Sustainability - April 2022

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April 2022 | sustainabilitymag.com

Dream Corps:

Promoting black entrepreneurs for diversity and inclusion

Influencers of Sustainable Supply Chains

DHL:

Delivering the circular supply chain

PwC:

ESG reporting: the front line of actioning sustainability

How EY teams deliver

visibility and agility for resilient

Supply chains

EY Global Supply Chain Leader

GLENN STEINBERG FEATURING:

SAP

KDDI

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The Sustainability Team EDITOR-IN-CHIEF

BLAISE HOPE

DEPUTY EDITORS

TOM SWALLOW EDITORIAL DIRECTOR

SCOTT BIRCH

PRODUCTION DIRECTORS

GEORGIA ALLEN DANIELA KIANICKOVÁ PRODUCTION MANAGERS

PHILLINE VICENTE JANE ARNETA ELLA CHADNEY

PRODUCTION EDITOR

JANET BRICE CREATIVE TEAM

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EVELYN HUANG JACK NICHOLLS MARTA EUGENIO ERNIE DE NEVE MOTION DESIGNER

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MEDIA SALES DIRECTORS

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LEWIS VAUGHAN

EXECUTIVE ASSITANT

JORDAN HUBBARD CHIEF OPERATIONS OFFICER

STACY NORMAN CEO

GLEN WHITE


FOREWORD

What does the invasion of Ukraine mean for corporate driving sustainability

“In the hopes of future peace, this is a lesson we should remember”

SUSTAINABILITY MAGAZINE IS PUBLISHED BY

Ukraine invasion makes case for corporate driving sustainability and peace Russia's invasion and its consequent isolation and economic calamity is making the case for coordinated corporate efforts for sustainability and peace Global reaction is unified in rejection of Russia's invasion of Ukraine. Businesses have taken unprecedented action: to cease operations in Russia and sell stakes in Russian businesses. In weeks, the businesses and governments of the world have laid the groundwork for dealing with threatsto global security - a new, non-interventionist measure that is powerful, and doubly so for the unity it embodies. There is turmoil in fossil fuel markets - for now - but this is encouraging for all sustainability objectives. Coordinated corporate action has real power. In the hopes of future peace, this is a lesson we should remember.

BLAISE HOPE © 2022 | ALL RIGHTS RESERVED

blaise.hope@bizclikmedia.com sustainabilitymag.com

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CONTENTS

Our Regular Upfront Section: 12 Big Picture 14 The Brief 16 Timeline: How did plastic become a global sustainability nightmare? 18 Trailblazer: Anna & Christine Tarrago 24 Five Minutes With: Eva Hamilton MBE

46 ESG

ESG reporting is the front line actioning sustainability

30

54

How to build autonomous and sustainable supply chains

Sustainable supply chains are in SAP’s DNA

EY

Design & Manufacture


62

70

Dream Corps uplifts black entrepreneurs shine in sustainability

SAP makes sustainability a question of planning

Diversity & Inclusion

Planning & Sourcing

80

Net Zero

Coal elimination uncovers the future of the energy sector

88 KDDI

KDDI set to enter the Thailand market with Telehouse Carrier - Neutral DC



100

Sustainable Sourcing

Delivering circularity requires a global, pan-sector effort

108

State Street Global Advisors ESG and stewardship in action

122 Top 10

Influencers of sustainability in supply chains

134 150

ClusterPower

ClusterPower is a green hyperscale DC set to take over

The First Mile

Brings dignity to waste material reclamation

170

188

The time for flexible work environments is now

Scalable, flexible and sustainable pods

WeWork

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April 2022


ESG investments face negative impacts from Russia’s invasion of the UKRAINE Ukraine

While some investors foresaw the events that are now taking place in Ukraine, many were unable to visualise the full scope of economic risk, creating losses for those providing critical environmental, social, and governance (ESG) investments. Investors are now viewing the event as a catalyst for clarity and demand for further ethical consideration through ESG investments.

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THE BRIEF “The evolution process is going to continue and there will be some sort of consolidation on rule making” Casey Herman Head of ESG, PwC US 

BY THE NUMBERS How many barrels of oil did Russia export per day (according to the International Energy Agency) in 2021? (mb/d)

7.4%

7.8%

September

October

7.8%

7.8%

November

December

READ MORE

“There are many amazing green jobs and workforce development organisations across the country” Michelle Romero

Chief Programmes Officer, Dream Corps  READ MORE

“We wear clothes every day, so that’s a lot of products being used, and a lot of emissions tied to them” Carsten Lützenkirchen

Senior Vice President of Commercial Operationst, DHL  READ MORE

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April 2022

Sustainability LIVE: SAP accelerates the circular economy Circular economies are critical for alleviating the waste management issues. 61% of the world’s population does not have access to the necessary waste management infrastructure. Find out more 

READ MORE


The WAR on UKRAINE distracts from the global climate crisis Companies withdrew trade from Russia; manufacturers in the country retaliated with a similar approach, and the stress and anxiety around the war imposed on Ukraine drew some of the media attention from the global climate crisis. On the 28th February, the Intergovernmental Panel on Climate Change (IPCC) released its findings from its second working group—part of its sixth assessment period—which highlights the imminent risks surrounding climate change, such as the lack off biodiversity and human effects on the planet. The report comes as the ‘bleakest warning yet’ and, as the divide on global trade impacts organisations, what will this mean for the environment that organisations are heavily committed to protecting?

 SHELL AVIATION Shell Aviation has developed a supply chain of Neste’s sustainable aviation fuel (SAF) to Singapore and is developing Asia-based production facilities to provide 550,000 tonnes of low-carbon fuel per year.  SIEMENS Siemens, in collaboration with Nexii, unveiled a world-first in sustainable charging. Operators will benefit from its intuitive design that enables fast installation with the ability to expand and maintain the unit efficiently.

 UNILEVER Unilever suspended its operations involving Russia, including imports and exports, and advertising and media spend. It’s one of an increasing number of companies across Europe and the US retracting business from the country.  WALMART One of many organisations listed by the FAIRR Initiative, Walmart has been unsuccessful in disclosing information on the conditions and practices of its sustainable sourcing, which could increase the likelihood of spreading emerging diseases.

W I N N E R S APR22

L O S E R S

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TIMELINE HOW DID PLASTIC BECOME A GLOBAL SUSTAINABILITY

NIGHTMARE?

Take a look at how plastic went from an initiative with good intentions, to an unsustainable component of an evolving consumerist culture that plagues the natural environment across the globe

1860

1950

1970

Plastic was invented to save Elephants!

Plastic is introduced to the food sector

Single-use plastic bags were doomed from day one

In 1869, the first synthetic polymer was created. John Wesley Hyatt responded to a New York firm’s offer of US$10,000 for an alternative to ivory—a product that supports the slaughter of at least 20,000 Elephants each year.

Historically, consumers would eat in restaurants from ceramics, and maneuvre their food with silver cutlery. The introduction of plastic marked an era of flexibility in the restaurant industry, allowing businesses to offer ‘takeaway’ services.

While consumers were dubious of the singleuse plastic bag, the item was introduced in the 70s. But, little did the producers know— let alone the rest of the world—that plastic would become one of the most significant burdens on the planet.


1990

2010

2020

Plastic packaging is polluting the ocean

Plastic begins its decline

Excitement builds around biodegradable packaging

The plastic issue came to light much earlier, but it was only in the late 2010s that we saw a decline of plastic use. Single-use plastics were targeted first for their inability to fit into a circular economy. One UK supermarket chain, Tesco bought over 600 million bags in 2016-2017.

We’ve witnessed many exciting alternative packaging concepts, such as biodegradable bottles, liquid packaging solutions, and alternative materials like starch-based polymers. The restaurant and fastfood sector soon made the switch to cardboard and paper packaging as a sustainable response to the spike in food delivery.

While plastic was developed with good intentions, the case against it increased. In the 90s researchers found that 60-80% of plastic in the ocean would not go away. Plastic was adversely affecting life under the sea.


TRAILBLAZER

ANNA & CHRISTINE TARRAGO FOUNDERS ALFENA FOOTWEAR

Anna and Christina Tarrago are the mother-daughter duo behind Alfena footwear and the revolutionary Kira No.1, designed from scratch to be fully circular, sustainable, biodegradable and on trend for every occasion

B

ig companies tend to get our big headlines, but sometimes the story of a small company is big enough to hold meaning for a whole industry. Anna and Christine Tarrago, the mother and daughter behind Alfena Footwear, have built out a completely visible and sustainable supply chain, with partners at every tier adhering to the same principles as them, embedding social value along the chain, and using exclusively reusable and sustainably sourced materials, they have produced a shoe fulfilling every conceivable sustainability, circular, and regenerative criteria. And they did it all for €20,000 (US$22,000), a multi-year spend rapidly being outpaced in the first two months of sales that, annualised, would mean a pre-marketing profit for the first year on the market.

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TRAILBLAZER

Alfena’s achievement is impressive, but not, obviously, comparable to Nike or Adidas making the same sort of change. Making even minor changes at that level is a huge and incredibly tough job, but Alfena’s story is remarkable all the same. This is trailblazing work, informed by a shared dedication to sustainable business objectives - A point every major corporation understands when it comes to driving change in this decade. How a shared passion made the Kira No.1 “If you're going to the gym, you need a certain pair of shoes. If you're running, you need a certain pair of shoes and I'm not going to wear my gym shoes. When I'm going out to dinner, I'm not going to wear my running shoes when I go to a bar,” says Anna, who grew up between Europe and the US and is now finishing her studies at the German Sports University of Cologne. “One thing led to another, and then we realised all these shoes, they're creating so much pollution - and this is plastic pollution. It's all part of the fast fashion industry: plastic chemicals, toxins - we always end up with more in our environment. That’s how Alfena started.” The shoe itself - the Kira No.1 - is designed to be universal. This means it is unisex, but can be used for going out, day-to-day activities, even for sport and exercise. The price tag of €249 marks it out as a luxury item, but reflects its multifaceted utility and extended lifecycle. The sleek, platformed, white design fits with prevailing trends across shoe fashion from sport to eveningwear. Alfena plans to release more models in the future.


“ WE WANT TO SHOW YOU DO NOT HAVE TO COMPROMISE STYLE, QUALITY, OR COMFORT TO BE SUSTAINABLE” sustainabilitymag.com

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TRAILBLAZER

For Anna’s mother, Christine, sustainability has been core to her life and upbringing. These are values she sought to raise her daughter with. Now based in the US, this journey, too, began in Germany. “Since my very early childhood, we worked on sustainability. We cleaned up our kindergartens and at lunch break in schools, we had to pick up our trash, and every class rotated,” Christine says. “Sustainability was always dear to my mind and heart, so wherever I lived, I guess that's how I raised Anna, that we have to be sustainable.” Following Anna’s prompt, Christine began to research the shoe industry. “The numbers were just speaking for themselves,” says Christine, who has 25+ years of experience in global 22

April 2022

business. “When I saw 15 to 20 billion shoes end up thrown out annually, globally, as well as the circumstances in which they are produced, that was a big concern. “I could see in my mind also these landfills, where everything ends up, and how that could leak into the groundwater. That’s how it came together.” The pair began to research. Without external support they found suppliers of natural materials that would biodegrade, then taught themselves about how shows are built and went out looking for supply chain partners to bring it all together. And so they did, in Portugal, Austria, Germany, France and beyond. The shoe came together, made of cork, Tencel (derived from wood fibre), Rhabarbleder (from rhubarb


“ SUSTAINABILITY WAS ALWAYS DEAR TO MY MIND AND HEART, SO WHEREVER I LIVED, I GUESS THAT'S HOW I RAISED ANNA, THAT WE HAVE TO BE SUSTAINABLE”

biomass), and Lactae Hevea, derived from Latex bought from wholesalers in Asia and elsewhere. The leather? Well, while it's the animal-derived kind, it's sustainably sourced from small German farms and vegetable tanned a process that produces no toxins. With a production process in place, the time came for a prototype. That became the Kira No.1. “We want to show you do not have to compromise style, quality, or comfort to be sustainable,” says Anna. “You can wear shoes that look good and still do good for the environment. That was our mission and we accomplished this by picking out materials that are natural and as biodegradable as possible to give back to Mother Nature “You can see it as borrowing mother nature's materials, making a product out of it. At the end of its lifecycle, it goes back to nature.” sustainabilitymag.com

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FIVE MINUTES WITH...


EVA HAMILTON

MBE Eva Hamilton’s Key4Life has been hugely successful in getting recidivism rates down in the UK, and has pioneered equine therapy in prisons to help calm inmates. Key4Life holds lessons for the entire corporate world. Q. EVA, HOW DID IT ALL BEGIN?

» I always felt I was here to serve.

I worked briefly in the home of the dying mother: Teresa was actually away while I was there, but I was with her number two. That was the greatest calling I had, but having had that, where did I actually start my career? So I started at the industrial society under Dame Julia Cleverdon. I was her secretary. Then in 1991 she moved to Business in the Community. I went in initially as her PA and within a year, Prince Charles had come up with the idea of setting up the Prince of Wales’ Seeing is Believing programme. I was put in to run that at the age of 23.

Q. HOW DID THE READY FOR WORK PROGRAMME COME ABOUT?

» I was in Bristol visiting a homeless

shelter, and I met three men, injecting their feet with heroin. On the journey back to London with BT, I had another light bulb moment: if children can go and get work experience, why don't I apply the same notion to the homeless? I went and approached about a dozen companies and asked if they would give homeless people work placements, like BT, Reuters, Virgin Records. All of them said, ‘it's a crazy idea, but we'll give it a shot’. Of the 14 rough sleepers that we placed on this pilot, 13 completed the twosustainabilitymag.com

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FIVE MINUTES WITH...

week mark and the programmes grew from there.

Q. WE ARE MOVING FAST HERE, BUT I WANT TO TOUCH ON THE WARRIOR PROGRAMME.

» In 2006, I set up another charity

called The Warrior Programme, which was initially for the homeless, about unlocking pain. Then I went on to work with soldiers with posttraumatic stress, some of whom had not even left their homes for three years. They were suffering terribly from war and what they'd seen and gone through. And then in 2011 the London riots took place and I realised very quickly that actually really, I needed to go back now and start looking at the root causes of some of these problems.

Q. HOW DID THE KEY4LIFE IDEA TAKE FORM?

» I designed a brand new seven step model, and I went to Bristol, brought it to a prison, a young offenders institution. I thought I was gonna be given some really nice young people. What I didn't realise was I'd been given the toughest gang leaders in Britain. When we arrived with military trainers, they showed us no respect. The military trainers actually said to me, ‘you've pitched this totally wrong. We're leaving.’ I asked them to please wait half an hour until the horses arrive. The minute the horses arrived in the prison, the same men - children, I should say - that were showing us no respect were hiding under their chairs. They wouldn't come out of the gym. They were too scared of the horses. That was the start of Key4Life.


Q. HOW ARE THINGS GOING NOW?

» We've worked with probably

about four, 5,000 children. Our reoffending rate has only ever gone up as high as 16%, and the government's is 64%. Our employment rate currently is actually over 60%, and the government's is at 15%.

Q. WHAT ARE THE LESSONS FROM THIS?

» I think if you look at a

company, if you talk to lots of great leaders, they always talk about the rich mix of people in their workplace. The richness comes from employing people who have had challenges in their life and a bit of a chequered past. What it does is it brings everyone down onto a level playing field, which often gets neglected or overlooked by many companies. Our young men bring a realness to it. When I was doing training last week, many of them talked about the fact they were born into these families that were drug dealing and that all the people around them were up to no good. From a young age, they were thrown through windows, into houses to commit burglaries. To them it was the norm to see drugs and dad being in prison. It's very dark when you've never had role models. When you go into a company and suddenly you're told there is an etiquette, this is how you've got to behave in their world. Their world has been normalised in a way that you and I could never, ever imagine it

“IT'S VERY DARK WHEN YOU'VE NEVER HAD ROLE MODELS”

could be normal. That's a very tricky thing. So going into the corporate world for them, you know, being an employee of Schroders and places like that, I think they bring such an interesting perspective to the workplace. And also they're prepared to work hard. They want to be given another chance. These people are fed up with looking over their shoulders. Many of them are massively successful drug dealers. It's just, they're selling the wrong product. They just don't know. They're hugely efficient at getting up, running a team of people, distributing products, it's just that it's illegal. Disclaimer: The author of this article is a Key4Life volunteer. sustainabilitymag.com

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How to build autonomous and sustainable supply chains WRITTEN BY: SEAN ASHCROFT PRODUCED BY: GLEN WHITE 30

April 2022


EY

sustainabilitymag.com

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EY

Glenn Steinberg shares insight into how EY teams are building the next generation of resilient, sustainable and autonomous supply chains

T

he pandemic has forever rewritten the rulebook for the global supply-and-demand economy, a delicate ecosystem that, until early 2020, was predicated on efficiency and productivity above all else. Every industry has had to come to terms with titanic shifts during the pandemic: finance now faces a touch-and-go cashless future, while retail has become omnichannelled and next-day-delivery by default. Underpinning each of these pivots is the supply chain, where the only constant is adaptation. Ask any chief supply chain officer (CSCO) how the pandemic has impacted their day-to-day life and, unprecedented demand aside, they’ll tell you it’s been largely business as usual, but with a significant twist. “What’s interesting is that the pandemic hasn’t necessarily created any new challenges for supply chains; it’s just magnified the problems that already existed,” says Glenn A. Steinberg, EY Global Supply Chain Leader. “In the US, for example, some estimates say we are short by about 80,000 truck drivers at this time. But three years ago, we were also short, just by about 61,000.” Adaptation has been a career-defining concept for Steinberg, a former executive at GE, IBM and another Big Four who for more than 30 years has helped organizations evolve and thrive throughout periods of boom and bust.

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Example of an image caption


“If you want to be successful in this industry, you have to have a thirst for learning – and that doesn’t end. Just continually stay out of your comfort zone,” he says. “If I look back on my career, all the critical turning points came when I got out of my comfort zone and took on something new. From the early days of process and strategy, to the rise of digital and ERP [enterprise resource planning] implementation, I still leverage those learnings, 20 years later.” It is a mindset and lifestyle that Steinberg fully embraces, shared with thousands of professionals and students each year. He is a frequent and in-demand guest lecturer of MBA students at Columbia University. In conjunction with Columbia Business School, he helps lead a quarterly roundtable for CSCOs to share insights and experiences of the biggest 34

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issues they face, from global tax and tariffs to sustainability, digital supply chain and the future of work. He also sits on the advisory board of Columbia Business School’s W. Edwards Deming center for Quality, Productivity, and Competitiveness, whose mission is to train the next generation of managers, upskill the senior executives of today and support vital research. Steinberg’s commitment to learning and sharing knowledge have also earned him a reputation as a trusted and valued advisor to the world’s biggest economies. When the pandemic broadsided governments around the world, Steinberg and his team were contacted by governments in Germany, the UK, the US and Australia. The assistance provided by Steinberg and EY teams was vital in one of the most acute periods of disruption in living memory.


EY

“ EY TEAMS, AT A GLOBAL LEVEL, ARE VERY FOCUSED ON DOING CUTTING-EDGE WORK WITH EMERGING TECHNOLOGIES. WE’RE DOING INNOVATIVE ENGAGEMENTS WITH AI AND BLOCKCHAIN, DIGITAL TWINS AND SMART FACTORIES” GLENN STEINBERG

GLOBAL SUPPLY CHAIN LEADER, EY

Today, Steinberg leads more than 5,000 supply chain consultants across the globe, guiding clients by offering supply chain strategy, procurement, manufacturing, logistics and fulfilment, as well as planning and technology solutions. It is a broad remit that demands collaboration, and he’s proud of the “collegial” culture he’s helped shape to foster an environment where it flourishes. “We are focused on taking care of each other, collaborating and doing what’s right for our clients,” he says. “I want this to be a place where everyone can say, ‘I feel valued I feel understood. I belong. I feel cared for and I can grow.’ This is the culture we have developed.” “EY teams at a global level are very focused on doing cutting-edge work with emerging technologies,” Steinberg adds. "We’re doing innovative engagements with AI and blockchain, digital twins and smart factories.” He adds that his team is “doing some of the most purposeful work on the planet”, carrying out shop floor digital manufacturing work at a global pharmaceutical company delivering lifesaving medicines and providing a trusted data-exchange platform and suite of applications that links all key players in the cell and gene therapy ecosystem. “We are also working with one of the largest consumer products companies in the world, helping to decarbonise their value chain,” he adds. “This is really purposeful work that our people can be proud of.” As much of the world begins to rediscover some form of regular cadence, Steinberg and his global team are turning their focus to defining the future of the supply chain. It's the start of what Steinberg refers to as an "investment supercycle", which has enormous potential for positive change. sustainabilitymag.com

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ey.com/supplychain

What if operational disruptions became growth inspirations?


© 2022 EYGM Limited. All Rights Reserved. ED None.


EY

“Supply chain reinvention is in vogue. It’s an exciting time for C-suites and CSCOs. The multiplicity of demands that are facing CSCOs is incredible. It used to be enough just to balance cost, service, quality and speed. Now you need to add resilience and sustainability into your supply chain.” As global powers continue to vie for cultural and economic influence, tariffs, incentives and sabre-rattling will continue to impact supply chains. Sustainability, visibility and resilience will come to define the new standard for supply chain excellence in a world where, Steinberg thinks, “something broader is at play”. “The world order is changing from a unipolar economic order to a multipolar one,” Steinberg continues. “This has a tremendous impact on the strategic architectures of the world’s supply chains. As a result, virtually every company in the world is re-evaluating their supply chain 38

April 2022

“ THE PANDEMIC HASN’T NECESSARILY CREATED ANY NEW CHALLENGES FOR SUPPLY CHAINS; IT’S JUST MAGNIFIED THE PROBLEMS THAT ALREADY EXISTED” GLENN STEINBERG

GLOBAL SUPPLY CHAIN LEADER, EY


GLENN STEINBERG TITLE: GLOBAL SUPPLY CHAIN LEADER INDUSTRY: CONSULTING LOCATION: UNITED STATES

EXECUTIVE BIO

Glenn serves as EY Global Supply Chain and Operations Leader. In his role, he helps drive high-impact strategies and business execution across the Fortune 500. He is a seasoned professional with extensive supply chain and operations experience. Prior to joining EY, he led many supply chain transformations in several leadership roles. He received an MBA in Finance and Operations Management from Columbia University and an Electrical Engineering degree from Union College. How Glenn is building a better working world: “I am focused on helping clients and internal teams navigate complexity with confidence. I am purposefully creating a safe place where our people can ask questions and collaborate – where our people become business consultants moving beyond functional professionals. I am supporting a new generation of leader equipped with digital competencies and focused on innovation.”


EY

footprint, determining where best to place their physical assets such as manufacturing facilities, warehouses and more.” Five key themes for resilient supply chains “Resilience is a concept that is multifaceted, with most people not understanding how broad and deep it really is,” he says. “End-toend visibility is foundational to a resilient supply chain, with agility built into the extended chain to enable action.” Steinberg says five key themes of resilience have emerged in the course of stress testing clients’ supply chains to uncover both vulnerability and opportunity: • Embedding end-to-end visibility by leveraging technologies such as internet of things, digital twins, simulation software, analytics, AI (including machine learning) and alerts for risk monitoring. • Creating agile networks by re-evaluating the geographical and strategic architecture of the supply chain. “It is a simple question to ask what should be local, regional or global, but in a complex partner ecosystem, reconciling a network of warehouses, manufacturing plants, logistics, procurement and the other pillars of the supply chain is never easy.” • Securing alternative sources of supply. “This means not only spreading your bets among additional suppliers, but also including diversity, equity and inclusiveness (DEI) commitments in your sourcing efforts.” • Developing a resilient workforce “by preparing employees to have the skills required in the next five years and embedding a problem-solving mindset into the ways of working right down to the shop floor machine operators. 40

April 2022

• Building a trusted, secure supply network. “In an era where everything is interconnected by technology, cybersecurity is paramount if a supply chain is going to be resilient.” Steinberg’s other focus is supply chain sustainability, and he says innovation around this important topic goes hand-in-hand with the fundamentals of resilient supply chains. “A resilient supply chain requires that you embed end-to-end visibility, simulation and risk monitoring into your business, while a sustainable supply chain requires traceability, visibility and disclosure. These are two different, but related, topics that are being worked on in earnest by companies across the globe. Similarly, resilience requires that a company secure alternative sources of supply to be ready for the next


disruption, while sustainable supply chain management requires sustainable and diverse sourcing strategies.” Supply chain in the C-suite The final major post-pandemic shift in supply chain is the rise of the CSCO and the elevation of supply chain as a constant boardroom agenda item. Some draw parallels to the rise of the chief information officer in the mid-2000s: once a nice-to-have advantage that is now an imperative skill set for every growing business. “The best CEOs are fully versed in the importance of technology,” Steinberg says. “They have to stay abreast of it as it’s moving very fast, and, otherwise, they can miss a pivot and easily be disrupted. Now CEOs, frankly, need to understand supply chains as well. It used to be a cost of doing business, but now it’s in the boardroom, and if you do it

right, it can be a competitive advantage and a revenue growth driver. For example, think about the largest online retailer, they can get you the product the next day, maybe even the same day. That’s all about using the supply chain as an engine for growth by quickly meeting customer needs. That is a differential competitive advantage.” Supply chain expertise can also come from sources beyond your company’s four walls, Steinberg points out, through a partner ecosystem where companies can collaborate and gain scale by accessing the talent of thousands of talented supply chain professionals globally. This, he says, is why the EY organization collaborates with best-of-breed innovators: industry solutions providers such as SAP and Blue Yonder, and technology giant like Microsoft. sustainabilitymag.com

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ey.com/supplychain

© 2022 EYGM Limited. All Rights Reserved. ED None.

What if resiliency isn’t about withstanding today but envisioning tomorrow?


“ SUPPLY CHAINS ARE HEADED TOWARDS DIGITALLY NETWORKED ECOSYSTEMS WITH SHARED DATA IN THE CLOUD” GLENN STEINBERG

GLOBAL SUPPLY CHAIN LEADER, EY

Typical of this spirit of collaboration is the EY teams collaboration with Nottingham-Spirk, a Cleveland, Ohio, innovation specialist that acts as its supply chain innovation hub. It has a center to demonstrate how its own technologies and EY assets work together to solve client business problems. “But I have to say, above all in the supply chain space, Proctor & Gamble (P&G), is a very important collaborator for us,” Steinberg says. “They are annually rated one of the top five supply chains in the industry by leading analysts. We formed a global arrangement with P&G, so while our competitors can tell you what great looks like, we can show you what great looks like. “We bring EY clients to P&G sites; we walk the factory and talk to the machine operators. We can embed P&G leaders on our projects, and we have access to their IP [intellectual property]. It’s been wildly successful in helping EY clients see into the future and what the art of the possible really is.”

Where is this all headed? Which leads Steinberg to the question he’s asked most often by clients: what is possible in the future, and where is this all headed? “There’s all this disruption,” he says. “We’ve got geopolitics shaping supply chains for years to come. We’ve got industry 4.0, and the interconnected society we’re living in. Consumer buying patterns are uneven and shifting, providing the opportunity for some companies to tap into analyzing real-time data to match supply and demand. And there is disruption from events ranging from weather to global semiconductor shortages. It is no wonder why CSCOs and the C-suite want to know how all these things will converge.” EY teams research points to the rise of digital and fully autonomous supply chains. EY teams researchers surveyed 500 seniorlevel executives at organizations of more

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EY

than US$1b in size. One key finding is that 2025 will be the year mostly autonomous supply chains will begin to emerge to replace the hybrid processes common today. “We’re already on a path to an autonomous future. We have selfdriving cars, where people’s lives are at stake. There’s no reason we can’t have an autonomous and self-organising supply chain. In the end, it’s just about mastering the power of data.” It’s an exciting future, a journey that EY clients are keen to embark upon – and for good reason. “We’re already doing projects to help clients get to their future state, to show them what the roadmap for a digitally networked and autonomous supply chain looks like. Consider this: today, a change in customer demand has to work its way linearly back through the supply chain to get to the OEM [original equipment manufacturer], the supplier, to the supplier’s supplier, all through the tiers. That could take months before people change their production plans. “Supply chains are headed towards digitally networked ecosystems with shared data in the cloud,” he adds. “This way, everyone can see what’s happening now, immediately adjust to real-time events and even predict what happens next. Finally, we have all the tools and technologies at our fingertips to make this a reality. There has never been a better time to be a supply chain professional than right now.” The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

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“ SUPPLY CHAIN REINVENTION IS IN VOGUE. IT’S AN EXCITING TIME FOR C-SUITES AND CSCOs” GLENN STEINBERG

GLOBAL SUPPLY CHAIN LEADER, EY


ESG

reporting is the front line actioning sustainability Demand for ESG reporting now comes from investors to consumers and even regulators. It is a priority issue that these experts explain how to get right. WRITTEN BY: BLAISE HOPE 46

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he drive for environmental, social, and governance (ESG) transformation has taken flight across sectors, industries and companies. As we look onward into a decade of fighting climate change, supply chain transparency, and effective diversity, equity, and inclusion (DEI) efforts, large corporations have entered a fight for survival in a landscape that is defined by ESG and the triple bottom line. ESG efforts will determine a large portion of corporate efficiency, long term cost savings, brand value, and reputational

damage, growth or protection, as well as the now-proven benefits of an inclusive and healthy corporate culture and, finally, the ability to effectively recruit top talent in a competitive environment from generations that care more about company actions than any before them. At every level of the business, it is either adapt or die. To do that, though, you need to know what’s going on, easily and rapidly, so leaders can design and implement effective strategies, then make fast decisions. sustainabilitymag.com

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ESG

The economy demands urgent ESG reaction PricewaterhouseCooper’s 25th Annual Global CEO survey found a significant correlation between high rankings for consumer trust and net-zero commitments. It also found that two thirds of companies with revenue of US$25bn or more had made net zero commitments, compared to just 10% of those with revenue under US$100mn. Big companies, with a big impact, have the perspective to see the need for change - and so their leaders are the most vocal and active in driving it.

“ Reporting shouldn’t be the main job of ESG professionals. Driving initiatives across their businesses and driving change should be” MARLEEN OBERHEIDE

LEAD SOLUTIONS ENGINEER, ONETRUST sustainabilitymag.com

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“I think [ESG reporting] is rapidly maturing,” says Casey Herman, PwC’s head of ESG in the United States. Herman’s department helps companies report on ESG, as well as develop and implement practices. “If you compare it to financial reporting, we've been investing in establishing rules, guidelines, standards, technologies, internal controls, and processes around financial reporting for well over a hundred years, even much longer than that. We've been focused on it in ESG for maybe 10. “The evolution process is going to continue and there will be some sort of consolidation on rule making, and a conclusion on what the applicable standards are. I think that's already happening. The field is narrowing, and it will continue to narrow, but as time goes on, there will continue to be a great deal of interpretive work that needs to be done to put fine points on those policies and rules that become generally accepted across the groups and users of that information.” Interpretive work is the key point. A search for consistency in metrics and understanding has prompted a surge in global hunger for understanding ESG execution itself. “A great deal of investment is needed in the education of what those rules are, how they're applied, the technology that is developed to maintain and create and port that information in both a timely manner and at an investment-grade quality.” The role of ESG in investment decisions A large part of this global ESG hunger is taking expression in investment portfolios. Money talks, and it is even louder as new generations of high net worth individuals take up the mantle, demanding an overview of what they are investing in, with ESG at the top of their criteria. 50

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“ We've been investing in financial reporting for well over a hundred years. We've been focused on ESG for maybe 10” CASEY HERMAN HEAD OF ESG, PWC


NewDay Impact Investing is a platform that allows consumers to access impactful ESG investments from as little as US$5. Anne Popkin is its new President and Chief Operating Officer. NewDay launched in 2018 with six proprietary funds - Global Impact, Climate Action, Gender Equality, Animal Welfare, Ocean Health and Freshwater - and while it does court consumers, it also serves traditional and institutional investors. “We consider NewDay to be a combination of a quantitative as well as qualitative investment firm,” Popkin says. “We serve institutions and we are looking to do a combination of investments and we look to provide education through round tables with major family offices and other institutions. Utilising technology platforms, we hope will make us incredibly impactful with our institutional clients.”

PwC's US ESG Leader shares insights on the current state of ESG

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ESG

Marleen Oberheide, Onetrust

Casey Herman, pwc

Anne Popkin, Newday

“Can you imagine if I said we were not going to consider 50% of your customer base? You would be outraged” ANNE POPKIN

PRESIDENT AND CHIEF OPERATING OFFICER, NEWDAY

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“I think there is a growing understanding of the need for this,” says Popkin. “We are 75% a diversified workforce. Our board is 67% and our advisory board is 50% diversified. “Can you imagine if I said we were not going to consider 50% of your customer base? You would be outraged.”

The role of technology - platforms and solutions - is where ESG reporting finds its edge. “Here is where a platform like NewDay is very valuable. You can screen in many companies, databases and so on, screening out the ones you don't invest in.” By screening out according to ESG criteria, Popkin says companies that do not make the cut are excluded from investment decisions.

Making ESG reporting adoption easier “I think, generally speaking, there’s still a lot of insecurity in the market on what framework to report against and how to collect all the data that’s required,” says Marleen Oberheide, Lead Solutions Engineer at OneTrust, whose OneTrust ESG solution is a leading sustainability software for managing and reporting ESG. Oberheide says ESG reporting itself should be handled by solutions, with executives left to focus on organisationwide change. “Many organisations I speak to spend months just gathering data and building their ESG reports,” says Oberheide. “In my view, reporting shouldn’t be the main job of ESG professionals. Driving initiatives across their businesses and driving change should be. Most data that’s required for ESG reporting already exists within organisations, but people aren’t aware. Software solutions like OneTrust can help to find that data, build a central repository of information to facilitate easy reporting and allow for data-driven decisions.” In a world of big data, hyper connection and rapid change, the ability to effectively enact and monitor ESG metrics is what will separate the winners of the decade from the losers. sustainabilitymag.com

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DESIGN & MANUFACTURE REPORT:

Sustainable supply chains are in SAP’s DNA AD FEATURE WRITTEN BY: SEAN ASHCROFT 54

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EXECUTIVE INTERVIEW

Sustainable supply chains are in SAP’s DNA Sustainability - from a product’s conception to its recycling is baked into SAP’s enterprise software application solutions

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or some time, sustainability has been gaining traction as a corporate aspiration. But following COP26 in 2021 the drive towards net zero carbon emissions by 2050 was enshrined in law by most nations in the developed world, making sustainability a mission critical business goal. At the sharp end, helping make today’s businesses more sustainable, is SAP. SAP has made sustainability integral to its solutions, so that businesses can think green and behave green, from one end of the supply chain to the other. “The supply chain encompasses every part of the process, all the way from design and manufacture to planning, logistics and asset and service management,” says Martin Barkman Senior Vice President, Global Head of Solution Management, Digital Supply Chain at SAP. “Not only does each of these directly impact sustainability, but they're also interrelated.” 56

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This is why SAP solutions are designed to work at every stage of a product’s life cycle - from how it is conceived to how it is recycled. SUSTAINABLE SUPPLY CHAINS, FROM DESIGN TO OPERATION Barkman says that on sustainability, SAP solutions can be categorised broadly as enablers of:

MARTIN BARKMAN

• The drive toward lower or zero emissions • The drive towards zero waste • The drive towards a circular economy • The drive towards zero inequality Barkman and his global team help businesses across all sectors worldwide keep sustainability top of mind every step of the way, from product concept to product consumption; and to re-use as part of the circular economy. SAP does this by making sustainability a focus in how products are designed, manufactured, moved, and used.


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“If you think about how a product is going to be manufactured when you design it, then that's a much better and more holistic approach,” says Barkman. A properly designed product will impact how sustainably that product can be manufactured.” Not just how it is manufactured, either, Barkman reminds us, but also how a product is distributed, used, and recycled. “Design can impact the cost of logistics, and ultimately also how the customer experiences the product, and how that product is recycled, reused, or returned to the earth,” he adds. How SAP is able to bring together the stages of design, planning, production, distribution and operation - and digitalise those processes and allow them to operate continuously with each other - “is particularly interesting to me,” Barkman says.

A properly designed product will impact how sustainably that product can be manufactured He adds: “For example, when you design a product, how do you design with sustainability and the circular economy in mind? You have to think about whether the raw materials can be reused, or at least if they are biodegradable? “Then, when it comes to manufacturing, you want to know you’re making it in the right place - that you're not generating too many emissions by transporting the raw material. Are you generating too much waste in the manufacturing process, and ensuring the health and safety of the workforce?” OVERCOMING THE CHALLENGES OF SUSTAINABILITY IN MANUFACTURING The manufacturing process also poses sustainability challenges, says Barkman: “You have to be smart about keeping equipment properly maintained and serviced, so that you’re not constantly replacing and disposing of components. The aim is to extend the life of all of your supply chain assets.” He adds: “It can get complex, which is why SAP solutions are absolutely geared towards helping companies navigate through all of this, to make sure they’re always headed in the right direction.” sustainabilitymag.com

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On the ground, SAP solutions help businesses make sustainable decisions in practical and profitable ways. SAP has software that allows companies to design and produce products in an environmentally responsible way, by helping them manage exactly what needs to be in any given product’s bill of material.

“A business may need to make a change to a product’s bill of material,” says Barkman. “We can help them WATCH: make that change at the design stage, DIGITAL and then translate this into a bill of SUPPLY CHAIN material for the various manufacturing SOLUTIONS steps. If a business can do this digitally, more or less on an ongoing basis, then that’s going to drive both productivity, profitability, and sustainability to a whole new level.” Other SAP solutions are allowing companies to take carbon-emissions tracking to the next level, says Barkman. “We have software applications that allow companies to manage the environment, health and sustainability of their operation in the best possible way,” he explains. “We're bringing sustainability KPIs into our applications.”

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DESIGN & MANUFACTURE

GRAND AMBITIONS AROUND SUSTAINABILITY CAN BE A CHALLENGE When it comes to embedding sustainability into company-wide processes surely there are challenges? Changing regulations from country to country, for example. “Of course, we want to ensure our customers have the right tools, processes, and systems to be in compliance with regulations,” says Barkman. “But in some ways, it’s gone way beyond regulations. The journey into sustainability kind of began with that base level of regulations, and these don’t really change.” Now, he says, the real challenge is more about keeping up with customers’ ever-more ambitious sustainability goals, while maintaining profitability. “The United Nations has set some pretty top-level sustainability goals, and many of the businesses we meet have rigorous aspirations and goals for how they want to operate, and how they want to help lead us towards a more sustainable world. I’d say that the real challenge is how we lead these companies towards those noble, but high-level, goals.” Sustainability is complex, rewarding work for SAP, but Barkman says the tech that underpins its solutions has a paradoxical tinge. He cites the pandemic e-commerce boom, which has seen a global shift away from in-store purchases to omnichannel-driven e-commerce. “The technologies that are helping drive us towards sustainability are the same ones that are enabling consumers

MARTIN BARKMAN TITLE: SENIOR VP, SAP DIGITAL SUPPLY CHAIN SOLUTION MANAGEMENT GLOBAL HEAD Martin Barkman is senior vice president and global head of marketing & solutions for digital supply chain at SAP. Martin’s global organisation leads marketing, strategy, and growth initiatives for SAP’s Digital Supply Chain solution portfolio, which encompasses software for R&D, engineering, supply chain planning, manufacturing, logistics, and asset management. These solutions enable resilient and customer centric supply chains that are more agile, productive, connected, and sustainable Martin joined SAP in 2013 following SAP’s acquisition of SmartOps Corporation, where Martin served as the Chief Executive Officer. In his career, Martin developed a broad supply chain technology and management experience through roles ranging from corporate strategy consulting at McKinsey & Company to product supply and manufacturing management at Procter & Gamble.


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to behave in ways that aren’t so sustainable,” he says. “People sitting at home ordering one thing after another to be shipped to their doorstep in a way that involves multiple journeys is not the most sustainable way to do things.” He adds: “The pandemic changed many things for consumer packaged goods companies and of course retailers, and the key question now is whether we are going to continue buying the products online at the same rate, or if that will change, like it was showing signs of doing prior to the pandemic.” Outside of e-commerce, Barkman says there are other factors posing sustainability challenges. “Different industries are facing many different challenges these days, of which sustainability is but one thrown into the mix. The ultimate aspiration is creating resilient customer-centric and sustainable supply chains. I think different industries and sectors will take different routes and paths towards this.” NET ZERO IS CHANGING THE WAY BUSINESSES SEE THEMSELVES Beyond the paradox of technology, there are other philosophical elements

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to the global drive towards net zero, says Barkman - namely, the way sustainability is changing how companies view themselves. “There was a time when the only school of business thought was that companies exist for the sole and exclusive purpose of driving value for shareholders,” he says. Economics and sustainability have usually been at odds, admits Barkman, but adds that he is now seeing a “coming together” on this front. He says that this most often manifests in corporate goals and mission statements coupled with real innovation that is profitable because it facilitates sustainability. Consumers and customers will expect it, and so that is how sustainability in the end leads to shareholder value. “Increasingly, these are not limiting what corporations are setting out to do,” he says. “Businesses are still taking care of stakeholders but by driving strategy that in part has a vector specifically aimed at and around sustainability. In fact,


DESIGN & MANUFACTURE

investors are putting their money into companies that can show that they are both sustainable and profitable.” While businesses are undoubtedly moving towards their net zero goals, are they being pushed by the court of public opinion into doing so at a rate that will prove unsustainable for many? “Sustainability is an area of innovation,” he says. “As such it’s going to draw new investment and new areas of focus. There will be some amazing successes, and there’ll be those who struggle and perhaps those who fail. That is expected.” He adds: “That's actually a sign of something positive happening. That means risk is being taken. Things are being tried. It shows that businesses are stretching the limits of their imagination and capabilities, and in many cases, the failures will provide the largest source of continuous learning.”

Businesses want to feel good about what they do and how they do it. We can help them with this As for the biggest barrier to sustainability, Barkman feels this is “information, collaboration and visibility”. “These are the priorities,” he says. “Companies want to go on this journey but what they find difficult is how to get started in a meaningful way? How do you do something with all this information?” He adds: “In many cases, people will know what should be done, but putting this into action can make them feel like they’re stuck in the starting blocks. Once they start working around visibility across the end-to-end supply chain, though it soon becomes clear that it’s data where you begin.” But the need for businesses to embark on sustainability transformation programmes will only ever grow more pressing, says Barkman. “Consumers want the companies, products or services they purchase and interact with to be sustainable,” he says. “Increasingly the products people purchase are being looked at through the lens of sustainability. I see a lot of companies making this central to what their value proposition is, as they are driving innovation. At the end of the day, businesses want to feel good about what they do and how they do it. We can help them with this.” sustainabilitymag.com

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DIVERSITY

DREAM CORPS UPLIFTS BLACK ENTREPRENEURS

SHINE IN

SUSTAINABILITY We look at black entrepreneurs from Dream Corps' Green For All programme, and how it helps bring diversity and inclusion into senior sustainability roles WRITTEN BY: BLAISE HOPE

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fforts to bring racial equity into the workplace and into traditionally nondiverse environments are growing, from JPMorgan’s efforts to lift people from underrepresented groups to the heights of the financial world to activist investing and grants specifically targeting minority entrepreneurs. Dream Corps, founded by the US political commentator, broadcaster, activist, and lawyer Van Jones, is one initiative that is having wide impact in addressing racial equity in the US economy. Dream Corps “closes prison doors and opens windows of opportunity” but also seeks out and amplifies black entrepreneurs doing groundbreaking work. sustainabilitymag.com

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CREATING BUSINESS VALUE THROUGH SUSTAINABLE ENERGY Ensuring you have the best partner at your side.

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DIVERSITY

The nonprofit is also the parent organisation of Green For All, which focuses on building a green economy and lifting people out of poverty. Michelle Romero, Chief Programmes Officer of Dream Corps, has worked at both the parent organisation and Green For All for six years. “Before Dream Corps was founded in 2007, Van Jones, was working as a criminal justice organiser trying to get people out of prison,” says Romero. “It was at that time he had successfully helped to prevent and close an Alameda county superjail. That was a win, but he realised that if all of the work that he was doing was to get people out of prison and returned back to the communities they came from, what offer of hope or possibility for a new life was that they were really just being returned to the status quo.”

“IF THE ENVIRONMENT DOESN'T CONSIDER DEI, THAT'S A BIG PROBLEM BECAUSE MANY ENVIRONMENTAL ISSUES DISPROPORTIONATELY AFFECT BLACK AND BROWN PEOPLE” REGINALD PARKER FOUNDER, SYNC ENERGY AI

We Are Dream Corps

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MEET THE SPEAKERS Robert Kabera

Mina McCullom

COMPANY: SYNC ENERGY AI

COMPANY: SYNENERGY

Robert Kabera is the founder of Sync Energy AI, the leading power outage prediction firm in the United States. Their predictive grid failure analytics tool visualises all vulnerabilities on the electric grid ahead of time, allowing cities, municipalities, insurance companies, and natural disaster response companies to visualise weather-related disasters up to 6 months in advance with 97% accuracy. Kabera, who is originally from Rwanda and fled the genocide as a child, believes dealing with carbon is the universal requirement for global business. The one key takeaway for a large corporate executive that really wants to make a dent in this fight against the climate crisis, but also have the greatest impact on society is carbon removal. All these problems are happening because we are now a degree and a half warmer than a hundred years ago because of CO2 emissions. As a result, we are having five times more frequent and magnitude of extreme events. “The people that are suffering the most from these emissions are people in the developing world, in Africa, in the Caribbean and Pacific states. Those locations are the ones that also have the greatest carbon removal capacity.”

Mina McCullom is the President and CEO of SynEnergy, which engineers high-performance buildings to be more energy efficient. Her work focuses on large infrastructure owners, including international airports, Department of Defence installations, data centres, large-scale laboratories, and multifamily developments. “My goal in working with Dream Corps is to help with their mission to bring jobs in several areas. My mission, in parallel to that, is to bring - high-paying - engineering jobs to these minority communities. I'm starting at the university level and starting a pipeline there to inform college students about Dream Corps and about SynEnergy, what we do, and potentially to get them to start working full time for us. “I feel honoured to be around such high achievers.”

“MY GOAL IN WORKING WITH DREAM CORPS IS TO HELP WITH THEIR MISSION TO BRING JOBS IN SEVERAL AREA” MINA MCCULLOM

PRESIDENT AND CEO, SYNENERGY

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DIVERSITY

Reginald Parker

Ron Delyons

COMPANY: OPTIMAL TECHNOLOGY CORPORATION

COMPANY: CREEKWOOD ENERGY

Reginald Parker is CEO and Founder of the Optimal Technology Corporation, which has made huge advances in solar technology. Parker’s work has made solar 21x faster to install and 40% cheaper, and his technology rates 42.3% efficiency, double the industry norm of 21%. OptimalTech is behind many new product and process technologies in clean energy, renewables, and manufacturing. “The second law of thermodynamics is to go to the easiest state and to not care when you don't have to. A lot of DEI initiatives have now turned into ESG initiatives, and I have no problems with moving diversity into ESG, but when the environment doesn't consider diversity, equity and inclusion, that's a big problem because a lot of the issues related to the environment disproportionately affect black and brown people. “Of the 1.1 billion people who have no access to power, 600 million live in Africa.”

Black Future Weekend pictures by Katie Beth Barber

Ron Delyons is the longtime CEO of Creekwood Energy, a cleantech integrator and renewable energy asset developer, owner, and operator. His career has led through a series of sustainable solutions that focused on modernising infrastructure, achieving net zero, and efficiency and resiliency. He also works on providing opportunities for veterans and people exiting the prison system. “I'm hopeful about my children's future. I don't know how much movement we will make as a global society in my lifetime, but I'm hopeful that as my children get older and they put their stakes in the ground and begin to develop who they are and what they want to accomplish, when they have children, I think there will be more opportunities, assuming we can keep the planet from bursting into flame. “I always tell them, this is not for me. I'm pretty sure the planet's gonna be around long enough for me. This is for you and for your children, for their children and so forth. So I'm cautiously optimistic.”


“I ALWAYS TELL THEM, THIS IS NOT FOR ME. I'M PRETTY SURE THE PLANET'S GONNA BE AROUND LONG ENOUGH FOR ME” RON DELYONS

CEO, CREEKWOOD ENERGY

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To build a better world for ex-convicts to go back to, the organisation focused on the green economy and sustainability. “There are many amazing green jobs and workforce development organisations across the country,” says Romero. “Most of them are doing reentry level green job work. What we're trying to do is figure out how you get underrepresented black and brown talent into green jobs at other stages of an organisation.


DIVERSITY

“So, for instance, clean energy finance: these are jobs where if you have a traditional financial background, you still need the sort of solar modelling and clean energy for skills training. We asked ourselves if there was a way we could take people that are in finance and on that path and give them the specific skills they need to be effective in the sustainability space, and put them into jobs at companies that are looking for those skills? We've got all these companies

who are looking for sustainability officers for instance - How do we get folks into that pathway? Jones and Romero have brought a range of entrepreneurs into the fold, training them in everything from green energy to media relations. Here we highlight four entrepreneurs making waves through Green For All. You can also celebrate black entrepreneurship at Black Future Weekend on June 24-26 in Miami. sustainabilitymag.com

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PLANNING & SOURCING REPORT:

SAP makes sustainability a question of planning AD FEATURE WRITTEN BY: SEAN ASHCROFT 70

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EXECUTIVE INTERVIEW

SAP makes sustainability a question of planning

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SAP’s Integrated Business Planning software solution is helping businesses make sustainability part of the fabric of their enterprise-wide operations

he age-old adage, ‘Fail to plan, plan to fail’ has never been more true for those in charge of today’s disruption-hit and unpredictable supply chains. In truth, an agile approach to supply chain planning has always been a prerequisite for any efficient and cost-effective supply chain. It’s just that in today’s pandemicshaped world the density of disruptions to both demand and supply - and the structural integrity of global supply chains - rapidly evolved and accelerated the adoption of digital technologies. One man who knows better than most just how far the planning needs of businesses have evolved is David Vallejo, SAP’s Global Head of Digital Business Planning Vice President. Vallejo runs solution management for digital business planning at SAP, whose Integrated Business Planning software solution is a market leader in this area. 72

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DAVID VALLEJO

“I've been in supply chain planning all of my career,” says Vallejo. “The reason I moved to SAP was I saw the exciting work it was doing in moving supply chain planning into the cloud.” Sustainability is a key area that Vallejo and his team are helping businesses plan around - particularly in terms of how to balance sources of supply. With 80% of a company’s carbon footprint being Scope 3 emissions from its supply chain, this is a vital area. “Sustainability starts with product design, and this then feeds into the manufacturing and logistics processes. Planning is the intelligent brain that holds these areas together to attain the desired business outcomes,” says Vallejo. “Have you designed a product that contains elements or components that are bad for the environment, or have you set it up to be recyclable,


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Sustainability starts with product design, and this then feeds into the manufacturing and logistics processes

to support the circular economy? This is a key question when planning new product launches for example.” PLANNING COMES INTO ITS OWN WHEN FACED WITH TOUGH CHOICES “It’s a question that feeds into others,” says Vallejo - such as whether a company is transporting lots of raw materials from around the globe. “The strength of sustainability planning comes into its own when there are marked alternatives.” sustainabilitymag.com

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“Do you use suppliers in China for raw materials, or local suppliers, for example?” he asks. “There will be a price difference for sure, but also a huge sustainability difference, because one will probably involve air transport. Planning can help with making sustainability decisions like this.” Sustainability measures are sometimes cast as being bad for the

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bottom line, but Vallejo says that being green and making money “often times actually go hand in hand”. DIGITAL He adds: “For example, I've worked with BUSINESS PLANNING a customer whose supply chain was set up with what’s called international direct ship. They were manufacturing electronic devices in China and packaging them ready for air shipment to the US market. “The business benefit of this is a two-day lead time from production to arriving in the US. The disadvantage is the huge environmental footprint of air versus sea transport.” Vallejo says that in situations like this, business planning helps balance transportation volumes with customer service and availability. “We helped this company balance profitability, sustainability, and customer


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service simultaneously. We helped them find a sweet spot whereby a certain volume goes by sea and a certain volume by air. It was a happy medium that allowed it to meet all of its goals.” The end result was that a lot more volumes could be shipped by sea which saves thousands of tons in CO2 emissions. HOW DOES SAP HELP BUSINESSES WITH EMISSIONS? Vallejo says that SAP business planning solutions help with emissions by encouraging companies to begin tracking data. “You can't control anything you don't track,” he says. “Everything in the supply chain is measurable and can be added into the planning environment. We encourage companies to think of tracking as being like a currency. You take all aspects of supply - transport, manufacturing, supplier footprint and you track it all. When you onboard a supplier it shouldn’t be just about product quality and price. There should also be sustainability questions included in supplier questionnaires.” He reminds us that this is not just for tier 1 suppliers, either - but also tier 2 and 3: “Who supplies your suppliers? This is where the technology is evolving, so that it can propagate information downstream in the supply chain, and create standard ways and best practices to onboard suppliers with a view to delivering more-sustainable output.” Having a sustainability dimension to data is something SAP takes very seriously. “This is exactly why we believe such data should be treated just like a

DAVID VALLEJO TITLE: SAP’S GLOBAL HEAD OF DIGITAL BUSINESS PLANNING VICE PRESIDENT David Vallejo is globally responsible for solution management and go-to-market for SAP’s Digital Business Planning portfolio which includes SAP’s cloud flagship SAP Integrated Business Planning (SAP IBP). David helped many global companies define and implement their strategy around Supply Chain Planning and Execution and has been honored with the “Prosto-Know” award in 2014 by the Supply & Demand Chain Executive Board. David held various leadership roles within SAP, before assuming his current role also driving the successful launch of Ariba’s supply chain business network focusing on Direct Materials collaboration across the extended supply chain and driving the customer co-innovation program as product owner for SAP IBP. Prior to joining SAP 8 years ago, David had several global leadership roles managing Customer Delivery, Solution Management and Product Management at E2open and icon-scm.


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financial currency,” explains Vallejo. He adds that businesses are also coming to realise that sustainability is now mission critical, and that it can help them achieve their economic goals. “If it hits the news that your supply chain is not operating in a sustainable way this can have a tremendous impact on your brand, and a disastrous impact on the consumption of your products,” says Vallejo. “Businesses are beginning to realise there is a relationship between success and operating sustainably.” He adds: “Increasingly customers are looking for sustainable products and services. Over time it will be the norm for products to be labelled for sustainability in the same way they’re labelled for ingredients. Companies that take the view that being profitable is all that matters will eventually cease to exist.” 76

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OPTIMISING INVENTORY IS KEY TO BEING SUSTAINABLE Optimising inventory is another area in which SAP can help companies operate more sustainably. In today’s world, when it comes to inventory, the past can no longer be used to predict the future. “Inventory should be a function of how well you can predict both demand and supply,” points out Vallejo. “If it's 100% predictable, in theory you can have no inventory at all. Everything can be just-in-time.” What SAP’s Integrated Business Planning solution does is help customers measure volatility, and it’s this that helps control spoilage and waste. Vallejo says: “We use a scientific method to right-size inventory across the supply chain, which we call multiechelon inventory optimisation. Companies have seen fantastic results using this technique. They’ve been able to reduce inventory, which not only lessens the drain on working capital but also reduces waste. This is especially important for products that can have a high carrying cost or deteriorate in value.

If it hits the news your supply chain is not sustainable it can have a big impact on your brand and on the consumption of your products


PLANNING & SOURCING

We use multi-echelon inventory optimisation to help businesses reduce inventory and cut waste “And let’s say a customer wants to change the formulation of a product. Here, they would want to know exactly how much inventory of the old product they have left before introducing the new product. Inventory optimisation can help tremendously in this way with reducing spoilage and waste in the supply chain.” Even in complex consumer-goods markets - where sales of one product might impact demand for the same company’s other products - SAP can help keep inventory on track in terms of carbon footprint - to manage those phase-in/phase-out processes. And thanks to better support of artificial intelligence (AI) these processes now happen in more real-time and low-touch. “Managing inventory for interrelated products can be a massive problem,” admits Vallejo. “This is where demand planning built on AI and ML comes in. We can use this tech to look at patterns and interrelationships between not only the products themselves but between the products and other factors, such as the economy, the environment and the market. One simple example

is how the price of steel and oil impacts the portfolio mix and prices in automotive prices.” AWARENESS THE BIGGEST BARRIER TO PROGRESS ON SUSTAINABILITY But of course, integrating sustainability into enterprise-wide systems and processes can be hugely challenging for companies. Often the biggest problem is one of awareness. “There is a lack of awareness of how important sustainability is as a planning discipline,” reveals Vallejo. “We often see companies create offline afterthe-fact sustainability reports - maybe on how they did on this front in the previous quarter. “The biggest challenge is making them realise that their sustainability

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SAP REPORT

SAP’s Integrated Business Planning software solution provides end-to-end supply chain visibility Today’s supply chains have become difficult to manage, due to unprecedented levels of demand and supply volatility, the rise of omnichannel, an increase in geopolitical uncertainty and the inability of siloed data to offer a holistic view of the supply network. SAP Integrated Business Planning (IBP) is a cloud-based planning solution that helps businesses analyse, manage and optimise their supply chain. It provides a single platform to analyse, predict and simulate the entire value chain to anticipate changes and respond with a resilient and sustainable action plan. With SAP IBP, the customer is able to manage multiple end-to-end processes in real time, by combining planning functions such as sales and operations planning, demand planning, inventory management, and supply planning fully integrated into financial planning, manufacturing, logistics and the SAP Business Network for trading partners. This cloud-based solution also allows companies to simulate the effects of customer demand on processes, in terms of capacity, cost and profitability. It can execute planning processes through real-time supply chain management, while allowing businesses to analyse data and generate real-time predictive and prescriptive analytics.

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goals must inform their decisions around supply chain planning. In logistics, an example this would mean deciding how much volume you send by boat, air, truck, rail.” “Sustainability is an awareness hurdle, but it's not actually that difficult to incorporate into your planning. We’ve just released a carbon-footprint dimension across SAP Integrated Business Planning. Really now it’s all about awareness and training.” Of course, planning isn’t solely about sustainability; avoiding disruption is also vital. “To overcome disruption you need to be able to anticipate what could happen, what the impact would be and how you can be prepared to mitigate better,” says Vallejo. So for example, if you have a single-source supplier that's performing well today, what if that supplier has a problem in the future? It’s the same if you use a single transportation route that's critical for you.”


PLANNING & SOURCING

To this end, he says what-if scenarios are key, because it means that before any disruption happens, there will be a response plan in place. “This is where planning can help tremendously, in terms of being prepared and, therefore, resilient,” says Vallejo. He adds that another important resilience-boosting aspect of planning is how it helps with supply chain response management, which is about responding better when disruption actually hits. “Remember, disruption isn’t always upstream, with suppliers,” Vallejo stresses. “It can also be downstream, with changes in demand or problems with transportation. Using real-time planning, you can see what the impact of such disruption will be, and figure out alternatives. You might reroute volumes, for example, or rebalance

I think we will see dramatic changes in the way products are designed inventory. All of these decisions need to happen instantly, and this is where a digital planning environment can help to synchronise decisions across finance, manufacturing, logistics and the business network in near real time. These are today’s problems, but in a forward-looking business such as SAP, experts like Vallejo always have one eye on the future. He sees big changes afoot in what it will mean for supply chains to be sustainable “I think we will see dramatic changes in the way products are designed,” he says. “Today, when you order things online sometimes the product is way smaller than the packaging it comes in. We’ll see reusable packaging that you can return for the next product to be shipped to you, for example.” And he believes some products themselves will change drastically. “Take detergent, such as shampoo. Up to 99% of shampoo is water, which is heavy and bulky to transport. Yet when you’re in the shower, you're standing in water anyway. I believe shampoo will come in capsule form eventually. Previous generations might not have been open to such a change, but I think today’s younger generations will be.”

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NET - ZERO

COAL ELIMINATION

UNCOVERS THE FUTURE OF THE ENERGY SECTOR

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With coal out of the picture, governments and businesses remain dependent on fossil fuels to reduce future barriers to sustainable energy and commerce

WRITTEN BY: TOM SWALLOW

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n the 12th of November, COP26 came to a close and 135 countries pledged their commitments to netzero emissions as part of the overall responsibility for reducing climate impact. But, this task is not one to be underestimated. As one of the largest industries and the largest contributor to pollution accounting for around 70% of global energy consumption, the time is now for a shift in the way we consume energy. With a historic industrial presence, what will it take for the world to move away from fossil fuels and will it be achievable? A discovery that fueled the industrial revolution While it’s easy to throw shade on fossil fuels and their creation of harmful greenhouse gas (GHG) emissions, back in the early 19th century, coal and oil were driving significant industrial changes. With the initial industrial revolution taking place, manufacturing and other industries soon took to using oil as their primary source of energy. In the event of the Spindletop geyser, in Texas, the US became aware of its availability and it quickly became one of the country’s largest industries. Within a single year, there were more than 1,500 oil companies established, making oil the dominant fuel for the majority of industry developments.

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More awareness around the use of oil led to more adoption of the fuel across the globe. Standard Oil Company became the first oil producer in Saudi Arabia, which began supplying it to producers of grease for machines and vehicles, and as an illuminant for certain medicines. At this time, the development of kerosene was also underway as Rock oil was distilled from shale to create the substance, which, unknown at the time, would go on to fuel international flight. Positioning fossil fuels in a post-COP world While COP26 provided a clear written commitment to eliminate the use of coal by either 2040 or 2050 (depending on the country), fossil fuels will remain a big business. While they won’t be as significant in energy production, oil and gas demand will be retained by the production of chemicals and plastics. During the coronavirus pandemic, the industry witnessed a decline in growth to around 1% per year, however, the world still consumes around 4.5 billion tonnes of oil and one billion tonnes of petrochemicals — natural gas and oil that is used in chemical production. 350 million

tonnes of petrochemicals are pumped into plastics annually, suggesting there is a long way to go before plastic production is eliminated despite corporate efforts to create more eco-friendly products and packaging. Another alternative to coal energy production, nuclear energy research has uncovered major breakthroughs in recent years with the recent success of nuclear fusion, providing promising results for what seems to be a clean source of energy. Despite these promising developments, not everyone is on board with the idea. In the wake of nuclear catastrophes, such as Chernobyl in 1986 and Fukushima in 2011,


Arrow Energy’s Surat Gas Project In 2020, the fuel provider turned its attention towards the production of natural gas in Australia and the expansion of its liquefied natural gas (LNG) output from Nigeria. With a stake in gas power production in Australia, Shell entered into the first phase of Arrow Energy’s Surat Gas Project — a development that intends to meet the energy needs of its locality as well as demands from overseas. To minimise safety and environmental risk while streamlining the process, the gas produced from Surat will be transported through Shell pipelines and will be treated at its QGC LNG plant.

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Germany has been reluctant to maintain its use of nuclear power and is seeking out methods to go green with its current gas and renewables sources. The so-called ‘antinuclear movement’ is driven by Germany’s efforts to create clean energy through its renewable sources and, since committing to the idea, has set about shutting down all of its nuclear operations. Energy leaders action the renewable energy demand Organisations are well aware of the demand for renewable energy sources, not only for consumers across the globe but for the survival of their businesses. Orsted provides a great example of this, having transformed from a fossil-fuel-based energy provider to adopting green energy sources with its investment of DKK193bn (roughly US$29.4bn) between 2010 and 2019, taking green energy sourcing to 90% of its portfolio. Over the next few years, the company will invest a further DKK200bn to continue its energy transformation.


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Natural gas is also a key component for reducing environmental impact. While it is not capable of decarbonising the industry, it will provide a buffer towards eliminating coal. According to the International Energy Agency, natural gas emits around 45 to 55% fewer greenhouse gas emissions, which is why Shell has adopted this fuel as a way to reduce its climate impact. Who pays for renewable energy adoption? While the world relies on renewable energy sources, cleaner energy comes at a price. For companies to make the switch to renewables, a significant amount of investment is required to develop and install reliable solutions for renewable energy. General Electric has played a significant role in this with the design of its Haliade-X wind turbine; a triumph in offshore wind energy

with a 60 to 64% capacity factor — based on its output while functioning continuously at full power. However, with the cost of installation between US$3,000 to US$8,000 per kilowatt (KW) of capacity, erecting just one 12-megawatt (MW) turbine could cost almost US$100mn. Another hurdle the industry must face is energy storage. While renewable solutions are important for decarbonising energy generation, adequate battery storage systems are required to ensure that solar and wind farms can operate at higher percentages. Batteries are also risky in warmer climates, which was witnessed in August 2021 when Tesla’s Megapack went up in flames at a Victoria-based storage facility. For renewable energy adoption to be effective, such solutions must be costeffective for businesses and, for the most part, reliable in the long term. Achieving this means decarbonising all aspects of the renewable energy supply chain, from

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Wind power Wind power goes back longer than is commonly known. In 1887, Charles F Brush, an American Scientist, oversaw the construction of the first automatic wind turbine for the process of generating electricity. Brush continued to develop his design and created a much more efficient version in 1899, using a small number of rotor blades to increase energy generation — hence industrial wind turbines are built with only three rotor blades.

the manufacturer and construction of sites to the maintenance and potential operational risks. While we can expect big energy names to invest heavily in renewable energy adoption, the commitment of public sector organisations is also required to make the transition. As ESG investment moves in full force, industries can expect support from public investment funds. One of the largest sovereign wealth funds in the world, the Saudi Arabia Public Investment Fund began talks in 2021 of green-related debts as it diversifies its portfolio. Meanwhile, much further north, Norway’s sovereign wealth fund, managed by Norges Bank Investment Management — responsible for Norway’s US$1.4tn oil fund, is expanding its efforts as a significant investor in sustainable technology, aiming for the highest possible returns with the lowest possible risk.

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KDDI SET TO ENTER

THE THAILAND MARKET WITH

TELEHOUSE CARRIER NEUTRAL DC

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AD FEATURE WRITTEN BY: ILKHAN OZSEVIM PRODUCED BY: LEWIS VAUGHAN


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KDDI TELEHOUSE

The Carrier-Neutral Data Centre company KDDI Telehouse is preparing to enter the Thailand market to meet growing demand in a rapidly developing data ecosystem

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magine that you live in a city where you could enjoy all of your daily activities and entertainment in one place without going out of town, such as a shopping mall or amusement park. The concept of a carrier neutral data centre (DC) is the same” says Manabu Takagi, General Manager of KDDI Telehouse, Global Data Center Business. Carrier-Neutral DCs are a breed of DC architecture that resolve connectivity issues that can transpire from being attached to more conventional data centres. ‘With multiple connectivity partners located in a carrier-neutral DC, customers can obtain all the connectivity services they need - such as internet services - from service providers within the DC. They also benefit from the low latency, greater efficiency and reliability, and greater flexibility that the DC environment can offer’ he says. The obvious implication is that data centres lacking carrier neutrality can suffer from the limitations that KDDI Telehouse is providing solutions for. Data centres that are ‘carrier-biased’ can restrict their users to just a single connectivity service, a need to venture out of their remote digital villages to access their limited digital services, which can be inconvenient, costly and even risky. KDDI Telehouse solves this problem by allowing its clients the freedom to quickly shift between the multiple services available to their customers within their carrier neutral network.

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Manabu

TAKAGI

Example of an image caption


MANABU TAKAGI TITLE: G ENERAL MANAGER OF GLOBAL DATA CENTER BUSINESS INDUSTRY: TELECOMMUNICATIONS LOCATION: JAPAN Manabu Takagi is the general manager of Global Data Center Business at KDDI headquarter excluding Japan. He leads the international business unit that manages strategic planning and business development such as M&A and partnering, and also manages the profitability of overseas data center business. With an over 15-year specialized experience in the data center and business development field and joined KDDI after working for PwC and a consulting firm specializing in DC. Manabu holds a master’s degree in Law from Waseda University in Japan.

“ AS AN ENERGY SAVING STRATEGY, ONE OF OUR BIGGEST STRENGTHS CONSISTS OF HIGHLY EFFICIENT DATA CENTRES WITH A LOW PUE (POWER USAGE EFFECTIVENESS)”


KDDI TELEHOUSE

“Moreover,” says Manabu Takagi, “carrierneutral DCs can increase speed to market by enabling connections to providers quickly and creating strategic networks with customers to improve their service offerings. Customers can therefore enjoy the rich connectivity and flourish in this DC ‘city’.” Before joining KDDI Telehouse, Takagi worked with a consulting firm - one of the Big Four, plus another firm specialising in DC’s and has had over 10 years of experience in the data centre industry. He joined KDDI in 2017 as Strategic Planning Manager. Now General Manager of Telehouse, Global Data Center Business, Manabu Takagi is responsible for the global Data Centre team excluding Japan - with roles and responsibilities spanning across strategic planning, business development and business management. KDDI Telehouse opened its first data centre in New York in 1989, initially providing services for Japanese banks and trading companies. They gradually expanded their global footprint

as a result of increased demand in the market. Takagi says,“the growth of public cloud has changed the market significantly and they have changed their strategy accordingly, to focus on building interconnection hubs in key and upcoming data centre markets”. Sustaining DCCI operation and expansion through Sustainability Describing KDDI Telehouse’s approach to sustainability, he says, “We understand that sustainability - and especially achieving carbon neutrality - is a major initiative for our customers and the data centre market as a whole. KDDI Telehouse has committed to becoming carbon neutral by 2050, and we’re working on achieving 50% by 2030 against a 2019 baseline”. In order to implement actionable steps, KDDI Telehouse has departmentalised the process, thereby creating measurable systems and organisational feedback loops to achieve these goals. sustainabilitymag.com

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KDDI TELEHOUSE

Takagi says, “achieving carbon neutrality is a key business challenge and opportunity that KDDI Telehouse is striving to achieve. One of the main steps that we have taken is to create a ‘Sustainability Management Department’ in April this year, which will focus on sustainability measures for the entire group, including carbon neutrality”. Telehouse has already made significant strides towards achieving these targets with 70% of its energy resources being converted into renewable energy. “For the countries where renewable energy is not yet in place,” Takagi explains, “we will gradually promote carbon neutralisation by offsetting CO2.” “As a data centre operator that both owns and operates its facilities, we have been working to reduce our energy consumption related to carbon neutral conversion, and this energy saving is directly related to the design and construction stages right through to operations." “One of our key strengths consists of highly efficient data centres with low PuE (Power usage Effectiveness),” he says. “One of our flagship data centres, Telehouse North Two - located in London and launched 5 years’ ago - was designed and built to world-class standards to deliver low PuE by incorporating the world’s first multi-story adiabatic cooling system.” KDDI Telehouse’s reach is truly global, with 100 offices located in 60 major cities between them. Speaking of their European data centre operations, Takagi says: “We have presence in London, Paris and Frankfurt, operating our most connected data centre campuses out of London and Paris.” They opened their first data centre building, Telehouse North, at Telehouse, London Docklands in 1989. It was the first purpose-built carrier-neutral data centre in 94

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SUSTAINABILITY Telehouse has already made significant strides towards achieving these targets with 70% of its energy resources being converted into renewable energy.


“IMAGINE THAT YOU LIVE IN A CITY WHERE YOU COULD ENJOY ALL OF YOUR DAILY ACTIVITIES AND ENTERTAINMENT IN ONE PLACE WITHOUT GOING OUT OF TOWN, SUCH AS A SHOPPING MALL OR AMUSEMENT PARK. THE CONCEPT OF A CARRIER NEUTRAL DATA CENTRE (DC) IS THE SAME MANABU TAKAGI

GENERAL MANAGER OF GLOBAL DATA CENTER BUSINESS, KDDI

Europe at that time. Since then, their London Docklands campus has developed to become a leading connectivity hub in London. This was a result of relationships developed with partners such as The London Internet Exchange (LINX), one of the largest internet exchanges in the world, which made Telehouse London Docklands its primary home more than 25 years ago. The London Docklands campus provides access to more than 500 carriers/ISPs, as well as direct access to AWS and Microsoft Azure. In addition to the existing four data centre buildings in London, they are set to further expand the campus and open a new building, Telehouse South, in March this year in response to increasing demand in the London market. In Paris, KDDI Telehouse’s data centres host Paris’ foremost internet hub, with France IX’s internet traffic travelling through its Telehouse Voltaire data centre, making it the most connected data centre in France. Takagi says: “Just outside of Paris, we have another data centre, Telehouse MagnyLes-Hameaux, offering 66,000 sqm of floor space, which is a good fit for the customers expecting future space growth. The Magny campus is strategically positioned as a sustainabilitymag.com

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site that can connect back to our Voltaire campus through a dark fibre network between the two campuses.” In 2020, they also expanded their data centre services in Frankfurt, with the addition of a fifth building at the Telehouse Frankfurt campus. The space was quickly filled thanks to customer demand. Preparing for entry into the Thailand Market KDDI Telehouse have also just announced their entry into the Thailand market. KDDI Telehouse has leased a plot in Rama IX, central Bangkok, to leverage the connectivity network of local carriers for its KDDI Telehouse Bangkok facility, with the location close to the financial district in Thailand. Planning has already begun on the threestory facility, with the initial phase targeted to be completed by Q2 2023. 96

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This facility will provide 4MW of IT power over 32,000 sqm of space when complete. KDDI Telehouse has taken full equity ownership of its enterprise in Thailand, where the business is 100% owned by KDDI group, including its subsidiary in Singapore and Thailand. “We firmly believe that the timing is right to enter Thailand,” Takagi says . “While many data centre operators have ambitious plans to build large, wholesale facilities around the Asia-Pacific region, KDDI Telehouse intends to offer a well-connected, carrier-neutral data centre on an international scale.” Thailand is historically a tourism and manufacturing hub, so Bangkok has not really featured in the data centre market until recently, when accelerated digitalization in the wake of the pandemic has brought cloud providers’ attention to the market and highlighted its potential.


KDDI TELEHOUSE

A key issue faced by international customers that own network nodes in APAC is the lack of pure carrier-neutral data centres in the market, including Bangkok. Although US hyperscalers have yet to clearly indicate plans to set up cloud regions in Southeast Asia, KDDI Telehouse’s interconnection services may well boost the market’s attractiveness to international cloud providers, as well as to other firms that are only just noticing the market’s potential. “One of my responsibilities,” Takagi explains,is business development, which is to expand our data centre footprint in regions such as Thailand. We have been exploring opportunities in several markets around the world. In Thailand, we entered the market with full-ownership of our data centre business and there are no restrictions on the form of entry. Our aim is to utilise the appropriate model for each market and to develop the right partnerships.”

“ WE FIRMLY BELIEVE THAT THE TIMING IS RIGHT TO ENTER THAILAND” MANABU TAKAGI

GENERAL MANAGER OF GLOBAL DATA CENTER BUSINESS, KDDI sustainabilitymag.com

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In terms of KDDI Telehouse’s ethos, he says: “We will continue to put our customers first, expand steadily and provide data centres with the highest level of connectivity in the market, without being influenced by the external environment.” Commenting on future trends in the industry, Takagi says: “As for data centre operators, I believe that the corporate value of data centres, such as EBITDA, will continue to be around 20-25. Boosted by this situation and the perspective of a long-term capital investment business, there may be a new form of business that sells out after launch.”


KDDI TELEHOUSE

“However, I don’t think there will be any major movements, such as player changes, which happened in the last 3-5 years.” Additionally, Takagi plans to shift from traditional data center hubs into new regions. Looking at rapid market growth in Southeast Asia and considering the issue with Singapore's moratorium on establishing a new data center, it is presently impractical to secure enough capacity to support the explosive growth in Southeast Asia. He predicts that Thailand could hold the key to solving South East Asia’s digital traffic problem.

Thailand is geopolitically located at the center of Southeast Asia, and is the midpoint for traffic and Internet traffic, including submarine cables and land routes. Suppose a cloud region or an alternative function is installed in Thailand. In that case, the route will shift to away from Singapore, and consequently Telecom carriers and NW managers in Southeast Asia will consider further strategic changes to the architecture to provide a better service. Considering Tier 2 or 3 data centre markets, such as those in emerging countries where the entry of cloud players is expected, KDDI Telehouse’s prediction is that fierce competition between local operators and global players will occur with the aim of expanding scale, especially for hyperscale data centres. KDDI Telehouse has achieved considerable success with its network-dense data centers in developed markets such as London, and it hopes to replicate a similar business model in Bangkok. They have worked closely with telco carriers in other markets, and the liberalised Telco sector in Thailand offers a friendly environment for the firm to pursue this business model. ‘We believe that our interconnection services may well boost the market’s attractiveness to international cloud providers and other firms that are only just noticing the market’s potential’ says Takagii, ‘as it is in its early days and has yet to experience the scale of growth seen in Indonesia’. In view of this Takagi predicts that “interconnected data centre demand is likely to grow in emerging data centre cities.”

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SUSTAINABLE SOURCING

DELIVERING CIRCULARITY REQUIRES A GLOBAL, PAN-SECTOR EFFORT Delivering Circularity is the title of a 2022 DHL white paper and a mission that draws wide, trans-national efforts including multiple stakeholder groups

G

WRITTEN BY: BLAISE HOPE

lobal supply chains are under enormous pressure to build back circular, as fast moving consumer goods, like fast fashion and consumer electronics, endure their own pressures to become more sustainable. The pandemic exposed the current system’s limits and the market is reacting. Building a global circular supply chain is an urgent task for the global business ecosystem: at a time when consumers rely more than ever on global distribution, logistics, and delivery networks, as well as local delivery services, supply chains are under pressure on all fronts. It is a perfect ground for transformation and so it is proving - digital transformation, business transformation, and to make it all viable longterm from a business, moral, and consumer perspective, sustainable transformation. The building blocks of our global supply chain need to be sustainable in all aspects for them not to fall flat the next time a global crisis turns up the heat. Achieving that requires a circular supply chain. 100

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There are many angles into this topic, not least because major global logistics and delivery firms are all aiming to achieve it. In January, DHL released its white paper Delivering on Circularity: Pathways for Fashion and Consumer Electronics. Breaking down the global mission for a circular supply chain DHL’s white paper focused on highlighting the “circularity opportunity in consumer goods.” The paper looked specifically at the environmental impact of fashion and consumer electronics and the potential in those two segments for net zero and the environment: 80% of their emissions come from production, for instance, so the paper recommends extending product lifetimes, along with reducing the use of virgin raw materials, product repair, refurbishing, reselling (“The 5 Rs”). Delivering Circularity then outlines the building blocks and enablers of a circular transformation.


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SUSTAINABLE SOURCING

“ IT DOES NOT DEPEND ON ONE SINGULAR PARTICIPANT IN THIS MARKET. IT'S REALLY SOMETHING THAT CAN ONLY BE FUELED BY MANY” CARSTEN LÜTZENKIRCHEN

SENIOR VICE PRESIDENT OF COMMERCIAL OPERATIONS, DHL

Carsten Lützenkirchen is an author of the white paper and the Senior Vice President of Commercial Operations for DHL’s cross-divisional Customer Solutions and Innovation (CSI) unit. He earned his MBA from the University of Essen and over the past 22 years held leadership positions at DHL covering E-Commerce, Product and Strategic Management in Germany, Europe,

and the United States. His current role at CSI focuses on solution development for DHL’s largest customers across five market sectors, and he also leads the commercial team in the development of DHL’s group-wide Sustainability Roadmap. “[Fashion and consumer electronics] really stand out in terms of visibility,” says Lützenkirchen. “Every consumer uses fashion and electronics, so they are two important categories to make circular. The impact of those two product categories on the environment is big. “We wear clothes every day, so that’s a lot of products being used, and a lot of emissions tied to them. Also, with electronics: I think everybody now has more devices than they had before, so it's an everyday good that everybody uses. We wanted to use those as good examples in these areas for how to solve circular issues.” sustainabilitymag.com

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SUSTAINABLE SOURCING

Lützenkirchen says the idea for the white paper came following discussions with customers about decarbonisation, climate change, CO2 reduction, and wider sustainability that led naturally into talks about circularity: “We wanted to look deeper into this topic: How can we help circularity and find a basis for discussion with our customers? How can we collaboratively drive this forward?” “We had a really positive reaction from all different types of customers, large and small, from different industries. Everybody sees the need to do more in this area and is looking for discussions to find solutions and innovations to drive this topic forward.” Circular implications for waste and recycling “Everybody knows it's not an easy problem to solve, so there has been clarity for a very long time,” says Lützenkirchen. “In many industries it has been implemented to a certain degree, for example in waste management: recycling is already a big topic in many countries.” Where the supply chain ends is also where sustainability can matter most. A pillar of the circular economy means eliminating, or at least managing, waste. Graham Rihn is the Founder and CEO of RoadRunner Recycling, which creates and manages end-to-end waste and recycling solutions for large and small businesses. It offers custom technological solutions and haulage that drives down business costs and helps firms adopt “Smarter Recycling”. “Our goal is to establish a benchmark of how much is a customer recycling and how much does it cost that customer,” says Rihn. “We use machine learning to analyse that data and then we essentially predict the future of that customer with us solving for costs and solving for a recycling 104

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“ WASTE AND RECYCLING IN BUSINESSES, DUE TO ITS NATURE, IS NOT ORGANISED. THE DATA ISN'T KNOWN” GRAHAM RIHN

FOUNDER AND CEO, ROADRUNNER RECYCLING


goal, customer signs, an agreement. Then we start the onboarding process, which is really just an integration of RoadRunner as the overarching manager of their waste and recycling, and then long term we implement strategies to take material that went to landfill to actually get it recycled. “We provide reporting aligned at the enterprise level with ESG requirements, so we can say we take a business from 10% recycling to 70% and here are the environmental benefits as a result. RoadRunner fills a gap in the market where the potential of business waste streams to contribute to a circular remain unrealised - in fact, largely untapped and invisible.

“Waste and recycling in businesses, due to its nature, is not organised. The data isn't known. So RoadRunner organises the reporting in data that right now is pretty much chaos for businesses.” Zero Waste in a circular world Making unknowns known is a growing trend across business operations from supply chain transparency to circularity solutions. Zero waste is getting tackled from all angles. Stephen Jamieson, SAP’s Global Head of Circular Economy, told Sustainability Magazine in an earlier interview that “Our responsibility is to achieve zero waste, zero emissions, and zero inequality. SAP's objective is to create positive economic, sustainabilitymag.com

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SUSTAINABLE SOURCING

“ EVERYBODY SEES THE NEED TO DO MORE IN THIS AREA AND IS LOOKING FOR DISCUSSIONS TO FIND SOLUTIONS AND INNOVATIONS” CARSTEN LÜTZENKIRCHEN

SENIOR VICE PRESIDENT OF COMMERCIAL OPERATIONS, DHL

environmental, and social impact within planetary boundaries with special focus on climate action, circular economy, social responsibility, and holistic steering and reporting.” For example, SAP Cloud for Sustainable Enterprises goes alongside the multinational’s industry and supporting solutions. It helps customers embed the operational data, financial data, and insights that drive sustainability at scale. Nurturing that sustainability is the core finding in Delivering Circularity: A call to action for a “concerted effort from four stakeholder groups.” These include brands to create opportunities for it, customers to drive behaviour, government to create the right environment, and logistics partners to make the circular flow of goods a reality. “It does not depend on one singular participant in this market,”says Lützenkirchen. “It's really something that can only be fueled by many.” sustainabilitymag.com

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ESG AND

STEWARDSHIP IN ACTION 108

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AD FEATURE WRITTEN BY: JESS GIBSON PRODUCED BY: GLEN WHITE


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STATE STREET GLOBAL ADVISORS

State Street Global Advisors: instigating positive change in portfolio companies by using its voice and vote, influential campaigns and future-planning

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he landscape for corporate accountability is changing - and swiftly, at that. Diversity, inclusion and environmental sustainability are at the top of the agenda for both companies and their shareholders in 2022, with an increased emphasis upon building meaningful change into the very DNA of businesses. Long-time proponents of ESG values, State Street Global Advisors have dedicated the last few years to using their influence to encourage corporate boards and management teams to address concerns relating to diversity and climate-based issues. Indeed, State Street Global Advisors’ Vice President and Global Lead of Asset Stewardship Reporting, Philip Vernardis, has been advocating such principles for over a decade - long before it became a trending topic among mainstream business circles. “State Street Global Advisors is one of the world's largest investment managers, with nearly $4.14tn in assets under management. We are the creator of the world's first exchange traded fund and an indexing pioneer,” Vernardis explains. “Our mission is to invest responsibly to enable economic prosperity and social progress. We practise asset stewardship by actively using our voice and vote with portfolio companies. Our aim is to drive positive change on material ESG issues and promote long-term sustainable value on behalf of our clients.” sustainabilitymag.com

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STATE STREET GLOBAL ADVISORS

“The majority of our assets under management are invested in index funds, which are investment funds that track a specific benchmark index, such as the S&P 500 or the FTSE All- Share.” he says. Such indices are essential for potential investors, who use the information provided to guide their investment choices. With ESG considerations becoming ever - more important-across general society as well as via governments-companies that have previously fallen short are scrambling to demonstrate their dedication to diversity and sustainability. For more long-serving business leaders, who are often opposed to change, this new climate of transparency and accountability is difficult to get their heads around - and they don’t have long to do so. “We believe a company’s ESG rating will soon effectively be as important as its credit rating,” Vernardis states, highlighting the increasing transactional value of social and environmental issues at a corporate level. 112

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ESG: Making an Impact Through Engagement and Voting The key to being a company that’s considered socially responsible is demonstrating a genuine commitment to change and avoiding surfacelevel PR stunts. Whether that means an overhaul of systems and structures, bringing in outreach initiatives, or setting up alternate recruitment campaigns, there are plenty of starting points from which corporate teams and shareholders can motivate social progress alongside economic prosperity. “An index fund is essentially near-permanent capital. Unlike active managers, we can’t walk away from a company as long as it remains in the index.” So then how exactly can an index manager instigate change at a senior level? “If we don’t like what a company is doing but we can’t sell out, using our voice and vote as shareholders is key to promoting positive change and long-term value creation,”


PHILIP VERNARDIS TITLE: G LOBAL LEAD OF ASSET STEWARDSHIP REPORTING INDUSTRY: FINANCIAL SERVICES

EXECUTIVE BIO

LOCATION: UNITED KINGDOM Philip Vernardis is Vice President and Global Lead of Asset Stewardship Reporting at State Street Global Advisors, which is one of the world’s largest asset managers with nearly $4.14 trillion in assets under management. In his role at State Street Global Advisors Philip draws on his extensive experience to lead engagements with board directors of portfolio companies on ESG and encourage positive change. Philip is also leading the company’s global reporting function on stewardship activities. Before joining State Street Global Advisors, Philip worked as a Corporate Governance Manager at Fidelity International. Prior to his position at Fidelity, he was Deputy Head of Research at Manifest – Minerva Analytics. Philip sits on the UK Investment Association’s Sustainability and Responsible Investment Committee. He is also a member of the Investment Leaders Group at the University of Cambridge Institute for Sustainability Leadership and a member of the UK Corporate Governance Forum. Philip is a regular writer on ESG issues and speaks frequently at industry conferences.


STATE STREET GLOBAL ADVISORS

Vernardis says, going on to explain the impact of these moves. “Our stewardship programme is designed to have an impact and drive positive changes to promote long-term, sustainable returns for clients. Through engagement and voting we have seen portfolio companies responding to our call to action by, for example, enhancing their board gender diversity or sustainability disclosures and practices.” “Boards should lead the way on ESG. The quality of oversight provided by the board and setting the right tone within the organisation can make the difference between a company landing at the front or back of the pack. In our view board accountability is fundamental to strong governance. So, if directors have been on the board for some time and they're not performing and they are not responding to our feedback, then as long-term shareholders we need to keep them accountable,” Vernardis outlines. “We usually hold boards accountable by exercising our voting rights on director elections.” “So, for example, with gender diversity, we vote against the re-election of the Chair of the Board’s Nominating Committee or the Board Leader if the company has no female directors on the board.” Addressing the ESG Data Challenge The lack of standardisation and transparency in ESG reporting and scoring presents major challenges for investors and corporates alike. In a bid to address the ESG data challenges, State Street Global Advisors developed their unique R-Factor™ scoring system in 2019 to help clients understand their portfolio exposures, as well as inform their own asset stewardship engagements and investment decisions. 114

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As different sectors are faced with different challenges and opportunities, Vernardis emphasises that the relevance of an ESG issue to a company’s financial performance varies industry by industry, company by company: “Focusing on the right ESG issues is key to a company’s ability to create long-term, sustainable value for shareholders and investors.” “Investors face two key data challenges: the lack of a consistent, commonly accepted materiality framework and the opaque ESGscoring methodologies of existing data providers. So we developed an innovative ESG-scoring system that measures the performance of a company’s business operations and governance as it relates to financially material ESG challenges facing the company’s industry,” he explains. “R-Factor™ is the first system of its kind offering companies a roadmap on how to


“ CLIMATE CHANGE POSES ONE OF THE MOST SERIOUS RISKS TO LONG-TERM INVESTORS DUE TO BOTH THE STRATEGIC AND BUSINESS CHALLENGES IT REPRESENTS TO PORTFOLIO COMPANIES” PHILIP VERNARDIS

GLOBAL LEAD OF ASSET STEWARDSHIP REPORTING, STATE STREET GLOBAL ADVISORS

manage and disclose their ESG practices, allowing them to take the action needed to enhance their scores.” Vernardis explains that State Street Global Advisors’ unique R-Factor™ scoring system is fully integrated into their asset stewardship programme. In 2020, they started taking voting action against board members at companies in their main indices that were that were “laggards”(i.e., in the lowest 10% in their industries) based on their R-Factor™ scores and could not effectively articulate how they planned to improve their score. Starting in 2022, they are expanding their voting screen to include those companies that have been consistently underperforming their peers on their R-Factor scores (i.e. being in the lowest 30% in their industries) for multiple years, and may take voting action unless they see meaningful change. sustainabilitymag.com

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“ ASSET STEWARDSHIP IS CRITICAL TO ACHIEVE NET-ZERO ALIGNMENT ACROSS OUR PORTFOLIOS” PHILIP VERNARDIS

GLOBAL LEAD OF ASSET STEWARDSHIP REPORTING, STATE STREET GLOBAL ADVISORS

Promoting “Fearless” Diversity Agendas Through Stewardship In many respects, State Street Global Advisors set themselves apart from contemporaries and were pioneers for the social pillar of ESG. A particular project of which they are - rightfully - proud is the Fearless Girl statue installation, which was temporarily situated in Manhattan’s prestigious financial district in March 2017. During its time in Manhattan, the bronze statue of a girl with her chin raised, shoulders thrown back, and hands on hips challenging passers-by was positioned in front of the famous Charging Bull statue. The message this positioning was sending was abundantly clear, and had a profound effect from the start. “It's all about the impact for us. We started the Fearless Girl campaign with a symbol: the defiant girl in front of Wall Street's iconic charging bull. And that was a powerful symbol, highlighting the need for companies to improve on gender diversity at a boardlevel. But there is also substance behind it. Fearless Girl is part of our campaign to encourage companies to add more women to their boards.” 116

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“Since we began this campaign in March 2017, and after 5 years of productive engagement and voting, 948 companies have responded to our call by adding their first female director to their boards,” Vernardis finishes, proudly. The aim now is to expand this remit even further. The Effectiveness of Shareholder Voice on Gender Diversity State Street Global Advisors’ work is all the more important in light of recent research. It suggests that the work of large index investors such as State Street Global Advisors is more effective than government mandates in motivating broad-based governance changes and expanding women’s participation in corporate leadership. Diversity of thinking and perspective in board leadership is critical to the effective oversight of the company and execution of strategy. “On the issue of gender diversity while boards have become more gender diverse, it is clear that this work is not yet complete. This year we have expanded our campaign on gender diversity from targeting companies in our major indices in select markets to all markets globally. So we now expect all our portfolio companies across the globe to have at least one woman on their boards. From 2023 we expect companies in our main indices to have boards comprised of at least 30% women directors,” Vernardis explains. Climate Change: Supporting the Transition to a Low Carbon Future Climate change is also a top priority for State Street Global Advisors in 2022. sustainabilitymag.com

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“Climate change is one of the greatest challenges of our times and consequently one of the biggest risks in investment portfolios today. It also brings with it tremendous opportunities for companies and investors alike,” Vernardis says. Regardless of which industry a company sits within, climate change is an evergrowing threat - one that indeed needs to be tackled as a priority. “We have been engaging with companies on climate-related matters since 2014. In that time, we have had over 900 climaterelated engagements across a range of industries and markets. In 2021 our number of climate-related engagements almost doubled, “Vernardis says highlighting the 118

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heightened focus on this topic. State Street Global Advisors conducted 280 climaterelated engagements in 2021, an 89% increase compared to last year (148 in 2020). “By actively using our voice and vote we have seen portfolio companies responding to our call by improving their climaterelated disclosures and practices,” Vernardis continues. Recognising that in recent years companies have come a long way in disclosing and managing climate related risks Vernardis explains: “There is still a lot to be done and we will continue to focus on climate risk and reporting as our core, multi-year campaign. While we welcome the net-zero commitments that many of our


STATE STREET GLOBAL ADVISORS

portfolio companies have made in the last couple of years we would like to see more robust disclosure on how these ambitions are underpinned by a detailed strategy and capital allocation plans.” “As near-perpetual holders of the constituents of the world's primary indices, we can play a key role in helping drive the transition to a low carbon economy and we are keen to leverage our voice and vote to promote positive change in our portfolio companies,” Vernardis says. “When companies disclose clear, consistent and accurate information on the risks they face from climate change, investors can make more informed decisions to tilt, or even transform, their

“ IN 2022, WE ARE STEPPING UP OUR CLIMATE-RELATED STEWARDSHIP EFFORTS TO SUPPORT OUR PORTFOLIO COMPANIES ACCELERATE THEIR TRANSITION TO A LOW CARBON FUTURE” PHILIP VERNARDIS

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portfolios for the future. TCFD’s disclosure recommendations have become the gold standard for climate risk reporting and we expect all companies in our portfolios to report in line with them. Despite significant progress, there is still plenty of work to be done to improve TCFD’s adoption and ensure the framework is truly embedded globally.”

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Indeed, in its latest status report TCFD finds that for the first time over 50% of the companies under review disclosed their climate-related risks and opportunities. Despite the overall progress TCFD concluded that the overall disclosure is still lacking. “As such, starting in 2022 we are taking voting action against companies in our main indices


that fail to provide sufficient disclosure in accordance with the TCFD framework,” Vernardis concludes. In 2021, State Street Global Advisors became a signatory to the Net Zero Asset Managers Initiative (NZAMI). They are proud to support the NZAMI, which promotes the goal of net zero greenhouse

gas emissions by 2050, in line with global efforts to limit warming to 1.5°C. Their net zero strategy has engagement and voting at its core aiming to influence positively and hold portfolio companies to account on their climate strategies and commitments to net zero.

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INFLUENCERS OF SUSTAINABILITY

IN SUPPLY CHAINS Transparency is critical for implementing sustainability across all supply chain stages and these 10 businesses are influential in driving ESG change 122

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TOP 10

F

rom a time when the supply chain was underrated to an era of procurement importance, companies are under more pressure than ever to develop more sustainable supply chain operations. This is a response to the climate change concerns that are faced by all countries and all businesses, which was also highlighted by many individuals at our inaugural Sustainability LIVE conference in February. Businesses are looking to decarbonise their operations, source products, components, and ingredients more sustainability, and innovate to reduce the need for plastics in products and fossil-fuels in logistics. Here are 10 of the organisations that have shown significant commitments to supply chain sustainability.

WRITTEN BY: TOM SWALLOW

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10

Dassault Systèmes France

Gaining insight into a product’s lifecycle provides actionable data and Dassault Systèmes now provides Sustainable Innovation Intelligence, which assesses the environmental impact of a product and allows producers to implement circular principles. Its fully-embedded systems provides its partners with great visibility over their entire value chains and leverage Dassault’s ecoinvent database, which stores data on more than 18,000 industrial and agricultural operations, providing a virtual product development experience.

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09 Shell

United Kingdom In early 2022, Shell Aviation announced a major move that will benefit the transport sector. The company released news on its supply of Neste sustainable aviation fuel (SAF) to Singapore. The firm’s subsidiary, Shell Energy, has also developed a partnership within the city-state to develop a biofuel facility capable of producing 500,000 tonnes of low-carbon fuels every year, once operational. The company’s various subsidiaries have been instrumental in implementing netzero and carbon-neutral initiatives in land and air transport.


08

Starbucks

United States Coffee importing was subject to scrutiny for many years before responsible sourcing principles were adopted. Starbucks is part of the movement to create fairer working and living conditions for those who grow its coffee beans. The company recognises that to cultivate great coffee, it must build great relationships. It does this by assessing the quality of its coffee and the quality of life for its growers through its C.A.F.E. Practices to ensure the fair treatment of suppliers.

07 Nestlé

Switzerland Nestlé is on a mission to use data to advance the planet’s recovery. Through its Responsible Sourcing programme, the company has created a series of disclosure documents that cover all of its ingredients. Working with its partners — both governments and nongovernment organisations (NGOs), Nestlé is promoting meaningful impact and undergoing initiatives that improve climate impact, support the people that supply critical resources for its global supply chain, and implementing agricultural best practices. sustainabilitymag.com

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WE MAKE DATA CENTERS SUSTAINABLE.

At Automated Logic, data centers are part of our DNA. We designed and developed the industry-leading WebCTRL® building automation system, an intuitive, proven platform that provides real-time visibility and control of equipment, systems and facilities – from anywhere in the world. And our Strategic Accounts team delivers that innovation to real-world sites, installing the WebCTRL system with expertise and consistency around the world bringing powerful, efficient, and sustainable data centers to life. Visit www.automatedlogic.com/datacenters to learn more. A Carrier Company. ©2021 Carrier. All Rights Reserved.


06 Unilever

Mead Rusert, President, United Kingdom

its portfolio, of which we’re outstanding quality of very proud,” states Rusert. its products. Automated describes its industry“The keys to success have Logic’s WebCTRL® building leading approach Championing a circular economy, really been to understand automation system, for and the standard of their processes: finding out instance, provides customers Unilever has presented exciting excellence underpinning what’s important to them with a seamlessly integrated its partnership with Iron of initiatives for sustainability, as the client, incorporating building system, incorporating Mountain which one is the paper-based that into the design, and air conditioning, heating, bottle. When it comes to sourcing,ventilation, electrical power then delivering a powerful, Founded in 1977 and PVH sustainable BMS using our Unilever is tackling issues related management, and more – to headquartered in Kennesaw, single deployment model create a sustainable data United States toGeorgia, UN Sustainable Development Automated Logic around the globe.” centre solution. As such, the (a Carrier company) an on company is able to provide Goals (SDGs) — whichisfocus expert in the manufacture Climate Action and Life on Landfacilities staff with a ‘single Its sustainability is The resultstrategy for Iron Mountain of building management has been the optimisation pane of glass’ to monitor and —systems driving (BMS) regenerative ethics. The for data sourcing manage operations. “Our centredofaround its data centre processes and holding its suppliers to the owner of brands like Calvin centres. Regarding the latter to create efficient and Strategic Accounts team Mead Rusert, President, says, highest standards. In doing so, partners with the client toKlein and Tommy Hilfiger — harmonious operations “Data centres have been Unilever can further enhance create standards for theirwhich need no introduction — is irrespective of location. part of our DNA since we “We’re very happy that data centres, which leads to itslaunched sustainability and support its producing its luxury goods with a mission-critical Iron Mountain chose us as a consistency of design suppliers in the for modern slavery division over 20agricultural years ago. sector.and deployment around consideration a partner. We want to instil We combine our powerful concerns. supply theThrough confidence thatchain we can the world.” building automation products transparency, is and be the the bestcompany BMS supplier with a dedicated execution help withconditions all its data centres It was this standard of able to stipulate with team to deploy our data going forward.” excellence that secured suppliers as it imposes strict centre solutions more the company’s partnership efficiently around the world. with data management supplier conditions. At Automated Logic, we like company Iron Mountain, a PVH is also pushing further to say that we make buildings collaboration that has now initiatives to decarbonise its better.” been ongoing for several offices, warehouses, and stores years. “We’ve now earned The company’s reputation the privilege of being the with 100% renewable energy for speed and reliability LEARNits MORE sourcing and reduce overall primary BMS provider across is partly rooted in the supply chain emissions by 30% by 2030.

05

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04 Cisco

United States Cisco is one of the founding members of the Responsible Business Alliance (RBA), adopting its strict supplier code of conduct to ensure that sustainability is passed down the value chain. Part of this initiative is to drive environmental sustainability but also social responsibility within the supply chain. Implementing a circular economy, Cisco technology is taking a holistic approach to supply chain sustainability as it supports the target of 100% circular products, packaging and design principles.

03

Vodafone

United Kingdom Vodafone focuses on supplier management and procurement with a particular emphasis on key areas like sustainable sourcing and tackling human rights actions. The company is committed to ensuring safe working conditions for every individual within its supply chain as well as fair payment for services. The firm is piloting a new service called MyFarmWeb that has been developed to speed up digital transformation within the agriculture sector.


Alibaba China

02

Launched in 1999, Alibaba is one of the world’s largest leading e-commerce platforms based in Hangzhou China. Alibaba is committed to ensuring sustainability for its partners. The firm’s subsidiary group, Cainiao Network partnered with Nestlé in 2021 to support a greener logistics network in China. Green logistics has been a critical focus for the company over recent years. The firm’s cloud technology offerings are used to transform logistics processes for its partners and for real-time insights and collaboration to create sustainable supply chains, increasing transparency and endto-end traceability. In 2018, Cainiao established the Cainiao Green Alliance Foundation, which was a small step for sustainability in shipping.

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TOP 10

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Anheuser Busch InBev Belgium

Anheuser Busch InBev (AB InBev), one of the largest beer manufacturers in the world, is extremely ambitious when it comes to packaging and sourcing. With a supply chain including processes from growing to bottling, the company has imposed rigid targets for sustainability as it aims to cover four significant areas by 2025. Through smarter agricultural practices, AB InBev is committed to fairer pricing for its barley suppliers and will take part in a Water Stewardship programme for more sustainable use of the precious resource. The company will also ensure that its packaging is fully reusable, leveraging circular economies, and plans to source 100% renewable energy to power its operations.

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CLUSTERPOWER

IS A GREEN

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CLUSTERPOWER

SET TO TAKE OVER

WRITTEN BY: ILKHAN OZSEVIM PRODUCED BY: LEWIS VAUGHAN

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CLUSTERPOWER

ClusterPower has just become an alternative for the entire FLAP region using AI and high energy efficiency in its promising DC

W

e have just become an alternative to the entire FLAP area,” says Vladimir Ester, CTO of ClusterPower, as the company position themselves to become one of the most groundbreaking DC centres in Central and Eastern Europe. The FLAP areas are Frankfurt, London, Amsterdam and Paris — the four cities considered to be the primary markets for all new data centre deployments. Located in Romania, ClusterPower’s five hyperscale Data Centres (DCs) are of a magnitude and scalability that promises to see them become the leading provider for the entire region, while enabling them to tap into international markets. All five data centres are scheduled for completion by 2025, by which time they will be housed in a 25,000 SQM campus, sustainably producing a total capacity of 200MW. So this is hyperscale technology — but not as you know it. Ester comes from a strong technological background and has acted as an infrastructure engineer, as well as a solutions architect, for data centre and internet service provider deployments throughout most of his career. He has also been a CCIE — Cisco Certified Internetwork Expert — for almost 10 years, with this expertise laying the technical foundations for project ClusterPower.

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Example of an image caption sustainabilitymag.com

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COSMIN GEORGESCU TITLE: CEO INDUSTRY: DATA CENTRE AND CLOUD PROVIDER LOCATION: ROMANIA

EXECUTIVE BIO

Proficient professional with more than 20 years of experience in energy infrastructure and complex technological projects, as a direct lead. Select achievements include: Design and permitting of the first wind farms for Electrica (52 MW), EPC for Cernavoda Nuclear Power Plant - Data centers for Microsoft, Bosch, Radet Constanta (partnership with Siemens), and Fan Courier - The first cogeneration plant in Bucharest (2MW), Brasov (1 MW), Vatra Dornei (3 MW) - The first photovoltaic park in Romania (1MW). And Energetic infrastructure projects for Romania’s main energy providers (Enel, Transelectrica) and prominent real estate developers Mr. Georgescu holds certifications in project management, software development, security systems, network design, is a Cisco Professional and and EMBA graduate.

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CLUSTERPOWER

“ We have just become an alternative for the entire FLAP area” VLADIMIR ESTER CTO, CLUSTERPOWER

“I think that this skill set has really prepared me to both design and implement largescale infrastructure projects,” he says. “So, in the last couple of years, I've moved away from engineering towards management and entrepreneurship, joining Cosmin and the rest

of the team, and I’m now managing all of the infrastructure aspects related to our campus.” “We are very experienced in our fields,” says Cosmin Georgescu, CEO of ClusterPower, “and I have been closely involved in both energy and technology projects for over 20 years now, so it was a natural move to have our own assets and to build our own Data Centre and technology campus.” ClusterPower is the first ever Hyperscale Data Centre in Central and Eastern Europe; both the technological and operational vision behind it is just as huge. Georgescu possesses a fundamental knowledge of Cisco training and certifications, as well as for Project Management, with these experiences leading to the development of the first data centre in Romania for Microsoft, Bosch, and Amazon. He’s also worked on several large national projects and sustainabilitymag.com

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CLUSTERPOWER

ClusterPower is a Green Hyperscale DC Set To Take Over

infrastructures, including a nuclear power plant, Romania's first wind farm, and its first photovoltaic plant. Speaking about Clusterpower’s capabilities he says: “We can host large scale infrastructure deployments in a custom, fit-out way. We are very flexible in customising services for our clients. We can host for clients and customers that either want to expand in the Central Eastern European region, or that want to optimise their current infrastructure.” A Green Energy Data Centre Powerhouse One of the main cross-industry concerns with hyperscale DCs is potential energy wastage. But, through strategic partnerships, ClusterPower has devised an innovative solution: build a powerful data park that is not only operationally effective, but also highly sustainable and extremely energy efficient. 140

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“We are focusing on green energy, power and efficiency,” says Georgescu, and that focus is already yielding major returns. ClusterPower has a PUE (Power Usage Effectiveness) of just 1.1, which is considered very low across the industry. “We produce our own power and cooling at the same time and, to come up with such an innovative solution, we worked with our partners, Rolls-Royce MTU (hydrogen-engine solutions), which makes us not only extremely efficient but also allows us to function independently, while greatly reducing business interruption risks.” Continuity of service is absolutely critical to DC hosting, since entire data infrastructures depend on their uninterrupted operations. “We already have eight redundant fibre connections on site,” Georgescu says, “and that’s just in the first phase.” Redundant connections are essentially duplicate


VLADIMIR ESTER TITLE: CTO INDUSTRY: DATA CENTRE AND CLOUD PROVIDER

EXECUTIVE BIO

LOCATION: ROMANIA Ester has worked in IT infrastructure and services for over 15 years, gaining a vast of amount of experience in this time. Select achievements include: design and deployment of Data Center for Defense, Design and deployment of Data Center for a US-based Fortune 100 insurance company, Migration to the cloud for 13 government institutions in Abu Dhabi, infrastructure design and maintenance for the worldwide premier owner and operator of shopping centers. Before Cluster Power, Mr. Ester was with Cisco and one of Romania’s largest telcos (as data center manager). Mr. Ester holds a Master in Cybersecurity and advanced industry certifications: Cisco Certified Internetwork Expert (CCIE #36295), Cisco Certified Design Professional, Cisco Advance Routing and Switching, Cisco Daca Center Unified Fabric Specialist. As a key member of the Cluster Power team, Mr. Ester is taking the lead in the development and engineering design of the company’s services and assessment of new markets, all while maintaining a customer-centric mindset by keeping the cost and speed of the client go-to-market in balance.

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CLUSTERPOWER

“We are focusing on green energy, power and efficiency” COSMIN GEORGESCU CEO, CLUSTERPOWER

databases that are ready for access in the event of unforeseen circumstances. “We have also established the base of our digital highway connections to Frankfurt and Amsterdam. ClusterPower’s infrastructure already provides our clients with hundreds of racks, as well as off-PCs for 200 people that may be used to resolve business interruptions.” This means that, if their clients have a failover in a large European city, they can take a flight to nearby international airports — which are just 20 minutes away from ClusterPower’s base — and continue to work directly in their data centres with 20 or 40 people without any interruption, depending on their use-case.

ClusterPower is a real powerhouse of a Data Centre. Its sheer output of 200MW will allow it to produce its own sustainable electricity in-line with EU regulations, from its strategically positioned location. Georgescu says: “One important aspect of our project is being located in the EU, which means that we follow all European security and data privacy guidelines and, geographically speaking, we are at the gateway between East, West, North and South. This gateway is positioned to reach and supply a multitude of cities that can in turn reach us and our populations here.” ClusterPower’s geographic placement is a decisive point of client-attraction. He says that the company is “in an area with very low seismic activity for about an 800 km radius”, providing both security and critical dependability as a direct consequence of its site location. sustainabilitymag.com

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“ We surpass even the Tier-Three requirements of an uptime of 99.985%” COSMIN GEORGESCU CEO, CLUSTERPOWER

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Core Principles of Security and Resilience Security and resilience are core principles of ClusterPower, as well as the design and digital architecture being built entirely around them. ClusterPower’s campus is protected according to military standards and continuously monitored by over 200 HD cameras. All access is controlled by specific security procedures, with individual security levels for each rack, row and room — including biometric access technology. ClusterPower’s security-first model can be divided into two areas: the first is


CLUSTERPOWER

increase data transfer speeds — the company has spared no expense. This means that, according to its own calculations, ClusterPower surpasses even the Tier-Three requirements of an uptime of 99.985%. And Georgescu believes the company can exceed even that. All of these cutting-edge components and systems render ClusterPower a truly formidable competitor in the Data Centre industry. “We see ourselves as the gold standard,”’ says Ester. “From physical infrastructure, connectivity, utilities, resiliency — all the way up to the most advanced IT and technological appliances in our DC — everything has been conceived as stateof-the-art, even down to the procurement process, where we have chosen to work only with industry leaders for their segments.” “All of the networking infrastructure is being deployed in a partnership with Cisco.

related to specialised cyber security equipment, such as next-generation firewalls and its own distributed denial of service protection (DDOS), scrubbing centre and web applications; the second area is related to systems’ resilience, which provides a powerful infrastructure that will remain operational even during an attack or disaster. All of ClusterPower’s implemented solutions are fully redundant and, in terms of N+N — database duplicates that effectively sustainabilitymag.com

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CLUSTERPOWER

We use Paolo Alto and F5, who are leaders in security and low-balancing; we're using NetApp and grid storage solutions; and, last but not least, we work with NVIDIA and the our co-created AI platform, which is indeed a gold standard all on its own in the AI industry.”

DID YOU KNOW...

Artificial Intelligence and Supercomputing Data ClusterPower firmly believes that machine learning and artificial intelligence applications are here to stay, as they present both a huge market opportunity and a decisive direction for the industry to move in, as a whole. Ester says: “This is very closely related to other technologies, such as twin digital ecosystems like metaverse. This all relates to AI. Clusterpower has decided to fill in the gap of being the first cloud provider to offer AI as a service in this region, and we have built this service alongside NVIDIA, which means that we have installed Romania’s first supercomputer based on the DGX platform from NVIDIA, alongside Mellanox Infiniband Switch and NetApp storage.”

Cluster Power is one of Central Europe’s most ambitious technology projects, that not only offers competitive and resilient infrastructure in Eastern Europe but also empowers society to be more connected. It is one of the largest, most scalable, and technologically advanced hyperscale centers in Europe, with a capacity that can reach 200 MW and over 4,500 racks, at maturity. Cluster Power aims at being a one-stop shop for technological solutions. The hyperscale campus shall address a multitude of enterprise needs, either directly or through its partners' ecosystem, starting with the fundamentals of colocation space for racks to higher valueadding Infrastructure-as-a-Service, Platform-as-a-Service, and Software-as-a-Service solutions.

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CLUSTERPOWER

2019 Year founded

2022

ClusterPower officially inaugurated its first DataCentre, on April 1st 2022. The DC is located in Mischii, Dolj County, and put ClusterPower on the map as the largest provider of cloud and compute in Eastern Europe

50+

Number of employees

“ Together we all share a vision to promote a project that will change the world for the better” COSMIN GEORGESCU CEO, CLUSTERPOWER

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In a nutshell, this is a certified supercomputer that ClusterPower is offering as a service to its customers who want to either train their own AI models or run their AI-based applications in. “So we fit both models with the same infrastructure, research, training and inferencing,” says Ester. “This is a very scalable and flexible service model that we have designed, and I think that with this kind of service offering, we are pioneers in the field — not just the region.”


Georgescu reaffirms this perspective: “It provides us with a very powerful tool for management and cost optimisation, as well as for predictive maintenance. This has already been implemented on our campus, where we’re using artificial intelligence for energy optimisation as well as forecasting. “Most importantly, we have a great ecosystem of partners and a very seasoned team,” says Georgescu. “Together, we all share a vision to promote a project that will change the world for the better — which

means that, not only do we aim to support our customers to achieve their most ambitious goals, but we can help them become part of a transformational process, such as largescale use of trust policy AI, which will benefit regional developments in making them both competitive and unique, while allowing them to use state-of-the-art tools.”

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THE FIRST MILE BRINGS DIGNITY TO WASTE MATERIAL RECLAMATION WRITTEN BY: JOHN O'HANLON PRODUCED BY: MARK CAWSTON

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THE FIRST MILE WORKS WITH GLOBAL BRANDS TO SUPPORT FAIR WORKING PRACTICES AND ELIMINATE CHILD LABOUR FROM RAW MATERIALS SUPPLY

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First Mile is a private, nonprofit initiative formed of the partnership between Thread International and WORK. As such, Kelsey Halling - Head of Partnerships at The First Mile - and Vivien Luk - Executive Director of WORK - collaborate closely to enact meaningful change on projects in countries such as Haiti, as well as subsistence

communities in other parts of the world, chiefly Taiwan and Honduras. It focuses on finding and ameliorating human rights concerns within the raw material sourcing of supply chains, improving quality and volume of material collected and supplied to brands. They are expanding their work this year exploring the creation of new First Mile supply chains and launching programmes in of Example an image caption

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THE FIRST MILE

Kelsey Halling Head of Partnerships, The First Mile

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“ WE'RE HOPING TO EXPAND OUR WORK GLOBALLY, WHEREVER THE NEED IS GREATEST” KELSEY HALLING

HEAD OF PARTNERSHIPS, THE FIRST MILE

Brazil, Indonesia, Vietnam, Ghana and some USA states. “We're hoping to expand our work globally, wherever the need is greatest,” says Halling. The brands that work with The First Mile in making their supply chain more sustainable include FMCG brands such as Heineken & Unilever, technology giants like Hewlett Packard, fashion brands like Puma and Ralph Lauren, and credit card companies such as CPI and US Bank. By supporting brands across these sectors, First Mile can have an influential, wide-ranging effect - from providing opportunities for plastic recycling to having a visible, long-term social impact, there's an abundance of paths to choose from. After all, many - if not quite all - businesses are in the market to increase their environmental sustainability credentials both in-house and within their supply chains.

KELSEY HALLING TITLE: HEAD OF PARTNERSHIPS COMPANY: THE FIRST MILE INDUSTRY: RECYCLING

Kelsey joined the founding team of Thread in 2012. Thread (under B2B brand "First Mile") takes trash from communities and transforms it into consumer goods for global brands trying to find value in authenticity, transparency, and responsibility. Kelsey built the on-the-ground community impact programming for First Mile ®’s waste reclamation network in Haiti, which was then expanded to Honduras and Taiwan. In 2017, she took over the leadership of sales, expanding the portfolio of global brands utilising First Mile material in their products. Her expertise is in impact measurement, supply chain traceability, and recycled materials. She represents First Mile ® in the Ellen Macarthur Foundation Circular Economy 100 working group, Textile Exchange recycled polyester working group, and serves as an advisor to NextWave Plastics. In February 2015, Kelsey became the first woman to Run Across Haiti, as part of WORK’s inaugural event. She believes that recycling is magic and that the true climate change heroes are the entrepreneurs turning waste into a resource every day.

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EXECUTIVE BIO

LOCATION: UNITED STATES

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Second Wave® Payment Cards First Mile impact partner, CPI Card Group® features recovered ocean-bound plastic in the core of Second Wave® payment cards. CPI estimates that 33 tons of plastic have been diverted from entering oceans and waterways since Second Wave's launch in 2019.

The Contactless Indicator mark, consisting of four graduating arcs, is a trademark owned by and used with permission of EMVCo, LLC.

© 2021 CPI Card Group Inc. All rights reserved

LEARN MORE


THE FIRST MILE

The human cost Developed countries tend to have established, professionally run waste collection facilities, usually with arrangements for recycling, whereas in the global south there may be little or no such infrastructure. But there's just as great a supply of waste material. “The way recycled materials, and plastic specifically, get to recycling facilities in the first place is because individuals are sorting this material from the general waste stream and selling it to give them some income.” This is an efficient business model for informal waste collectors, with a low barrier to entry, formalising the work they already do in sourcing recyclable materials. Oftentimes, this work leaves workers vulnerable to

exploitation, takes place in hazardous locations, and requires child labour - forcing children to work rather than receive an education - all of which are issues that global brands don't want their supply chain to be associated with. “If we can bring, safety and dignity to this work and recognise the critical service that informal waste collectors are providing, not only from the environmental standpoint of keeping this material from being burned, buried or reaching our oceans but also addressing the social impacts too, then our brands can tell a very different, holistic and powerful story.” Halling works very closely with Vivien Luk. “WORK's mission is to accompany families out of poverty through good dignified jobs,”

“ WORK'S MISSION IS TO ACCOMPANY FAMILIES OUT OF POVERTY THROUGH GOOD DIGNIFIED JOBS” KELSEY HALLING

HEAD OF PARTNERSHIPS, THE FIRST MILE

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“BY PARTNERING WITH US GLOBAL BRANDS KNOW THAT THEIR DOLLARS ARE ALWAYS GOING TO BE PUT BEHIND THE COLLECTORS’ NETWORK” VIVIEN LUK

EXECUTIVE DIRECTOR, WORK

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The First Mile in plastic reclamation

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“HAITI HAS NO WASTE INFRASTRUCTURE – EVERYTHING IS DUMPED IN LANDFILL, IN CANALS OR IN THE STREET OR INTO THE SEA. PEOPLE WILL PICK IT UP ONLY IF IT HAS A VALUE”

she explains. “Haiti has what their needs are, no waste infrastructure their assets, we found – everything is dumped families of about six, in landfill, in canals or with children some in the street or into four years behind in the sea. People will their schooling and pick it up only if it has dropping out of school a value. Oftentimes around the age of ten. in a place like Haiti The parents too tend to people actually live on have ceased education KELSEY HALLING those landfills because at the same kind of HEAD OF PARTNERSHIPS, THE FIRST MILE it's affordable for age, so are unable to them, gets them away bring in more than a from violent neighbourhoods and selling subsistence income of maybe $30 a month. what they collect on the same spot brings They can't afford to send their kids to school, them some money. When we did our initial which is why we find those children working assessment to understand who they are, on landfills simply to put food on the table.” 160

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THE FIRST MILE

VIVIEN LUK TITLE: EXECUTIVE DIRECTOR COMPANY: WORK INDUSTRY: HUMANITARIAN AID

Vivien joined WORK in 2012 as the organisation’s first Executive Director. She led its start-up phase and translated the vision into a block-by-block accompaniment model that’s scaled to affect several thousand of the Western Hemisphere’s poorest people. Under Vivien’s leadership, WORK became a founding member of the First Mile with sister company Thread. Vivien specialises in creating and implementing programming that translates to practical impact, aligning philanthropic and business strategy, and job preparation and placement. She is an industry leader on the effects of employment in the first mile of supply chains. Her background is in policy and non-profit governance, having previously managed the research agenda and grant-making for a coalition of over 350 non-profit organisation's dedicated to providing a unified voice for the nonprofit sector while at The Forbes Funds. When home in Los Angeles long enough to unpack, she is an avid runner and sought after speaker.

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EXECUTIVE BIO

LOCATION: UNITED STATES

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FIGHTING OCEAN PLASTIC AND CHILD LABOUR AT THE FIRST MILE WITH WORK Truittier, Haiti’s largest landfill is located in the community of Molea, a neighbourhood in Port-au-Prince where many of the families in its residence rely on waste collection as a primary source of income. These families often face the difficult choice of involving their children in this work to ensure the security and well-being of the family. While we believe strongly in supporting income opportunities driven by utilising waste as a resource, children working full-time in waste reclamation does not fall under our definition of dignified work. As a partner, WORK leads the efforts in providing services to the 300 Haitian children in the landfill with access to medical care, educational opportunities, safety workshops and supplies, and job training and placement in the future. Hewlett Packard has been actively reducing ocean-bound plastic in Haiti since 2016, when the company began partnering with the First Mile Coalition to convert plastic bottles into recycled material used in Original HP ink cartridges.

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“Our investments and partnerships in Haiti are a great example of the positive change that can happen when business and NGOs come together to support shared objectives, “ said Ellen Jackowski, Global Head of Sustainability Strategy and Innovation, HP. “We are keeping millions of plastic bottles from ever reaching our oceans, converting them into sustainable products, and creating new opportunities for local residents through job creation and education.”


THE FIRST MILE

“ VERY RARELY DO RECYCLERS UNDERSTAND WHAT LANDFILL COMMUNITIES LOOK LIKE, EVEN THOUGH THEY ARE BUYING MATERIAL THAT IS BEING SOURCED FROM THOSE COMMUNITIES” KELSEY HALLING

HEAD OF PARTNERSHIPS, THE FIRST MILE

With Hewlett Packard (HP), one of First Mile's biggest brand partners, a programme was initiated in 2016 to put an end to child labour at Haiti's largest landfill site near its capital Port-au-Prince. Since then other partners including fashion brand PUMA and CPI Card Group have joined in supporting

the work, with the result that already some 75% of children working there have returned to school and other learning opportunities, removing themselves from working in waste collection. Furthermore, access to medical care, health information and workshops, together with prevention programming, has led to a significant decrease in emergencies. “We believe in a holistic model of accompanying the whole family by ensuring that they have a safe roof over their heads and access to educational opportunities. Poverty in Haiti has multiple causes but a key remedy is dignified work, so we create a vibrant market for the supplies they're collecting on a dayto-day basis: so not only have our brand

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partners supported our social impact programming, but they have also allowed us to grow demand for the supplies that are being collected and increase their value as time goes on.” That, in turn, highlights the detrimental impact of child labour in supply chains to those brands yet to partner with The First Mile. They may not even be aware that it's there, warns Kelsey Halling. “This first mile of the supply chain is not covered in standard audits or standard certifications that cover recycled materials. Very rarely do recyclers understand what landfill communities look like, even though they are buying material that is being sourced from those communities, and so the

“THE INSIGHTS AND SOLUTIONS THAT WE'RE ABLE TO OFFER TO BRANDS ARE REALLY HELPFUL TO THEM” KELSEY HALLING

HEAD OF PARTNERSHIPS, THE FIRST MILE

insights and solutions that we're able to offer to brands are really helpful to them. Instead of just saying they are not going to source from these places because these things are happening, we give them assurance that this material is being sourced in a thoughtful and dignified way. That is the real value that we're able to bring to our partners.” Most companies now are making serious commitments around the amount of recycled material they want to be using, by 2025, 2030 or even 2050, and recognising that if they're going to reach those goals they're going to be sourcing from new sustainabilitymag.com

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THE FIRST MILE places. This however is attended by risk, but that risk is minimised if they are partnering with First Mile. That the work towards eliminating exploitation and child labour has taken root so quickly is in itself impressive; that this should have been achieved during a pandemic is extraordinary. There were many hurdles to overcome, Vivien Luk says. “The market that has been set in place was heavily impacted over the last two years, everything has been affected, from the demand for raw material to its transportation. Our members' own upward supply chains backed up for a variety of reasons, which led to slower procurement patterns as well.” In Haiti vaccines are only now reaching the population, and this made it difficult for staff and collectors alike to work safely. “We did everything we could to help our collectors to stay home and safe at the most difficult times. We made sure everybody

had a mode of communication, so that if they are staying home they know what's going on outside, and they know when they can get back out again to collect so they weren't risking their lives, trying to get out there and put food on the table that day. It's sometimes very difficult for collectors and their families to find accurate information about Covid, so we regularly share information from credible sources like theMinistry of Health and WHO. School age children were supported so they could continue their education too.” Good for people, good for the planet For communities subsisting on landfill because it's their only way to stay alive, the money they can make is a higher priority than global warming - yet these are usually the very communities most impacted by rising sea levels, the loss of species they may rely on for food, and the frequency of extreme weather events. They are less

Behind the Collab | PUMA x FIRST MILE

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“ INCLUSIVENESS IS A CRUCIAL PRINCIPLE WE WANT EVERYONE TO TAKE AWAY AS THEY'RE THINKING ABOUT TECHNOLOGY AT THE FIRST MILE” VIVIEN LUK

EXECUTIVE DIRECTOR, WORK

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THE FIRST MILE likely to follow the deliberations of COP26, but they, and the service they provide to the recycling industry, are important in solving the issues that are being discussed there. In the past, businesses have fallen into the trap of treating sustainability as solely a CSR issue, and have addressed it only because of the wish to tell a good story to their shareholders in the Annual Report. In short, they've resorted to greenwashing.. As for climate change, until recently, some were unsure whether, if it existed at all, really felt this was a compliance issue and waited for government regulations to catch up. Today change is being driven at the grass roots level, the employees and the supply chain, and at last being taken seriously at board level. “Though the work we do is clearly human-centred and focused, Halling emphasises, “ it also drives business performance. Investing in the human rights of raw materials collectors in the first mile means greater quantity and higher quality of recycled material for our brands. I think we're getting to a point where this isn't just a nice-tohave, but a part of core business strategy.” To this Vivien Luk gives passionate endorsement. “They are all sitting at COP26 and trying to come up with solutions. These individuals are already on the ground, solving the problem in the real world. Either we get behind them and support them and their work, making it secure and dignified or we continue to spend millions and trillions of dollars on solutions that are not going to yield the outcomes that these global brands, are trying to reach. By partnering with us they know that their dollars are always going to be put behind the collectors network.” Technology at ground level The ability to communicate quickly, easily and globally has made a big difference to the effectiveness of the impact team and managers at First Mile, but technology is 168

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making things a lot easier for the collectors too, particularly in the rapid growth of mobile money transactions, that enable faster, secure payment by the recycling centre owners to the families that collect the material, allowing First Mile to make relief payments during the pandemic. It is a necessary step to making informal waste collectors become entrepreneurs. But in this context technology can be a two-edged sword. “ I do think that there is often almost too much faith put in technology as a traceability or solutions-oriented tool,” says Halling, “especially in supply chain management at this level. When people are picking up plastic waste and earning $3 a day, it is going to require some incentive for them to share their personal data. I would like to see the technology tools that do exist out there, do more than point out problems or issues in the supply chain and do more to actually drive solutions. We see a disconnect there with many of the tools and platforms that are available.”

“INVESTING IN THE HUMAN RIGHTS OF RAW MATERIALS COLLECTORS IN THE FIRST MILE MEANS GREATER QUANTITY AND HIGHER QUALITY OF RECYCLED MATERIAL FOR OUR BRANDS” KELSEY HALLING

HEAD OF PARTNERSHIPS, THE FIRST MILE


It's a matter of balance, they insist. Technology developed for the supply chain aims to make it efficient, and that's an aim both Kelsey Halling and Vivien Luk support, so long as the process is inclusive of waste collectors and allows them to share their expertise. It may be that one day waste collection will evolve to a point where the informal collectors of Haiti, Taiwan, Honduras and elsewhere are no longer

needed, and that is a result The First Mile would be happy with, as long as enough has been done to ensure they have been part of that evolution. “Inclusiveness is a crucial principle we want everyone to take away as they're thinking about technology at the first mile.”

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WRITTEN BY: GEORGIA WILSON

PRODUCED BY: MIKE SADR

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Gary Levitan, Global Head of Procurement, Sourcing and Supply Chain, WeWork on why the time is now for flexible working and the need for procurement talent

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n the wake of the pandemic, organisations are looking for more flexibility. The Great Resignation has begun: according to US Bureau Of Labor Statistics, 4.3 million people left their jobs in December 2021 in the US alone. In 2021, many employees began to rethink their relationship with employment, chasing higher wages, better work-life balance, better childcare, better safety and more flexibility. Gary Levitan, Global Head of Procurement, Sourcing and Supply Chain at WeWork, says that the pandemic has increased its appeal as a flexible working space and solutions provider.

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“ Our vision is to provide flexible office solutions that better people and the environment” GARY LEVITAN

GLOBAL HEAD OF PROCUREMENT, WEWORK

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“Employees are demanding flexibility and that is our value proposition at WeWork,” he says. ”Our vision is to provide flexible office solutions that are better for people and the environment.” WeWork services are categorised under three pillars: Space-as-a-Service; WeWork Access; and WeWork Workplace Since he joined the business back in 2021, WeWork has become a public company.


WeWork, 312 Arizona Ave Santa Monica

GARY LEVITAN TITLE: GLOBAL HEAD OF PROCUREMENT INDUSTRY: REAL ESTATE

“We are becoming a more mature organisation,” says Levitan. “We are creating processes and systems that are allowing us to scale and grow. But it’s not an easy transition from being a startup to being a company able to expand products and solutions to meet growing demand, in order to secure our long-term viability. This process is a day to day reality at WeWork.”

EXECUTIVE BIO

LOCATION: NEW YORK, US Gary is a veteran Procurement leader with a deep passion for Corporate Social Responsibility and Sustainability. Gary is currently leading all procurement and supply chain efforts for WeWork with comprehensive responsibility for owning and managing spend across all Direct and Indirect categories globally. Gary has 15 + years’ experience efficiently and effectively enabling spend owners, business units, and functional partners to maximise the value they receive from suppliers to meet and exceed their objectives. Gary has been recognised as a respected leader and mentor of crossfunctional teams of senior sourcing and procurement professionals for recognisable global firms such as JPMorgan Chase, The Hudson’s Bay Company, and Saks Fifth Avenue.


WeWork, Friedrichstraße 76 Berlin (Below) WeWork, 419 Park Avenue New York (Right)


WEWORK

“ We are creating processes and systems that are really allowing us to scale and grow” GARY LEVITAN

GLOBAL HEAD OF PROCUREMENT, WEWORK

Data’s role in organisational efficiency In his role, Levitan is not only responsible for managing the company’s global furniture-and-fixtures supply chain but also for procurement, category management, sourcing and spend control.

Of data, Levitan says: “It’s incredibly important. I know everybody says this, but we want to use data in a different way. Typically within procurement, sourcing and supply chain data is often underused in designing an efficient organisation and the employees needed to effectively run its operations.” He adds: “Typically, building a procurement organisation is based on spend under management. There are industry benchmarks that most chief procurement officers use to guide staffing needs. So for example, a common industry metric is that for every US$50mn that you manage, there are benchmarks to say that you need X amount of full-time employees, then on top of that, the complexity of the category dictates the level of experience but typically that is then the end of the data. The major weakness of this analysis is that sustainabilitymag.com

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it doesn’t take actual transactional volume, organisational nuance or product delivery into account resulting in a mismatch between bandwidth and headcount. “But employees that are not engaged, busy, or working towards a goal - even if you have the best culture, leaders and benefits, become complacent. People want to keep busy, feel valued, learn new things and then move on. So this traditional 178

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benchmarking method doesn’t really work.” Instead, Levitan is trying to incorporate into WeWork the practice of gaining as much ‘real world’ transactional data as possible. He says: “If you base the staffing plan of an organisation on this practice you are able to create volume levers in the future, balanced workloads, and airtight business cases for decision makers when you need to grow.”


WeWork, Carrera 7 Bogotá

WeWork: The time for flexible work environments is now

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WEWORK

“ I realised that industry expertise and subject matter expertise is not as critical when it comes to category management as I used to think and is often a detriment” WeWork, 450 Lexington Ave New York

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GARY LEVITAN

GLOBAL HEAD OF PROCUREMENT, WEWORK


4K+

number of employees

700+ locations globally

150 cites

38

countries

590K+ physical memberships

45K+

All Access memberships *As of Dec 2021

WeWork, 155 West Street, Johannesburg

Category management: ‘It’s all about processes’ Throughout his career Levitan has been driven by different business strategies, many of which have fallen out of favour. “At the beginning of my career, category management was a function that very few understood. I led some very specific categories - including sustainability and renewable energy - but then I started to oversee more commodity-based

categories, such as OPEX consumables, which are products and services that support day-to-day business. It was then that I realised industry expertise and subject-matter expertise is not as key to category management as I once believed. Now, I actually think it can be detrimental,” says Levitan. He adds: “For example, I had stakeholders with the same subject-matter expertise as me, and that created friction sustainabilitymag.com

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because I was too focused on finding the perfect solution, instead of understanding their goals and delivering on their needs.” “But I learned that if you have a great end-to-end category management process, all you need to look for is talented, like-minded, eager, and passionate people. With the run on talent right now, this is more important than ever.” To this end, WeWork’s has a fivestep category-management toolset that allows Levitan to identify anybody with a desirable profile. “Simply filling out various templates, conducting market research, and putting that information into graphs, is a category strategy in itself,” he says. “This in turn organically develops expertise that wasn’t there before.” But the fact remains that - although the pandemic has raised the stock of procurement in boardrooms procurement and sourcing are not typical go-to college topics. “There is no educational framework for it,” says Levitan.


“Partnerships are critical [...] by leveraging partnerships organisations stand a chance in mitigating risks” GARY LEVITAN

GLOBAL HEAD OF PROCUREMENT, WEWORK

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WeWork, 123 Eagle Street Brisbane

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“It’s not something kids are typically passionate about. This means we are missing out on like-minded people with the right talent attributes. So we can help the industry by creating these opportunities for people who may not necessarily know about procurement, sourcing and category management.” How technology is changing procurement When it comes to technology in the procurement function, Levitan predicts there will be a shift in how technology is used in procurement. “I think we are going to move away from self-contained procurement and supply chain ecosystems to best-in-class technology providers for each portion of the end-to-end process. Complete supply chain ecosystems are notoriously difficult to deploy, because not every function in supply and procurement is necessarily deeply related or integrated, especially in certain matrixed organisations.” sustainabilitymag.com

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THE DIFFERENCE BETWEEN CATEGORY EXPERTISE, SOURCING EXPERTISE AND GENERALISTS Gary Levitan, Global Head of Procurement, Sourcing and Supply Chain at WeWork outlines the difference between the three: •

DID YOU KNOW...

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Being a category expert is to be an industry subject matter expert. Whether it’s experience in buying, sourcing, or managing, being a category expert the person really owns the product. Sourcing expertise is less about specific industry expertise and more about having competitive process expertise. It’s about knowing how to find suppliers and how to rate and grade them. It is also about how to run an effective and competitive process, how to get stakeholders engaged, and how to make proper recommendations. A generalist is someone who can flex into different categories and situations. They have broad industry, category and process experience and an eye for value.

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WeWork, Designer Club, Seoul


WEWORK

But one tool to do all that can leave gaps in the functions. Rest assured, Levitan sees emerging technology such as smart contracts, AI-supported demand forecasting, long tail spend management software, and intake and approval workflow platforms filling the gaps for each of these functions in procurement and supply chain. When it comes to deploying any kind of technology, Levitan is a firm believer in looking before you leap. “You need to assess what is most important, then deploy best-in-class tools that serve your organisation best.” He also stresses that organisations must not forget about change management. “I have seen too many supply chain platforms fail because the change-management project plan was too light.” WeWork, 80 Strand Street Cape Town

WeWork and its partnerships “Partnerships are critical,” says Levitan. “It’s a bit of a cliché, especially in the procurement world. Our global supply chains are posing never-before-seen complexities and only by proactively leveraging true, collaborative partnerships do organisations stand any chance of mitigating these potentially existential risks.” Empire Office “Empire Office is an example of a partner who helps us buy furniture directly from multiple global manufacturers. Although our product is space, that space comes furnished with fixtures and technology, and we need to get those products to our customers and members on time,” says Levitan. “Our partnership with Empire allows us to deliver fully furnished space on time and on budget.” This partnership helps WeWork create clear communication and clear expectations on both sides, at a time when having a reciprocal relationship is more critical than ever. Cushman & Wakefield Cushman & Wakefield - a global commercial real estate services firm - believes in flexible office space as a viable option. They are invested in WeWork and the kind of service and amenities that it offers. They are going to be a valued collaborative partner going forward, especially since they have a lot of experience in large real-estate portfolios. There will be a lot of synergy between WeWork and Cushman & Wakefield.

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DATAQUBE’S MISSION: SCALABLE, FLEXIBLE AND SUSTAINABLE PODS

AD FEATURE WRITTEN BY: ILKHAN OZSEVIM PRODUCED BY: LEWIS VAUGHAN 188

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DATAQUBE


DataQube creates scalable, flexible and sustainable 5G data centre pod architecture that is fully customisable while solving the DC storage problem

D

avid Keegan is a Co-Founder and CEO of DataQube, an innovative, scalable and firstof-its-kind 5G-active data centre technology that has already secured a US$29.4mn investment from French investment management company RGREEN INVEST. “I've been involved in the data centre market for more than 30 years,” says DataQube’s David Keegan. “The data centre market was actually around thirty years ago, they just had different titles, ‘comms rooms’ etc.,” he says, underlining both the integral nature of data centres as a technology, and the speed at which they are increasingly demanding attention in the hyper-modern business world. Originally training as an electrician through an apprenticeship, David Keegan went on to study a degree in engineering, until eventually stepping into the data centre market where he now is having an unmistakable impact. “I’ve now been involved in some great projects across the globe, have worked in most countries where there are data centres, and have been involved in the design and construction of about forty million square feet globally, in projects worth US$20bn.” Small beginnings. Great changes. “What I've seen is certainly the rapid change in technology,” he says. “About four years

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DATAQUBE

David Keegan, DataQubes Visionary DC Architect sustainabilitymag.com

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DATAQUBE

“ T HE UNIQUENESS OF DATAQUBE IS THAT IT'S NOT MODULAR, IT'S NOT CONTAINERISED. IT'S A SCALABLE, PODULAR UNIT, WHICH ALLOWS US TO BUILD IN ALMOST ANY SHAPE YOU CAN THINK OF” DAVID KEEGAN

DATAQUBES VISIONARY DC ARCHITECT, DATAQUBE

ago, I decided to look at whether there was something else that's going to support technology growth outside the traditional data centre models. So DataQube then became a vision.” This is the problem-solution approach to business and the world at large, which 192

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as a model, bears the seeds of some of the greatest and most innovative ideas ever devised. Could it be so for David Keegan’s DataQube? Setting Standards in Data Centre Technologies “The uniqueness of DataQube is that it's not modular, it's not containerised. It's a scalable, podular unit, which allows us to build on a pod-by-pod basis that can be uniquely built in almost any shape you can think of.”


DAVID KEEGAN TITLE: D ATAQUBES VISIONARY DC ARCHITECT INDUSTRY: DATA CENTRE LOCATION: UK

One of the problems in the data centre industry (one for which solutions are constantly being developed) is the basic issue of physical storage. Data centres can potentially be very large, rapidly growing in-line with demand and generating major spatial and practical problems of their own. To deal with these problems, companies tend to focus on moving the physical data centres themselves, sometimes to very remote and impractical environments. Uniquely, DataQube offers a solution to

EXECUTIVE BIO

David is a dynamic and highly skilled senior C-Suite executive with a demonstrable record of delivering data centres and technology solutions, having designed, built, and managed more than 40m sq. ft. ($20bn) of data centre white technical space globally. These projects range from brownfield traditional builds, existing building retrofits, modular build, and edge facilities with supporting technology solutions. Well rounded, operationally strong, financially aware, commercially astute, with excellent influencing and communication skills. David has the gravitas and reputation to act as a figurehead for the business, whilst providing clients, stakeholders, investors and business partners with the appropriate reference points and confidence.


DATAQUBE

“ D ATAQUBE CONSUMES UP TO 40% LESS POWER AND EMITS UP TO 60% LESS CO2 THAN REGULAR AND MORE TRADITIONAL DATA CENTRES” DAVID KEEGAN

DATAQUBES VISIONARY DC ARCHITECT, DATAQUBE

this problem by adapting the data centres themselves to the environments in which they are housed. A sort of evolution by technological selection. Keegan says ‘our model can sit at the side of a road, in petrol stations, in forecourts etc. We can also build it flatpack, we can miniaturise it, we can monoblock it, which means that we can even deploy it inside high-rise buildings by using pedestrian lifts to get access’. To demonstrate just how customisable DataQube’s solutions are, Keegan has the perfect analogy: “So, if you imagine every letter of the alphabet in a capital format, we can build DataQube to fit all those configurations.” Responsive and Responsible Data Centres The first 5G (ready and active) edge technology of its kind, DataQube centres operate with a lead time of <6 months. No other edge data centre solution on the market offers the same levels of energy efficiency, IT density or scalability, making DataQube unrivalled in terms of both cost and speed to market. Not stopping there, DataQube also crafts its data centres in light of the United Nation CSRs (Corporate Social Responsibilities) and has developed a green technology– helping it to stand out from its rivals. “We can also 194

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take it apart from manufacturing in various materials, stainless steel, mild steel, timber, adding yet another level of attractiveness for its stakeholders.” Data centres are known to be increasingly green, especially considering the steady industry-wide transition from fossil fuels to renewable energy sources. Yet DataQube has gone a step further than even this standard precedent, developing a technology that consumes up to 50% less power and emits up to 50% less CO2 than regular, more traditional data centres. Another stride beyond the competition, and one which sets DataQube apart as a leader in the field. Life On The Edge and The Last Mile: Defining and Redefining Information Technologies Edge technologies seek to solve problems related to bandwidth (data flow) by bringing those storing relevant data closer to users. Facial recognition technology would be one such example of Edge Tech. If, for example, you use facial recognition tech to unlock

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your phone, each and every time you do this, the information has to be relayed to a cloud server. The delay caused by this would render the technology both inefficient and impractical to use, and so it makes sense to house the data centre on the phone itself. Unsurprisingly, data centres such as DataQube are primarily concerned with data, its storage and its transfer. To illuminate the not-so-obvious, though, data transfer is not as simple as going from A to B in a linear progression, like a vehicle traversing the highways. Instead, the situation is better visualised as a superhighway - with millions of vehicles moving in different directions, at different speeds - which then narrows into streets, lanes and avenues near the beginnings and ends of their journeys, culminating in a sort of informational congestion. This deceleration of data as it nears its destination has come to be known as the ‘Last Mile’ problem. But is it really a problem? Not according to David Keegan. “My view is that the edge is not yet defined,” he says. “We don’t know how it's going to be used. It's really in its infancy.” In the same way that Keegan recognises that Data Centres have been around for at least 30 years, albeit in a different form, he also sees edge technology as still evolving, being constantly revised and redefined. He says: “I think we're going to have a different interconnected world. I think we're going to have the optical world (the optical fibre networks), which will continue to grow. And, inside that global ring of interconnect, we're going to then have satellite technology - 5G, 6G, 8G and Microwave - and you're going to be getting clusters of connectivity.” Keegan’s position on so-called ‘edgetechnology’ reflects his approach to data centres as a model, which is that not only sustainabilitymag.com

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is technology constantly being redefined through development, but also that this development then solves seemingly indissoluble problems in turn. His position is one of a creative openness, a sort of growth-mindset geared towards technology and marked by a reflexivity that envisions that such a stringent definition may in fact lead to a type of stasis in development and

“ A BOUT FOUR YEARS AGO, I DECIDED TO LOOK AT WHETHER THERE WAS SOMETHING ELSE THAT'S GOING TO SUPPORT TECHNOLOGY GROWTH OUTSIDE THE TRADITIONAL DATA CENTRE MODELS. SO DATAQUBE THEN BECAME A VISION” DAVID KEEGAN

DATAQUBES VISIONARY DC ARCHITECT, DATAQUBE

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growth. This can be seen in his approach to not just edge technology and the so-called last mile problem, but towards connectivity technology in general. While many companies and leaders tend to see technological growth as a singular and homogenous transformative process, David Keegan recognises that it shifts on a global scale in intermittent stages, and at varying degrees, around the world. “We see the systems that will come online will create varying levels of interconnection. And that's going to be down to thousands of dumb - as well as intelligent - solution

devices that actually talk to each other, and they can be 100W or 500W, but they holds data both on and off premises, all locally interconnected. And certainly looking at 5G and the satellite deployments that are now happening, all these things are really not as yet properly defined.” Orienting himself to the future, David Keegan says: “The next 12 to 18 months look really exciting. As you know we received our investment from RGREEN INVEST in the last year and are very pleased to be partnering with them – the relationship is really strong. “We are already deploying two edge data centres in Ireland to create one of the city’s first smart solutions using DataQube, and we're partnering in a mode that allows us scale and growth. We've sold into Australia, and we are working with partners in the US to build an edge data centre platform using DataQube. We're also heavily going into the Asia market, where we've got a lot of inbound traction, and certainly also in the Middle East.” Considering the potential growth of DataQube in the near future, David Keegan says: “We anticipate having somewhere between 50 and 80 edge data centres contracted and in production ready to be deployed in the next year or two.” As big data ramps up on a global scale, data centres are becoming evermore integral to almost every industry in one form or another, and client demand grows with it, meaning that only the most innovative data centre providers will thrive in such an environment. David Keegan says: “Part of our evolution is we're now extensively designing further product ranges to support client requirements.”

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