Sustainability Playbook for Business Leaders with Daussault Systems (CXOTalk #711)

Sustainability Playbook for Business Leaders with Daussault Systems (CXOTalk #711)

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If you are not taking into account  environmental issues, social   issues; if you are not in sync with  the society in which you're living in   or you're operating in; your company is  probably not going to be there in a long time.  We're speaking with Alice Steenland. She  is the chief sustainability officer of   Dassault Systemes. Alice, tell us about Dassault  Systemes and give us a sense of your role as   chief sustainability officer. Dassault Systemes, for those of you who don't know   us, we are sort of a world leader in what we call  virtual twins, so creating a virtual universe in   which you can in fact invent, design, and create  anything. That's what we do. We make those for  

companies and also for universities and different  sizes of organizations and types of organizations.  I am the chief sustainability officer there.  It's a newly created function. It was created   last year. But I have been the chief  sustainability officer for many years   in other organizations and have been  working in this field for about 20 years.  Why did Dassault Systemes create this  chief sustainability officer role?  It's a company that has had (in its  mission) a corporate purpose, as we say.   This idea of enabling sustainable innovation  to harmonize product, nature, and life.  

That's been there for many, many, many years. I think the idea was that the virtual universe (in   and of itself) helps increase the sustainability  footprint of an organization because if you are no   longer making thousands of physical prototypes and  trying new manufacturing processes that you have   to redo over and over again because you don't know  if they will work, you are wasting massive amounts   of resources, of energy, of water.  You are being very wasteful, in fact.  Doing all of this in a virtual world means  that you're doing it the first time right.  

You are being, in many ways, more efficient  and more sustainable in the use of resources.  I think what has changed now and what pushed the  company to create this function and create this   position is really that the world has changed so  much. Not only do people want to think, "Oh, well,   I'm doing this better." They want to know exactly  how they're doing this better. They want to  

measure the CO2. They want to measure the savings  in terms of water. They want to measure their   impact on the environment, understand what they're  creating, what its impact on the world will be,   and that's because the expectations are  rising from investors, from consumers,   from everyone across the board today. There's a kind of rising tide of interest   in sustainability. What does it actually mean? In  the press, it's kind of used in a very loose way.  I've been in this space, as I mentioned, for a  long time. I have seen, in very different parts of  

the world, it actually has different connotations. It's not only a word that can be used very   differently in English. So, I'm an American.  I've used this word for a long time.  Not only does it have different  interpretations here, but different   interpretations across the world. I'll give  you one definition – actually, two, if I can. 

The first one is the actual meaning of the  word sustainability, the original meaning,   which was to say, if I am a sustainable company or  sustainable organization, it means I will be here   in 20, 30, 40 years. I can sustain my activity. That's where the original concept came from,   which is that if you are not taking into account  environmental issues, social issues; if you are   not in sync with the society in which you're  living in or you're operating in; your company   is probably not going to be there in a long time.  That's actually, from an investment perspective   or financial perspective, what we've seen.  We've seen, for many years, sustainable or ESG   high performers basically outperforming  the market over long periods of time.  I think that's one way to think of it.  It really is about the sustainability,   the viability of the organization over time. The second way of thinking about it is this ESG  

terminology: environmental, social, and  governance issues. This is the definition   used by the investment community to talk about  sustainability. It just gives you an idea of what   are some of the things that they're looking at. In fact, a funny fact is that they used to call   this extra-financial or non-financial information,  which essentially meant that any indicator, any   process, or any information about the organization  that is not purely about revenues and sales   can be considered material from an ESG  perspective. So, it is a very broad topic.  When you, as a sustainability professional,  talk about sustainability in business,   are there components? How do you break  it down? How do you think about it?  ESG, in itself, is a framework,  right? You're looking at the E, the S,   and the G. That's one type of framework. Another  type of framework is taking all of those issues  

and looking at the most material issues  for your sector and for your company.  Obviously, the issues that I'm  focused on working in a tech company   are not the same as my colleagues who do the  same job in a food manufacturing firm, right?   They're going to be very focused on agricultural  issues, land use issues, biodiversity issues.  I am very focused on: • How do you green IT?  • How does IT green the rest of the economy? We're all working on slightly different aspects.   So, materiality is another term you hear a  lot, and that's a framework for thinking about   which issues you prioritize within that. Then there's another framework that's very  

commonly used, which is inside-out. Starting from,  what are my own operations? For Dassault Systemes,   what are our direct operations? Where are  our priorities in that circle of influence?   Then, what are we doing for the rest  of the world? What are our products and   services doing to impact the rest of the world? Then beyond that, even beyond our customers, how   are we engaging with the broader community, other  types of stakeholders, regulators, investors,   all of our supply chain? How are we interacting  with that larger circle? That's another way of   thinking and working on these topics  is the inside-out type perspective.  Correct me if I'm wrong. It seems like  there are two components, two aspects. One   is the business performance dimension. Then number  two is something that strikes me as a little bit   squishier, a little bit more vague, which has  to do with contributing in a positive way to   the world. Is that a correct way to view it? [Laughter] That is one way to think about it.   For example, there are different reporting  frameworks out there. Some of them are focused on  

what are the ESG issues or the sustainability  issues that will be most material financially   within the next five to ten years. That's one way of looking at it, and   that's really about performance. Like, let's  prioritize those issues that are going to actually   translate into a direct financial impact  in the medium-term – relatively soon.  Then there are other reporting frameworks in terms  of what you're supposed to be accountable for   that actually come from the stakeholder  perspective. What are all of the stakeholders   of the organization, and that includes the  planet (the natural environment)? That includes   civil society. That includes obviously your  employees, your suppliers, and your customers. 

But you can take that stakeholder perspective  and say, "What is it that our company is doing   that impacts them?" If we know that's important  for our stakeholders, eventually, that will be   important for us, and eventually, it will have a  financial impact. If we don't take into account   those stakeholder perspectives on what they care  about, the issues they care about, eventually   that's going to come back to sort of get us. Those are two slightly different ways   of looking at that set of issues  that we've got in front of us.  There are a number of different pieces  that come into play when you talk about   sustainability, and so it seems like the  equation becomes very complex very quickly. 

You could say that. I would say it's  becoming even more complex because you've   got concepts like not only zero-carbon;  now we've got the circular economy.   There are these different ways of  thinking about how to get to the solution   or how to find solutions to get to  a much more sustainable economy,   and they are going to be diverse and multiple  and there will be lots of ideas out there.  In fact, we're seeing this rise in interest in  the topic on all sides: regulators, consumers,   et cetera. That means a proliferation of ideas  of, "Oh, have we tried this? Can we try this?"  We need those new ideas. We need these, what I  call moonshot ideas, crazy ideas. But that does   put us in a situation where it's becoming a very  noisy field with lots and lots of information, new   initiatives being launched, new legislation being  launched. And so, I think, for folks that are  

new to this topic, sometimes it can actually be  quite overwhelming – even just the jargon. Yeah.  One of the things that you've mentioned a  couple of times are the economic impacts.   Would you maybe explore that for us a little bit? Let's just take what we've seen, I'd say in the   last couple weeks. For those of you who have been  following the news on this, several fossil fuel   organizations had been hit by legal decisions,  regulatory shifts, and a bunch of sort of   unexpected (I would say) surprises in terms  of questioning the core business model.  This is something that, for folks working on  sustainability, has not come as a surprise   because this type of event where you have sort  of a sudden loss in the valuation of a company   is quite common in the ESG field, which is  that a topic like human rights, climate,   or the way you treat your employees is not  material until one day it is. It becomes  

very material all of a sudden, so there  are a lot of these shocks to the system.  The health and safety on oil rigs hit BP very  hard many decades ago, and there have been   these repeated sort of shocks to the system.  This is what we've called in the ESG investing   committee for a long time – because I worked  in finance for many years – "stranded assets".  These are assets that people own. They're  in stocks and portfolios across the world.   People have stakes in these companies, and they  all of a sudden one day become stranded because   the entire ecosystem around them has changed,  the winds have changed, the tide has changed,   and there's been some shock to the system  that creates very drastic drops in valuation.  That's actually what we're starting to see with  fossil fuels, but it's what we've seen with some   other companies in terms of human rights abuses  in their supply chain, et cetera. It's a very,  

I would say, material financial issue. I'm not  even talking about the legislation that's coming   online, which is going to be a direct cost  for companies that are not ready for this.  Why is there this intersection  between sustainability and ethical   purpose? That seems less clear to me. One of the (I say) thorniest topics comes back to   your earlier question about, is there a financial  side of this, and then sort of like a social   kind of side of this? This is a space  in running an organization today where   those worlds are sort of mixing.  It makes for a very thorny topic.  What we're seeing now is employees really  speaking out very loudly about what they   want or they don't want their companies to do in  terms of policies, behaviors, and the way they   engage with customers and things like that. We've  seen it obviously in the areas of racial justice,   but also in the areas of climate where actually  the employee base is getting organized and saying,   "We want more of this," or "We want less of this." That never really happened before. That's really  

changing the dialog and the way people are  thinking about the role of business in the world.  Before, you had your business side, and then  you had people's ethics and their personal,   you know, what's important to them personally,  et cetera. These were two different spheres.  What we're seeing is this merging  of the two spheres. That is making  

it very tricky. I think, for CEOs today,  it is very complicated to walk that line.  There is this very strong balance then between  sustainability and the corporate policies, as they   affect the social fabric, just in general. Yeah. I think so. On the flip side, one of   the things that is, I would say, getting easier  in this topic is that I think the financial upside   of doing more on environmental, social, and  governance issues—and doing better in that area—is   becoming much more clear as well, right? It's  becoming trickier, harder, and more complicated,   but the upside, I think, is becoming much clearer. You have the rising generation of millennials.   Very clear about the fact that they will  associate, buy, and invest in organizations   that prioritize environmental and social issues.  They're putting their money where their mouth is,   and what we're seeing is a generational shift  in wealth towards that category of consumer,   if you will, or citizen. That is just going to  change the way you think about marketing products,  

about creating new products, about  engaging consumers, and that's a big   part of the new upside to sustainability,  which is a very clear demand on that side.  Dassault Systemes headquarters is in France,  and so we have a very large footprint globally,   but a very large footprint here in the EU.  We're subject to the EU regulations, and we   are seeing things come online that are clearly  going to change the playing field and are going   to give a huge advantage to companies that know  how to manufacture with zero carbon emissions,   that know what a circular product looks like,  and have an idea of a business model of how to   make that work. Those companies are going  to be positioned very well, and it's very   clear that that's going to change the landscape  and give it a real opportunity and advantages   to companies that move quickly on this. Alice, is sustainability, therefore,   a net positive or a net negative (from  an economic standpoint) in business?  In the minds of most leaders around the world, it  is right now changing quite quickly. I think this   area, for a long time, was seen as kind of like  compliance. It's like we have to do some of these  

things. It's not a legal requirement, but really  everybody is expecting it from us, so we've kind   of got to do it. It's a cost center, et cetera. Now, I think we're in a very different space,   which is, if you just take the energy sector  and the massive global ambition on greening   the energy sector—and that's just one  sector but it's a very obvious one—if   you're an energy player and you're not well  positioned on renewables today, your business   is going to be in trouble in a few years. You  need to understand the dynamics of this change. 

I think more and more folks are seeing that this  is not about just sort of making people happy   or doing the right thing. This is a  massive global business opportunity.  In fact, there was some research done a few  years ago talking about the energy transition   and highlighting what sectors had to gain from  the innovation, the innovations coming online,   and the revenues that would come from those.  We're talking about $12 trillion annually   of new innovations and new opportunities for  growth for different sectors. For the companies   that are well-positioned on this, I think  this is a wonderful, positive opportunity.  Arsalan Khan says on Twitter,  "All organizations use IT,   and the greening of IT  would definitely help them."  Absolutely. He asks, "Do organizations of  

different sizes and industries share their lessons  learned with each other because, without that   sharing, sustainability would be very piecemeal?" The interesting thing about the tech sector is   that it is the only sector where the emissions  are exponentially growing year on year. That's   because a lot of the other sectors are using  technology to become more sustainable and   green their operations. It's a strange paradox,   but it is calling increasingly more and  more attention to the issue of green IT.   You know I work for a software company. How  do you green software, is becoming an issue.  Our friends at Microsoft just launched a green  software foundation a week ago. This is becoming   a big thing. How do you green software? How do you  make code that's greener? The entire IT sector,  

especially the hardware producers, are very  focused on this (the leading actors around the   world) because it is a serious issue. To the question about collaboration,   just to give an example, we are part of a couple  of organizations. One is called The Global   Enabling Sustainability Initiative. That is  an organization that brings together companies   from the entire ICT sector – telecoms, hardware  manufacturers, software manufacturers – bringing   us together to say, how can we be more  sustainable across the entire ICT sector?  We just launched, with that organization,  something called Digital with Purpose,   which will be a global certification scheme,  a little bit like organic food today.   You will get a label. If you are a  high-performing, sustainability tech company.  

We're coordinating also with governments around  the world to say, when you do your procurement   and you are in government, this will be a  sign of quality. This will be like a quality   certification, like an ISO certification (in the  future). That is an example of collaboration.  Another one is we're a founding member  of the European Green Digital Coalition.   That's a similar idea backed by the EU, so it's  very stakeholder interactive. [Laughter] We've got   government officials, regulators, business people,  and nonprofits. Everyone is working together there  

to try to come up with some guidelines for how you  measure the impact of IT, both from greening IT,   but also how you measure the impact of IT on the  rest of the economy in terms of sustainability.   Really interesting, really (I would say)  smart, collaborative work going on now.  Of course, data centers are  enormous consumers of power.  Yes. Not to mention bitcoin mining these days.  Yes. Yes, indeed. [Laughter] Yes, the  bitcoin conversation is an ongoing one. 

You've seen what happened with these announcements  saying, "Oh, this is this cool new technology."   Then the pushback saying, "Hey, whoa!  This thing is going to destroy the planet   even faster than before it existed." That, I think, is a really interesting   example of how tech is becoming increasingly  focused on sustainability and how you actually   can't talk about technology anymore without  talking about simplification for the planet.  Not meaning to put you on the spot, so  please feel free to refuse to answer this.  [Laughter] Any thoughts on bitcoin?  Oh, my. [Laughter]  I am not a bitcoin expert. Cryptocurrencies, in  general, they really see them as being linked to  

independence and some sort of basic kind of  liberty and human rights (in a positive sense),   a way of sort of decentralizing power, and  that that is sort of the future of the economy.   It's sort of a metaphor for the broader  economy, which I think is quite beautiful.  Then there's the actual, you know, what's  happening today. We have not figured out how  

to use these cryptocurrencies without very large  amounts of energy consumption. That's just purely   not sustainable, and so we've got to figure out  another way to do it if we want to do it. Yeah,   that is certainly a very controversial  issue within tech and green. [Laughter]  You're not going to tell us whether  to buy bitcoin or not. [Laughter]  I am not going to take a position  on that at all. No, I will not.  Okay. Well, we have a great question  from LinkedIn. This is from Sai Penumuru.  

He is the chief technologist at DXC Technology –  a big company. He asks, "How has COVID-19 changed   the role of sustainability for organizations?" A lot of people were worried. This idea of   Maslow's pyramid. You focus on what's your most  essential need and then you move out from there.   In periods of stress, you deprioritize  things that are not essential. 

I think there were a lot of folks in the  sustainability community who were thinking,   "Oh, dear. This is such a huge global challenge  and such a huge global disruption that actually   people are going to cut their sustainability work  around the world just to go into survival mode."  What has been amazing is that  the opposite has happened.   There is more investment in sustainability, more  interest in ESG. The inflows into ESG investment   funds completely exploded during the pandemic. Part of that, interestingly, is because the   companies that were the most resilient were  the ones that were the highest rating on   a lot of ESG rankings. That's just because  companies that are paying attention to ESG  

issues and sustainability issues have been working  with their supply chains for years. They were very   intimately connected to their supply chains and  that gave them a certain level of knowledge,   understanding, and resilience during the  pandemic. That's an interesting side note.  There was also a global, I think, consciousness  about our fragility, about our dependence   on the natural world, about our role within it  that was really called into question in a lot of   people's minds. And so, I like to cite a survey  that took place in the beginning of the pandemic   where citizens from around the  world (all countries) were asked,   "Do you want your government to act as forcefully   on climate change, for example, as  they are right now on the pandemic?"  [Laughter] We've never seen anything  like this action on the pandemic,   right? We are shutting down the entire global  economy to try to save people's health.  The answer was overwhelmingly yes, and that was  in all countries. You saw North America at very   high rates; Europe also around 70%, 80%;  Asia as high as 90% in some countries. 

This was a globally shared experience to say, "We  are part of a natural ecosystem, we are in danger,   and we don't want to go down this path  anymore." This build-back better concept   has really translated into more investment in  sustainability in organizations, more investment   from the financial front, and more regulation is  coming online also because of that mindset shift.  We have another question  from Twitter. You can see,  

I prioritize the questions that come in from the  audience. They tend to be great, great questions.  [Laughter] They are great because  so far so good. Great questions.  Okay, so picking up on the data center  point earlier, Lisbeth Shaw asks, "How   should data centers become more environmentally  sustainable?" I guess we can just broaden it to,   again, the whole data center issue. Take the example of Dassault Systemes.  

If you measure our carbon footprint, if you  include the emissions that come from the use   of our software – that is the running  of data centers to process the software   around the world by all of our close to 300,000  customers – if you are taking those emissions   into account in the footprint, it's close to 97%  of our carbon footprint. It dwarfs anything that   has to do with our office building heating or  even the computers we're buying, et cetera.  It is actually a massive global  footprint, and so this data center   piece is really important. On the greening  of that, there's a lot of work being done. 

The first and, I would say, easiest answer is  the idea of, well, where is the power coming   from? Can we green the power source behind  the data centers? Can we make sure that   our cloud is run on green energy? Google and  others are doing a lot of work in this space.  I think there's a real question about the massive  amount of data that is being processed but is   also being stored forever. You post something  [laughter] and it stays on a server forever.   That sort of massive accumulation, I think, at  some point, there's going to be a big conversation   about that accumulation and stocking of data  all the time. I think that's another topic.  Then there's actual functioning of the  data centers themselves. There is a lot  

of really creative stuff being done about  using tech, in fact, to have sort of AI   monitoring and optimization of data centers so  you can really precisely control the heating and   cooling systems, so you can recuperate  the heat and turn that into energy,   so that you can minimize (to a maximum) the water  needed for cooling as well. There are a lot of   really creative experimentation being done on the  actual operations, I would say, of a data center.  It's a very interesting point that  you just made about the accumulation   of data. All these large companies—Google,  Microsoft—everything pretty much in the cloud   involves increasing storage on a permanent  basis. Therefore, the sustainability challenge is  

continuing to grow and there is no opportunity  for a decrease if things are left alone. Again,   is that a correct way to think about it? I would say, in terms of prioritizing   where folks are working, there is less work on  that angle than there is on the greening of the   energy sources, which is sort of, in some  ways, the quick wins in that conversation.   This sort of constantly increasing amounts of  data, a lot of stuff has been written about also   the consumption patterns in the consumer world. I work on industrial kind of software, so we're   mostly B2B, and we are active in life  sciences and manufacturing in cities and   things like that. But there is a real question  in terms of changes of behavior of the average   person in terms of how much we're consuming every  day and how much of our time is spent in front   of screens and how many videos we're [watching],  that piece of consumption which is not correlated.  A lot of industrial software use, for  example, is directly linked to making   things more efficient in one way or another.  People buy this kind of software to optimize.  

Either they're optimizing for efficiency  or they're optimizing for CO2 reductions.  You kind of say, well, it's sort of  balancing. It's going to consume energy   on one side, but it's going to help other  industries to really decarbonize faster.  For everything that is purely consumer  consumption of media, consumption of IT,   there it's more of a cultural  sort of mindset thing,   and so it becomes a much stickier problem to  work on. The working groups I'm in are not   talking about how do we deal with the number  of YouTube videos out there. [Laughter] That's   not what we're focused on. Also, because that's  the hardest thing to talk about and to work on. 

You're looking for the quicker  wins, the easier wins, essentially.  Yeah, the other side is, are you going to start  limiting people's access to videos? These become   intricate not just environmental  questions but real social questions,   real behavioral science questions, real  freedom questions, liberty questions.  It becomes much more complicated and trickier.  Yeah, I'd say people are very aware of it,   but the hard work has not started, I would say. On the topic of thorny questions, we have a   great question from Arsalan Khan again.  Arsalan is a regular listener. He asks  

great questions. He says this. He says,  "If there are economic, operational,   and global benefits from sustainability, are you  seeing resistance to sustainability and why?"  Like I said, I've been working in this space for  more than 20 years. It is so different today. I   like to give the image of being pushed and pulled. I used to be pushing the organizations I was   working in saying, "This is important. This  is going to come. It's going to happen."  Now, I am being pulled by the organization  saying, "Please help us do this. Teach us how  

to do this. Come with us to these meetings."  So, the dynamic has completely shifted.  I'd say the resistance levels have just fallen  off a cliff in the last two years, essentially,   starting in maybe 2018. But  really, with the pandemic,   like I said, it's completely accelerated. The  resistance has dropped off a cliff, I'd say.  Where it does exist, I'd equate it to one of  those situations, like, "The future is here   already but it's not distributed evenly," which is  that the leading companies have totally gotten it,   are working on it pretty seriously, see  what's coming, and they're planning for that. 

The real fabric of the economy is  small and medium-sized companies   that are not listed companies. They have  not been subject to investor pressure.   The real economy is another world, in fact. I think what's happening now is you have   this massive acceleration in large, listed  corporations. What's happening is because  

we've hit that tipping point, it's translating –  I'll give you an example – into legislation here   where now climate risk reporting is going to  not just be for those listed firms (towards   their investors). It's going to be for any  registered company at more than 500 employees.  What's happening is the legislation  is going to basically, I would say,   transform what was kind of a niche for leading  players into a very generalized approach to   what business is about. It's not just  about being profitable. It's also about   managing other issues and being strong on those  other issues as well in terms of performance.  Alice, how does an organization  get started with this?  One way to get started is doing a bit like what  we mentioned earlier, which is actually looking at   where the hotspots are. Where are your biggest  impacts from a financial perspective? There are   some financial quick wins around environmental  sustainability, so very basic stuff like   changing your lightbulbs is actually a  huge cost saver for most organizations.  There's stuff that's kind of low-hanging  fruit. Then there are the things that are  

your biggest impact. Like we were talking  about for digital, it really is this sort   of impact of the digital itself: the data  servers, the data centers, et cetera.  There is an impact assessment piece, but I would  say, even above that, the first step is to think   about the governance. The governance question,  to me, is always core to how you can get anything   done regardless of what you want to work on. The first question is, how do you position  

this in your organization? What is the connection  to the board of directors? What is the connection   to the executive committee? How are you  going to move your organization structurally   and organizationally around the topic? Then those people, once that is in place,   will start running these materiality assessments  and impact assessments and try to understand   where they should be spending most of their  time. But the first piece is, how am I going   to run this topic in the organization?  That's actually a governance question.  Once you begin with a governance question,  suddenly it seems that the problem,   the challenge of implementing this  organizationally becomes really hard.  The only way this thing is going to happen is if  you have a very engaged executive committee and   a very engaged board who is willing to invest in  that governance. That's taking even a step back.  If you have that, if you've gotten to that stage  of conversation saying, "This is something that's   going to hit us in terms of investment, in terms  of regulation, in terms of consumer demand,   in terms of employee demands. We need to work on  this," if you can get that conversation going and,  

again, I think the resistance to that message is  so much lower today than it ever has been before,   if you can get that conversation off the  ground, that is the governance question.  Once you have an okay for that at the  very top levels of the organization,   then it's a normal follow-up question to say,  "Okay, so where are we going to put the resources?   How are we going to recruit somebody to do  this and fix the accountability systems so   that wherever they do makes sense, we agree  with it, it's strategic, and it's smart?"  I don't know if it's more complicated or  less. That first conversation is hard.   But now, as I said, it's getting easier. I'm just thinking that any time  

you try to implement a change  program in an organization,   especially on a broad-based level, it's hard. My job is in fact to be a change agent within   the organization and to do change management  and transformation processes. That skill set   is as important or even more important than how  much I understand about science-based targets and   diversity inclusion reporting or what have you. You're absolutely right, which is the real tricky   part and, I would say, the core skill set of a  chief sustainability officer is in fact that,   which is, how do you move large, complex  organizations? How do you get them to change?   Yeah, that's a combination. I like to say we sit on the  

edge of the company. So, what is the outside  expecting from us and what are we? What do we   want to do? What do we want to prioritize? And  how do we merge those two together? How do we find   the sweet spot where we're doing something that  makes sense for us and makes sense for all these   new demands coming in on this front? Constance Woodson is curious about   carbon footprints in mainframe  environments as distinct from cloud   computing, cloud server environments. [Laughter] [Laughter] People have heard a lot, this idea,   like, it's greener on the cloud. Right? I  don't actually know where that came from,   exactly, because it all depends on what  kind of data centers you are running,   so how efficient they are, and mostly where  they're located. Where does the energy come from?  If you have a cloud solution with some sort  of shared cloud server or public cloud,   but it's actually being run out of a country whose  energy mix is entirely weighted towards coal,   then that is not green. You'd be better off  just running it on your own mainframe servers   (wherever you are) if that energy mix is better. I would say there's not really one answer to that  

question. It all depends on what the energy mix  is, which is why some of the biggest public cloud   providers are really trying to green their energy  sources so that they can have that as a marketing   argument to say, "We know we can provide you with  a greener solution than what you've got today."  Today, it's not the case. It's really not  clear that that's the case across the board.  Thus, you see the rise of data  centers in northern climates,   whether it's Norway or Iceland, for example. 

Mm-hmm. Yep, good point. Yep. Okay, so batteries are a hot topic right now.   How can we make batteries more sustainable? Eighty-five percent of the electric vehicles   in the world are designed and  created within our software, so   our software was sort of at the heart of the  electric vehicle revolution and the battery.   The batteries are designed with this software. Anyway, if I come back to the question, the real   challenge with batteries, there's the question  of how long they can last and how much energy   they can stock, et cetera. But then the real  question you hear a lot today is about, "Well,   what about the end of life and the recycling?" There are a lot of rare metals. There are a lot of   really valuable materials in here. If you look at  the total lifecycle impact of an electric vehicle  

battery, it's actually very heavy in terms of CO2  emissions. Using the car is less so, but making   the battery needs to be counted into how you  think about the total footprint, the total carbon   footprint of a vehicle like that, for example. The real issue or one of the big issues with   batteries these days is this issue of, how do we  get to a circular model? How do we move towards   basically sort of throwing those materials  away, which are actually becoming more and   more valuable, and instead, keeping  them in the economy for longer?  You're seeing the creation of global centers for  recycling of electric batteries where they're   going to try to recuperate (as much as possible)  that material and get it back into the economy.   Now, with some of the resource constraints on some  of the elements necessary to run these, you're   seeing individual companies (not just states)  trying to organize how can I get that back. 

There's something created here in  France by Renault called Re-Factory.   It's all about recuperating the materials and  reusing them in the production system again.  Can you put on your organizational change agent  hat for a moment and share some thoughts on where   sustainability should live inside an organization? One of the reasons you need to be a change agent   is because it's one of the only functions in  an organization that is completely transversal.   We have to work with folks on tax policy,  on facilities, on software design,   on diversity inclusion issues, on executive  remuneration issues, so we are literally working   with almost every function in the organization. Then the question of, "Well, under which function  

would it sit?" becomes a real question. That's why  you've started to see the creation of these jobs   actually either directly reporting to the board  or directly reporting to the CEO because it's so   completely transversal that there is actually no  good place to put it except maybe at the top in   terms of strategy as a strategic orientation. I think that's a great question. Today,   where those positions are—including mine and in  many organizations—can sit actually anywhere. I've   seen them in HR be highly effective. I've seen  them sit on the product-facing side. I've seen   them sit on the risk management side. It kind of  depends to what extent your executive committee is  

actually engaged and they're serious about it, and  then how good the person is at their job, frankly.  I happen to sit in a customer-facing part of the  organization, so I am leading a lot of work with   the folks who are defining market strategy. What  products do we sell to whom? How can we be at the   cutting edge of the sustainability needs of our  customers? That's the scope that I'm slightly   more focused on, but I am also still responsible  for the carbon footprint of our data centers. 

It can sit anywhere. The question  is, how invested is the leadership   and how much support do you have to get  it done? It can work almost anywhere.  What final advice do you have or final thoughts  on sustainability that you can share with business   leaders who are listening, who want to do  something, and maybe even are hesitant, are   unsure, or things aren't going as they planned? I think now is really the time if you're not. If  

you don't feel like you're equipped to really take  this on board in your strategy, now is the time to   get ready for that because this is a dramatically  changing, I would say, business ecosystem.  Changes are happening faster than I ever thought  they would. We really hit a tipping point and now   stuff is happening every day, like new legislation  or new investor initiatives. It is accelerating   very quickly, so my one piece of advice would  be if you're not already working on this,   please do get started because – to come back to  the original definition of sustainability – I   think it will be key to the long-term  viability of a lot of our large organizations.   I would say speed is of the essence. Yeah. Okay. Well, Alice Steenland, thank you so much for   taking the time to be with us today. It was my pleasure. It was really  

fun. Thank you so much, Michael. Everybody, thank you for watching, especially the   folks who contributed such great questions. Now,  before you go, please subscribe to our YouTube   channel. Hit the subscribe button at the top of  our website so we can send you our newsletter.  

It's a really good newsletter. Tell your  friends and check out We have great   shows coming up. Thanks so much, everybody. I hope  you have a great day, and we'll see you next time.

2021-06-27 10:55

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