15 minute read
Mobility
COMMENT
Moving forward...
... sustainable transportation is going to be integral to cities down the road
Cities are home to businesses, entertainment, policymakers and billions of citizens who thrive in the vibrant and dynamic urban environment. Despite the global pandemic, their growth has not slowed, and they continue to move rapidly toward the future. There are significant opportunities and challenges, which come with the evolution of cities across the societies and communities that live in them. One of the key opportunities is transportation, which also comes with many challenges.
The transportation sector is undergoing an enormous transition as nations actively seek strategies to operate more sustainably. A core aspect of sustainable living in an urban environment is efficient transportation. With the rate of urbanisation ramping up, the demand for more sustainable and carbon-neutral options for mobility is also increasing. Modern mobility infrastructure must operate efficiently while minimising downtime and total ownership cost to reduce greenhouse gas (GHG) emissions.
A CARBON-NEUTRAL FUTURE
Over 100 million electric cars are projected to be on roads by 2030. This is a massive 30-fold increase from that of today. More than one million electric buses are expected to be introduced across five continents. It is forecast that by 2030, the electricity required to power these electric vehicles (EVs) will exceed 500 TerawattHour (TWh). By 2040, EVs will comprise close to ten per cent of the global energy demand.
A carbon-neutral society requires more than filling cities with EVs. To accommodate these changes in the world’s energy systems and achieve the vision of sustainable cities, the world’s energy systems need to keep up with this rapid evolution. Installing energy systems that can serve as the backbone for future cities while simultaneously keeping costs affordable is crucial for success.
OVER 100 MILLION ELECTRIC CARS
PROJECTED TO BE ON ROADS BY 2030
The world needs to come together and agree upon a common energymobility system. Electric networks must comprise two essential building blocks – an intelligent, convenient, widespread and standardised charging infrastructure and an adaptable and digitally-enhanced grid infrastructure capable of storing and transferring large volumes of renewable power.
One of the biggest challenges standing in the way of this new energy-mobility system is bringing various industrial sectors together to follow a common standard. This extends not just to technology, but also business models, regulations and policies. For instance, when a public transport operator switches from the internal combustion engine to electric propulsion, it must decide on the energy source to integrate its network within the urban environment. On the other hand, electricity providers will need to provide new infrastructure in their networks that can support new forms of energy ‘take-out.’
Suppose companies, governments and other relevant organisations across multiple industries do not collaborate closely. In that case, there is a risk that the infrastructure and vehicles are not optimised and that they don’t work together cohesively. This dissonance between the various systems will inevitably result in future retrofi ts, which will be expensive and unsustainable.
AN EMERGING MARKET
However, as we move forward, it is important to keep in mind that the electric mobility market is still emerging. Right now, a fraction of the cars on the road are electric, which is why energy providers seek to install only one, localised charger without attempting to integrate it into a larger electric grid that serves an existing fl eet operation, be it for personal use EVs or electric public transportation. However, the volume of energy consumption by EVs is gradually scaling up from kilowatts to megawatts which signals an optimistic future for the proposed energy-mobility system.
Despite the certainty of the conclusion, there are still critical questions about how to get there. There needs to be an open dialogue and strong cooperation between the expert stakeholders to address these questions.
THE RIGHT SOLUTION
A great example of a solution that takes a systemwide approach is the electric mobility hub. These hubs are charging centres that will facilitate the switch to digital mobility-energy management and prevent potentially messy, ine cient and disparate charging systems. Additionally, these hubs can be incorporated into our existing infrastructure with relative ease. A vast network of such hubs can be installed in structures such as parking garages for cars and bus depots for buses.
These hubs will provide a digital platform for fl eet management and energy fl ows. They can optimise energy conservation and a ordability locally and operate fl exibly on and o the grid. Irrespective of how EV technology evolves and energy demand changes, municipalities can enact a greater degree of control over how they upgrade their infrastructure moving forward.
We also need to develop intelligent energy grids which can maintain the appropriate balance between highly variable energy supply and demand while simultaneously supporting all forms of storage systems.
The existing grids can be adapted to become intelligent with recent advancements in grid technology such as HVDC, Statcom and Grid Edge, which can be adapted to cloud platforms through digital connectivity.
These technologies and many others will not only upgrade existing systems, but create new corridors of energy while massively reducing our overall carbon footprint. This will empower the new energymobility system to deliver upon our desire for greater green consciousness.
MORE THAN ONE MILLION
Dr Mostafa AlGuezeri, managing director for UAE and its oversight countries, Hitachi Energy
COMMENT
ILLUSTRATION: GETTY IMAGES/NANANO Leading the charge
Environmental, social, and governance (ESG) imperatives are now front and centre for Middle East businesses and governments alike. Further, with the UAE Net Zero by 2050 strategic initiative and a national drive to achieve net-zero emissions by 2050 in line with the country’s roadmap for accelerating national economic development, organisations conducting business in the country aim to support and steer the UAE towards a green and circular tomorrow.
In fact, the UAE has been a trendsetter for climate change and is fully embracing ESG reporting with investors and consumers keen for businesses to be ESG compliant. ESG concerns are the top priority of most Middle East investors today,
Historically, CEOs have been responsible for the profi tability of the organisation, leading the development and execution of long-term strategies with the goal of increasing shareholder – better yet, stakeholders – value. But the present time calls for over and beyond – the overall success of the organisation, anchored on sustainability These are far and few – only the woke ones. All CEOs and their boardrooms should, in fact, watch out for ESG very earnestly. From global climate frameworks to regional carbon-reduction pacts, to the UN’s Sustainable Development Goals (SDGs), new policies and regulations, as well as global reporting initiatives and duties, sustainability is designed to forge a new world and “compel” C-suite execs that still think it’s a buzzword down that path.
Here are the top five reasons why CEOs should be leading the drive for sustainability.
01. CEOS ARE PERSONALLY RESPONSIBLE FOR ESG
Whether they like it or not. Now the question of such personal liability for ESG breaches has been answered by the latest developments at Deutsche Bank, for example. On June 1, chief executive of Deutsche Bank subsidiary DWS Asoka Woehrmann resigned a ter German law o cials stormed o ces over claims that the company exaggerated the sustainable credentials of some of its fi nancial products. This happened right a ter the US Securities and Exchange Commission (SEC) released fi nes of more than $1m to BNY Mellon for misstatements and omissions about ESG in specifi c managed funds. Undoubtedly a case of personal responsibility. With UAE having a fi rm grip on ESG and up and coming ESG regulations, corporates must stay focused on maximising the opportunities through ESG-driven transformation by getting ahead of the game. It’s therefore inevitable that CEO executives get more and more linked to ESG targets.
02. RISKS AND REGULATIONS ARE KEY ESG COMPONENTS OF THE CEO’S AGENDA
As organisations adopt sustainability practices, climate incidents, emissions or transitional risks inherent to changing strategies around planet and people, as well as physical risks directly related to global warming occur. At the same time, regulations in each industry and region are now a necessity to support the UN SDGs.
There is certainly a strong call for more government guidance and policies on ESG in the Middle East and in line with each country’s agenda, such as Net Zero 2050 for UAE. Corporates and businesses are clearly looking forward to more, better and clearer ESG regulation in the near future, given that these are still evolving in the region.
As per PwC’s ESG 2022 Middle East survey report, more businesses are now setting net zero targets since the time UAE, Saudi Arabia and Bahrain governments set their national net zero commitments around COP26 in 2021. This is a signifi cant improvement since end 2021 when PwC’s 25th Annual Global CEO Survey was carried out.
Companies need to mitigate risks, comply with regulations, put procedures and policies in place to ensure resilience. This needs C-level buy-in, as it requires transformation and excellence in everything you do, thus this belongs on a boardroom’s agenda.
03. SUSTAINABILITY IS ALL ABOUT FINANCE
Eighty-six per cent of Eurozone CEOs believe ESG is an important value driver, even more critical than revenue growth. In 2021, Larry Fink from Blackrock set the scene with his CEO letter: “I believe that this is the beginning of a long but rapidly accelerating transition – one that will unfold over many years and reshape asset
prices of every type. We know that climate risk is investment risk. But we also believe the climate transition presents a historic investment opportunity.”
As stated before, the EU taxonomy requires companies to report on their environmental, social and governance actions. Not only in the EU, but also in North America. The SEC is currently preparing new disclosure requirements.
That applies to the Global Reporting Initiative, the Value Balancing Alliance, the Task Force on Climate-Related Financial Disclosures, international sustainability standards, you name it. All these reporting frameworks require corporations to disclose their goals and progress on climate and society.
In fact, 46 per cent of investors use ESG indicators in making investment decisions, with consumers increasingly requesting more sustainable products and services. As the trend continues to grow, this leads to increased interest from chief financial officers.
04. ESG (NON) ACTIONS IMPACT BRAND REPUTATION
A 2021 survey by Deloitte of more than 2,000 C-level executives across 21 countries found that 74 per cent reported regulation as the main external ESG driver, and 77 per cent reported pressure from governments to act on climate change and regulators. Eight out of 10 CEOs even believed
OF INVESTORS
USE ESG INDICATORS IN MAKING INVESTMENT DECISIONS, WITH CONSUMERS INCREASINGLY REQUESTING MORE SUSTAINABLE PRODUCTS AND SERVICES
that ESG issues were increasingly important to be discussed. Seventy-five per cent of that pressure comes from customers and clients; 65 per cent of that pressure comes from staff: young consumers and workers are increasingly demanding that social responsibility comes first. Seventy-five per cent of consumers are changing their preferences based on sustainability, and 46 per cent of employees would only work for a company with sustainable practices.
Whatever industry you are in, your customers will take a deep look at your business practices, and your activities will either make or break trust. They are looking for green producers trying to reduce the environmental impact.
In the Middle East for example, a region that is heavily dependent on oil and natural gas for its energy supply, decarbonisation becomes a major conversation. Hence with the region’s circular economy approach, the energy sector will be able to witness several benefits, more value and elevated brand reputation with increased investor interest.
Fast fashion brands are also making bold statements on sustainability while still substantially contributing to massive amounts of waste, water pollution or
Josèphe Blondaut, director ARIS Global Marketing – Software AG
labour conditions. In less obvious industries, such as banking, greenwashing allegations can be dangerous for the image of your company, and you must be able to back up your statements with real proof.
05. SUSTAINABILITY IS A CORE STRATEGIC TASK
As we saw with all the above examples, sustainability impacts all business areas and operations and revolutionises how your business works. It requires deep transformation of your operations based on strategic decisions, for example, to support UN SDG number 8 to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. Sustainability only becomes real when it comes down to processes.
To support climate action, you need to take a deep look at how your enterprise operates and where the potential and challenges are with your processes. Circular business models rely on a redesign of the processes. Social responsibility is anchored in the business processes, and ESG reporting sums it all up, needing insight into the business.
A CEO is responsible for envisioning, nominating and enabling the company’s vision and sustainability strategy. This strong change needs to be enforced by C-level commitment to mature and increase resilience.
Bob De Caux, vice president of automation at IFS
Showcasing sustainability
Why tools that aid reporting hold the key to ESG success
Every business now has a sustainability manifesto, or at least a stated ambition to operate more efficiently, ethically and responsibly. However, as this metric becomes more and more
significant in the eyes of customers, employers, regulators, auditors and partners, how can companies go on to prove that this declared vision is yielding tangible outcomes?
And how can that group of onlookers be sure that organisations are practising what they preach?
From both sides of the fence, there is a need for data – indisputable evidence that the technologies and innovations being deployed to enhance sustainability performance are hitting their mark.
In this regard, digital tools that can aid sustainability reporting are as important as any other weapon in businesses’ digital transformation armouries.
THE DATA DELUGE
It’s certainly not the case that data is unavailable to companies, which seems like a good start.
Parallel to this rightful obsession with sustainability is a separate obsession with the capturing, storing and analysis of data that can theoretically aid decision-making from that point on.
This is where the challenge arises, however. The data deluge that is occurring as a consequence, is often unguided by an initial reason and rationale, or a strategic roadmap for what companies want to improve at the other end of the automation filter. The result is companies drowning in a sea of data, generated by numerous, often misunderstood, tools which can’t be tied together to create meaningful statistics.
Sustainability is one of many metrics to suffer when it comes to the fostering of these progress reports, which also puts pay to an ultimate ability to showcase sustainability credentials to the wider industry. What this disconnect, and inability to generate clear reports, also leads to, is a sense of confusion about how to proceed from there.
If you can’t clearly see where you’re currently at from a sustainability perspective, how do you know where to improve, invest or refine from that point on?
DIRECT DIGITISATION
What businesses need is dedicated software targeted towards outcomes, not simply towards the data itself. Artificial Intelligence (AI), in particular machine learning, provides fantastic, necessary tools, but they’re only responsible for interpreting the data they’re being fed, and generating patterns as a result. If these results aren’t focused on specific outcomes and designated strategies, then it becomes extremely difficult to wade through that chaos and find what you’re looking for. And, of course, if there isn’t a strategy guiding the machines, there is also unlikely to be clear guidance for even the best data scientists to follow, either. The solution is to, firstly, deploy solutions that can confirm data’s connection with environmental, social and governance (ESG) ambitions. There are ESG add-on solutions, or even bespoke ESG frameworks within wider products which directly allow users to produce reports and map statistics for progress around said ESG bucket.
This could be used, for example, for CO₂ emissions of vehicles, building a remit for the automation tool deployed to gather information around emissions per vehicle and to generate reports around that specific statistic. However, this is only stage one of the digitisation journey.
DRIVING FUTURE PROGRESS
Stage two then has to be an embedded function which not only aids reporting but then points towards solutions and optimisations.
Going back to the vehicle emissions example – great, you now have clear visibility over this sustainability metric; but what can your company now do to improve those statistics? Organisations should be looking into bespoke ESG frameworks where data isn’t just more targeted and therefore visible, but it becomes a launching pad for decisions beyond that. After all, reporting, at its core, is more than just an audit document. It’s a gauge of where things are going well, and where they’re not. And only with that level of transparency can reports drive future progress.
DON’T FALL BEHIND
In the outcome-based service world that we are currently moving towards, sustainability epitomises what businesses should be striving for across all metrics. A single source of truth to confirm how efficient your business is can set the tone for a more connected and targeted automation framework across the whole business.
Analysts and AI feed off what you precisely want to achieve, while the data being yielded and reported on will give clear pictures of where improvements are required. For those who are already hitting ESG expectations, they will also now have a way to showcase that ability and differentiate themselves in the eyes of those aforementioned onlookers. Just like implicated organisations, service providers are also feeling their way into this environment, and bespoke frameworks as part of broader automation products will only become more advanced in the months and years to come. But if the past two years have taught us anything, this is no time to fall behind. Connecting data to sustainability via bespoke reporting mechanisms that can also inform future decisions is the holy grail for everyone wanting to flex their ESG muscles.
REPORTING, AT ITS CORE, IS MORE THAN JUST AN AUDIT DOCUMENT IT’S A GAUGE OF WHERE THINGS ARE GOING WELL, AND WHERE THEY’RE NOT AND ONLY WITH THAT LEVEL OF TRANSPARENCY CAN REPORTS DRIVE FUTURE PROGRESS
