflows.”

Organizations seek to

Establish a corporate sustainability baseline.
Execute a corporate sustainability strategy and meet targets.
Maximize asset service life and reduce environmental impact.

Sustainability, Environmental and Operational processes have specific objectives. The outcomes of these processes are coupled. Workflows are connected, and workflow data is shared.

Operational data at the asset level is required for operational sustainability workflows to be actionable.
Operational processes generate rich, diverse, high-speed, and high-resolution data.
Only environmentally significant operational data needs to be selected for sustainability analytics and reporting workflows.
Granularity of operational data can, should, and will be lost as data is aggregated and synthesized moving into sustainability workflows.

November 26, 2021

Sustainability Personas

mats Sustainability-Research

In 2021 and 2022 I performed strategic, user, and persona research on climate and sustainability for operational sustainability capabilities in IBM sustainability solutions.

This article overviews the design research insights on the sustainability and operations manager personas.

Evolution of the Sustainability Officer Role

The role of the sustainability officer has significantly changed over the last few years. Looking 20+ years back, the sustainability officer was funding and overseeing profile corporate projects on sustainability and social responsibilities.

Over the last few years, the role has evolved, significantly, at a wildfire pace. The sustainability officer is no longer an environmentalist, and a ‘tree-hugger’. The sustainability officer has become a strategic executive at the corporate level. The role is now important to corporate finances, investors, and shareholders. And more externally exposed through transparency to corporate sustainability strategies, objectives, and disclosed key results.

The sustainability role is now integrated with the executive team and part of the inner executive board, and working alongside the CEO, CFO, COO, CIO, CDO. Sustainability responsibilities are aligned with finance, money, market share, corporate survival, and business (re-)innovation.

Sustainability Organisation

The sustainability officer is leading a corporate function with an inner core team of up to 10 team members.

Team members are

Manager of sustainability.
Experts in data acquisition, data analytics, and sustainability reporting.
Experts in environmental, social, and governance topics.
Experts in governmental regulations.
Experts in physical climate risks and transitional business risks.
Experts in industry-specific sustainability topics like; emissions, circularity, forestry, mining, and energy production.

The team is supported by other corporate functions, increasing the extended team to 10s to 100s contributors

Finance and Marketing.
Data and IT.
Technology and Engineering.
Health, Risk, Safety, Environmental, and Compliance.
Procurement and Distribution.
Operations.
And industry-specific functions like Finance; Mortgage, Residential, Commercial, Loans, and Investments.

The Sustainability Officer

Kristina, the Sustainability Officer persona

Devices

10+ years of experience

Also known as: Chief Sustainability Officer, CSO, Sustainability Manager

Master degree – Sustainable Resource Management, Biochemistry, Chemical engineering

Sustainability reporting systems and Financial systems, Email, SMS

Responsibilities

The sustainability officer is responsible for

Leading the sustainability mission and team.
Translating the corporate business strategy to a sustainability strategy.
Establishing principles and targets for implementing the sustainability strategy.
Gathering, defining, and implementing sustainability best practices.
Gathering data for mandatory sustainability disclosures.
Reporting on sustainability KPIs monthly to executive boards.
Reporting through mandatory sustainability disclosures.
Reporting on broad areas of corporate, environmental, conservation, innovation, people, and society goals.
Reporting to investors, analysts, and sustainability rating agencies.
Engage other corporate functions, like operations, environment, and safety.
Engaging operations on sustainability projects implementing corporate targets.

Tasks

The sustainability officer is performing the following tasks

Managing day-to-day sustainability operations.
Educate the board of directors on sustainability.
Educate the organization on corporate sustainability strategies and targets.
Work with internal business stakeholders.
Work with the investor relations team and investors.
Build skills, engagement, and momentum in the organization.
Facilitate strategy meetings, target setting, and LOB conversations.
Facilitate corporate sustainability improvement programs.
Work with operations stakeholders on data collection, processing, and analytics.
Perform data collection, processing, and analytics.
Assemble sustainability KPIs for disclosures.
Ensure audits on sustainability disclosures.
Keeping tabs on sustainability issues.
Perform risk scenario analysis.

Pain-points

The sustainability officer is experiencing the following pain-points

The scale of data and data quality. Often up to 2000+ metrics and associated data sources.
Lots and lots of reporting. Often 20+ assessments and frameworks.
Frequency of changing regulations and standards.
Manual data collection across the corporate, supply chain, and service providers.
Lag of data availability for steering and reporting.
Accessibility to data in (some) global regions.
Difficulties to trace scope 3 emissions back through the chain of suppliers.
Data quality controls to avoid audit failures.
Sustainability auditing as strong as financial auditing.
Ownership and monitoring of improvement programs.
Understand the investor scoring KPIs.
Ability to backcast and forecast KPIs.

“I want to stop reporting and start acting.”

“I’m overwhelmed with investor and analyst questions on our sustainability assessments.”

“I have stopped using the word CLIMATE – Too existential and scary.”

“Regulators and investors are asking for it, customers are demanding it, and employees are expecting it.”

Operations Officer

Greg, the Operations Manager persona.

Greg, the Operations Manager persona

Devices

5-10 years of experience

Graduate or Bachelor degree. Engineering

Maximo Suite, Business Operations systems and Financial systems, Email, SMS

Safety first

Operations have the responsibility to not put the plant, staff, and operations at risk. Balance demand, capacity, and risks to operations.

Priorities are

Safety first.
- Always prioritizing the safety of employees, the local community, and operational equipment.
Deliver on operational target.
- Optimize performance to deliver on production plan.
- Assess the impact of risk factors on shift operations.
- Mitigate risks to ensure safety.
Ensure rules and regulations are followed
- Record production losses, incidents, and emissions.
- Monitors to stay within emission rights and certificates.
- Tracking emissions down to assets.
- Request new licenses or request production to move to other plants.
- Identify and analyze defects and perform root-cause analysis.
Maintain operational resources
- Predicts consumption demands and maintenance windows for units to go offline.
- Plan and schedule maintenance.
- Plan and schedule operational changes.

Climate

Operational impacts

Production parameters and forecast accuracy; Solar, Cloud coverage, Wind, Hydro.
Impact on demand, price, production load, capacity, transmission, delivery, and plant availability.
Weather forecasts lack integration with operational systems.
Increasing climate-related incidents causing increasing costs.
Unpredictable weather impacts operations from; Hurricanes, Storms, Thunderstorms, Long periods of cold, Floods, Landslides, and Erosion.
Risk of staff safety and disruptions to production.
Lack of interest in unquantified weather risks and proactive risk planning.
Damage to assets, impact to 3rd party, fines, claims, and corporate reputation.
Cost of maintenance, repair, and replacement.
Costs of hardening or moving assets.
Cost and funding for climate scenario analysis.
Climate impact on asset replacement strategies.

Sustainability

Manage operational targets; # emissions, # incidents, # worker injuries.
Manage emission certificates.
Manage carbon performance reporting and audits.
Sustainability reporting of carbon footprint is generally uncommon.
Sustainability data can/is based on operational data in SCADA systems.
Evidence of carbon improvement programs is anecdotal and fragmented.

Needs

Operationalize identification, assessment, and management of climate risks.
Business impact and attention to the weather, environment, and climate conditions as part of existing operational workflows.
Short-term weekly forecasts.
Longer quarterly seasonal predictions.
AI-supported decisions for reliable and predictive operations.

Pain-points

Unplanned downtime and losses in productivity.
Many information sources; views and lack of correlation across production, plan, work orders, operator logs, assets, and risk.
Worker awareness of safety and reporting.
Ensure compliance with regulations and reporting.
Lack of integrated weather risk forecasts.
Too many operator-level alerts and notifications.

“Safety first!”

“Climate conditions can cost us a lot of money and loss of customer satisfaction.”

“Sustainability happens at some other place with some other people.”