Deloitte's John Mennel on Tackling the Complexity of Sustainability Data

As Evan notes in this episode, data is the linchpin of corporate sustainability. So we are gonna spend a lot of time talking about data; including how companies like Amazon and FedEx gather and disseminate sustainability data.

And to help us sort out the complexitiy of all that data, John Mennel,  Managing Director in Deloitte’s Sustainability, Climate & Equity practice, joins the show (18:44) to share his insights on current corporate sustainability trends. John also details some of the technology- and analytics-enabled tools Deloitte has developed -- including GreenLight Solution, GreenSpace Tech and ClearCarbon -- to help companies and investors design and implement decarbonization plans, commercialize abatements and better understand climate-related risks.

Show segments

Sustainable or Suspicious - (1:58)
Amazon's HQ2 make some bold sustainability claims

Top Headlines from SmartBrief on Sustainability - (12:05)
FedEx offers emissions tracking tool
Climate change reducing omega-3 content of ocean fish
Dutch city tackles litter with fleet of mini EVs

Highlights from John Mennel - (18:44)

Deloitte's centralized position in the sustainability landscape - (18:58)
Things organization need to remember when establishing net-zero goals - (20:21)
Do we live in a world with too much data? Or not enough? - (22:04)
Which data needs to be prioritized: Compliance vs Business improvement vs Business transformation - (23:50)
The challenges of Scope 1, Scope 2 and Scope 3 reporting standards - (27:04)
Using data to navigate the intersection of stakeholders and regulators - (29:39)
Talent as a key stakeholder - Deloitte's Gen Z and Millenial Survey (32:07)
The basics of GreenLight Solution - (34:55)
How GreenSpace Tech propels innovation - (37:46)
The ClearCarbon tool for the food sector - (41:10)
How the field of sustainability has evolved over the years - (42:38)
John's bold predictions about the future of sustainability - (44:51)

Sign up for the SmartBrief on Sustainability newsletter

Transcript

(Note: This transcript was created using aritificla intelligence. It has not been edited verbatim.)

Sean McMahon  00:09

Hello everyone and welcome back to another episode of the Sustainability SmartPod. My name is Sean McMahon, and we're missing one member of the team this week Jaan vanValkenburg. But I am joined by Evan Milberg and Karen Kantor. How's everyone doing today?

Karen Kantor  00:25

Hi, Sean, I'm happy to be here.

Evan Milberg  00:27

Still holding it down for the Berg contingency.

Sean McMahon  00:32

Great. I haven't I liked that the Burgh contingency you and

Evan Milberg  00:35

I told her Jaan and I should have like a Berg & Berg like column and she thought it was clever.

Sean McMahon  00:41

Well I’m sure we can all look forward to reading that column. As for today, we’ve got a great show coming up.

We are going to be spending a lot of time talking about data.- including how companies like Amazon and FedEx gather and disseminate sustainability data. It’s no surprise there is a lot of complexity involved in all that data, so a bit later we’ll be joined by the perfect guest to help us make sense of it all: John Mennel from Deloitte. John is a Managing Director in Deloitte’s Sustainability, Climate & Equity practice, where he leads a team that is developing technology- and analytics-enabled tools to help companies and investors design and implement decarbonization plans, commercialize abatements, and generally better understand climate-related risks. So yeah… you could say John knows a thing or two about sustainability data, so I’m excited to talk to him, learn more about some of those tools Deloitte has brought to market .. and hear his overall thoughts on current sustainability trends.

Looking ahead … we’ve got some great interviews coming up in the next month or two. For example, We’ll be hearing from leaders at AT&T and Marriott to learn more about the approach those companies are taking to enhancing the sustainability of their operations. We are also going to bring in communications experts like Mike Hower to discuss how we talk about sustainability.because Like I always say, the messaging matters.  

But right now, it’s time to kick off the first segment of today’s episode. The segment we call sustainable or suspicious. Evan, I believe you have the topic for us.

Evan Milberg  02:33

I do so the second phase of Amazon's second headquarters complex in Arlington, Virginia is on hold because of market considerations. But last month, courtesy of our friends at ARL now, it shared some interesting claims about the nearly complete first phase which is known as Metropolitan Park. So they also published a blog post which touts a plethora of sustainable features at met Park, which includes water conserving amenities, electrified operations, low carbon concrete, and diversion of construction waste from landfills. It is worth noting that the co2 sequestered concrete for the project was made possible by carbon cure, which in the past has received money from Amazon's climate pledge fund. So if you're not a believer in low carbon concrete, the project also uses another sustainable material called mass timber in the form of glue, laminated timber beams that support the meeting center ceiling. Another thing that I found interesting about this story is that the company claims met Park will be powered with 100% renewable energy from a solar farm in Southern Virginia. Now, that's a conceivable possibility, considering that there are entire airports in the US and now run off micro grids. However, what's particularly eyebrow raising is that Cara Hurst who is Amazon's Vice President of Worldwide sustainability, told CNBC that the company has, quote, eliminated fossil fuels from this building, which is huge and really new for a lot of developments, particularly of this size. And I have to say, I agree. I don't doubt that this is going to be a case study in large scale, corporate sustainability and construction. I find it highly suspicious that they're claiming that there are zero fossil fuels involved.

Sean McMahon  04:37

Yeah, I think Amazon's always going to be in kind of a tricky predicament. Right. They are the leading procure of renewable energy in the US. I mean, they've got, I forget, I've lost track of how many gigawatts they've procured. So they lead the way there. I mean, they've electrified a lot of their fleet. But bottom line there kind of operating business does require a lot, a lot of moving parts. How could it not? Yeah, exactly. How can it not mean, as far as this facility goes, I mean, we've all been tracking it for a few years, even back to when they were deciding where to build it. I think it was initially kind of, they were thinking about New York, there's all kinds of jokes of why you need a second headquarters, whatever. But when it comes down to it, they chose our infant. And they're this far along in the project. So I hear your concern, Evan, about whether that's completely 100%, free of fossil fuels. Maybe they just mean in an ongoing basis, you know, once it's up and running, and the maintenance and the operating of it will be but the construction on it? Yeah, not a single construction truck drove up to that site, powered by fossil fuels.

Evan Milberg  05:35

Really, I mean, I mean, there are there are electrified cement mixers, and things like that. They don't mention that in the blog post, though. And while I am personally believer in carbon cure, I don't necessarily buy that every aspect of the concrete operation as fossil fuel free, it just can't be. There's no precedent for it. And if they were breaking a precedent, I would think that they would be, I don't know, far more demonstrative in saying so.

Sean McMahon  06:11

Karen, what do you think here?

Karen Kantor  06:12

First of all, I'll give them points for being sustainable. They're, they're trying really hard. And I think actually, they're doing a pretty good job. There are a couple of things that I'm especially interested in, and that one of those would be the water savings that they're claiming. They're claiming 50% water savings below building code. That's pretty impressive. Also, the electrical energy efficient operations, that I'm hopeful, partly because of the green roofs, they're saying they have two acres of green roofs, and that will certainly bring down the power. The fact that it's electrified makes me happy. Sounds like there won't be any gas stoves in the restaurants that are on the ground floor. So for me, the answer is probably sustainable. Could be better. But I give them points.

Evan Milberg  07:05

I'm always generally suspicious of bulleted lists. And that's what this blog post does. Amazon basically said, we're doing this this this, this, and this, you certainly can do the research involved in finding out what all of those individual measures entail. But I think this goes back again, to the to the communication piece that we always hit on every episode is when you package it in this bulleted list form. I don't know if there's something about that, that feels not the most authentic to me. I believe the construction part is actually a lot more sustainable than maybe we're giving it credit for. But I questioned the fossil fuel claim. And I question just how netzero it's going to be when it's actually up and running.

Karen Kantor  07:59

I would say that, for me is very easy, especially to be cynical about this. So I'm trying not to be I think especially compared to other construction, Amazon probably did a pretty good thing here.

Evan Milberg  08:11

No, and they absolutely have and like like I said before, I'm a big believer in carbon cure. I'm a big believer in mass timber. So certainly, I think if you were to enter every material that they used for this project in an embodied carbon database, which does exist, I think you would probably find that they score pretty high marks in that area. I'm just not sure we're getting the full picture. And for that, I just I reserve plaudits for lack of a better phrase.

Karen Kantor  08:46

There was one more thing I wanted to bring up regarding this building. One thing they did mention was the bird safe glass. Yes. And as someone who actually cares about birds, as I'm sure many people do, I was very pleased by that. And I did look up a little bit of information at the Audubon Society's webpage. And the fact that they're nonreflective is a very good thing. And kudos to Amazon for thinking of that.

Evan Milberg  09:13

Absolutely. I know Arlington isn't the only place that encourages these birds safe windows, I think there are there are other major urban areas that do so as well. So good good for them. You certainly can't say that they didn't have a plan and execute it. Because there are clearly lots of different considerations and consulting firms brought in to make sure that they ticked every box. But I think the way that they've communicated how they've ticked every box, makes me second guess them a little bit.

Sean McMahon  09:50

Yeah, like I mentioned earlier, I mean, I've got full faith in their ability to operate on renewable energy. I mean, Amazon, like I said, is such a leader on that. One other thing I would point out What I thought was interesting about during the construction is the amount of materials they diverted from landfills. In Virginia, the average is that about 65% of you know, materials from demolition and construction end up being sent to landfills. This is across all kinds of projects. Amazon was able to divert 82% of all of its materials away from landfills. So we're talking about concrete, drywall, things like that, that they've managed to keep out of landfills. So I thought that was pretty creative way of doing it. I'm not sure where it all went. But it didn't go to landfills.

Evan Milberg  10:31

Well, if we can't find out specifically where it went, then that Where are you getting the 82%? From? That that's where I'm coming from on all of this. It all sounds good. Just, I want to see EPDs, I want to see the fine copy of where everything went and how it got there.

Sean McMahon  10:51

I gotcha. It sounds like you want to bring in Amazon's sustainability team and have a little thumb wrestling match with them ever.

Evan Milberg  10:57

Not? Not necessarily. I mean, not necessarily. I'm I'm I'm not trying to be cynical. I just, again, I can't stress enough this communication piece about how things tend to get over simplified in this communication process. And how that fosters skepticism, and in some cases distrust me, we're going to have an episode in a couple of weeks that talks about that very topic. And we're going to be talking with Mike Hauer from how our impact, and also GreenBiz. And he's going to share some best practices for making sure that your message comes across authentically.

Sean McMahon  11:38

I gotcha. So Well, let's take a quick vote here. I think I know where each of you is headed. But we'll go ahead and get it on the record. Karen, where do you come down on this sustainable or suspicious?

Karen Kantor  11:48

I'm gonna vote sustainable. Evan,

Evan Milberg  11:51

I don't think it's that simple. I don't think it's 100%. One way or the other. I think it has, once again, all of the pieces to be sustainable. But the data transparency, and the communication piece of it all is always going to have me second guessing. So if

Sean McMahon  12:11

and I'm going to come down in a way, I think you might want to jump on the bandwagon with me. reverting back to that blog post with all the bullet points. I think some of those bullet points are sustainable. And some of them are suspicious that

Evan Milberg  12:23

yes, that is what I'm trying to say, in much more eloquent words.

Sean McMahon  12:31

Alrighty, so now we'll move on to the next segment of the today's show. This is where Karen comes in with some of the most interesting stories from the smartbrief on sustainability, which is the newsletter she curates. And I always always promote it, you can sign up for that newsletter. The link is in the show notes. Karen, what stories we'll be talking about today.

Karen Kantor  12:48

Well, Shawn, supply chain drive reports that FedEx is giving businesses what they want. They want data data data in the form of an emissions tracking tool. And they're calling that sustainability insights. The shipper comes up with the emissions information by tracking packages, steps and the mode of transport, it used to get to the different spots along the way. It counts non transport emissions to like mobile equipment and the energy its facilities use.

Sean McMahon  13:17

Yeah, I think this is incredible, quite frankly, it seems to me these days, more and more people I've talked to, you know, reporting out on your sustainability and your scope ones, your twos or threes. It's all about data, data data. Coming up in a few minutes, I'm gonna be talking to John metal from Deloitte. And we're gonna be talking all about data in this space and tools Deloitte has for companies are trying to not only establish netzero goals, but then track their progress along the way. So what FedEx is doing here is is going to help a lot of companies think about it, ultimately, you have to report back on everything, your company might ship somewhere. So if FedEx can deliver reliable data, that's that granular, right down to the package and a mode of transportation. I just stunt like this. This is Yeah, wow, in my mind, like a tremendously helpful tool.

Karen Kantor  14:04

And now if Amazon gets together with FedEx, we can get some real reporting, then I will really be impressed.

Evan Milberg  14:12

No, I completely agree with you guys on on the data piece of this. To me, this adds further credence to the theory that data is really the linchpin of corporate sustainability. And as we see more convergence between data and AI, clearly machine learning is the future of emissions reporting, but a machine learning model is only as potent as the data available to it. And clearly FedEx understands that.

Sean McMahon  14:37

Yeah, Karen I like what you're doing there. Maybe this is FedEx laying down the gauntlet for Amazon to try and match so

Karen Kantor  14:44

and there's our thumb war or for UPS,

Sean McMahon  14:48

UPS brown DHL, USPS

Evan Milberg  14:51

all of it. What can green do for you?

Sean McMahon  14:54

All right, Karen, what's the next story?

Karen Kantor  14:57

So Sean Nautilus reports that ocean warming may be doing more than shrink fish populations. It's also likely to be changing the fish themselves, making them less nutritious for us landlubbers. The article dives into the details. But without getting too far into this seaweeds, early stage research predicts a decline in omega three fats and other nutrients. Some 3 billion people around the world rely on seafood as a protein source. And some people in poorer tropical countries get more than half of their protein from the ocean. So this is an issue worth watching.

Evan Milberg  15:32

Yeah, I mean, so remember, not long ago when we talked about phytoplankton and the whales. Here's another example of why phytoplankton is such a huge player in the sustainability ecosystem. As I think Karen just explained, phytoplankton need cooler temperatures to make omega threes in abundance. So after reading this article, the first question I had was, is there a way that we could harvest phytoplankton outside of the ocean. And as it turns out, there is according to the saltwater aquarium blog, I know not the most scientific source, but bear with me. All you need to do this at home is light, basic nutrients, carbon dioxide, oxygen and a clean place to live. So if there were perhaps financial incentives for more people to do this at home, maybe we could create a value chain that circumvents this omega three decline.

Karen Kantor  16:27

Or we could keep the oceans healthy.

Evan Milberg  16:31

It not either or, but you know what I mean?

Karen Kantor  16:35

I do know that in poor countries, the chances of setting up good phytoplankton farms are probably a little bit less. And fishermen would probably just be just as happy to throw a line into the water.

Evan Milberg  16:47

So make the us do it. Not you're not asking anyone to pull a disproportionate share of their weight. But if you have the resources to do it, then do it.

Sean McMahon  16:58

All right. As I mentioned earlier, Jaan is not here today. And she usually guides us through the here and there segment of the show. But it turns out that the third story Karen has for us pretty much qualifies for that category. Karen, what do you got?

Karen Kantor  17:13

I have a publication called the mayor, which is reporting that Rotterdam in the Netherlands is deploying a fleet of three electric cleaning vehicles that are going to zip around town to clean up trash. The vehicles are pretty agile, and can use bike trails to get into some spots that are off the beaten track. They're going to act as sort of StrikeForce that can swing into action when litter is reported. And reporting is easy, because there's an app, or people can call by phone. Now when I think of this, there are pictures at the website with the article. And they're these cute little green square machines. With a guy holding on to the back, it looks like a Zamboni. And just picturing this is glorious. And these guys are going to be you know, kind of the superheroes of Rotterdam running around and cleaning up the litter. I I have to see this in action, I'm going to have to get on a plane,

Evan Milberg  18:10

Super litter. No, this is a really interesting idea. And I've actually seen it in other iterations. Six or seven years ago, I read about this concept called the scarab. I think I'm pronouncing that right, which is essentially an outdoor Roomba for highways and urban downtown areas. I think the prospect of having a manual operator as opposed to trusting autonomous vehicles makes this Rotterdam application a lot more promising. But yeah, I like this idea. It seems very heroic. 

Sean McMahon  18:43

Well, I think maybe this is a way for the crew in the Netherlands to try and catch up to Japan. I always when I think of societies that take pride in the way they clean up after themselves. I always think of the Japanese you know their soccer fans are famous for cleaning up stadiums and things like that after after matches. So, so kudos to Rotterdam, I like what they're doing. Well, hey, I know we're missing one member of our team today. But Karen Evan, this is fun. Thanks for chatting.

Evan Milberg

It was very fun. 

Alrighty… now it’s time to welcome in today’s guest John Mennel. As I mentioned at the top of the show John is a Managing Director in Deloitte’s Sustainability, Climate & Equity practice. John,  how are you doing today?

John Mennel  19:21

Good. How are you doing? Sean?

Sean McMahon  19:23

Great. I'm excited to bring you on. You know, on the show. We have a lot of experts in the sustainability field, but often they kind of work in one business or one silo and Deloitte being Deloitte, you kind of can see the whole board. So I'm really keen to kind of hear your perspective on some of this. Terrific. So can you tell me more broadly, how's Deloitte looking at sustainability? And how are you assisting your clients as they try to tackle these challenges?

John Mennel  19:44

Sure. It's interesting. So we're an old company. We've been around for 175 years. We're one of the oldest professional services firms. And we've actually been doing sustainability work for almost 30 years. So we were part of the World Business Council for Sustainable Development. steering group on sustainability and ESG, over 30 years ago. And we made a decision a few years ago that we were doing all of this great work, it was becoming more and more important to our clients, our clients were, you know, thinking about sustainability at the C suite level, we could talk a little bit more about why that was that we needed to do something to really up our game. So we created a single global practice that goes across all of our businesses, that is sustainability, climate practice. And that allows us to pull together all of the expertise we have across the firm. So if you want strategies, people focused on new business, fleet, electrification, renewable power, if you want auditors who really know the reporting environment, the tax and credits, people who know how to get all this paid for through the inflation Reduction Act and other acts, we brought all those people together into one practice that's across all our businesses, all our industries, to bring a really integrated view for our clients.

Sean McMahon  20:57

So obviously, one of the key steps for any company tackling sustainability is to establish a netzero goal. Most companies have already done this. But for companies who are kind of at the beginning of that stage, what are some of the key things they need to remember, and perhaps some of the pitfalls they need to avoid?

John Mennel  21:11

For clients that are just now setting their their net zero goals? We help them to think about two things to keep in balance. One is what's going to be ambitious and differentiate the business. And so what are the expectations of investors, employees, customers, now and then into the future? Because you really have to look, you know, 10 years out, and then also what's feasible. So what can they accomplish so that when they're setting a target, it's, it's a realistic target. And we help clients think through and you know, balance both of those things. Usually, it's aligned to a standard. So the science based targets are the gold standard. That's what a lot of our clients are aligning to. The other thing that's really interesting is that, in, you know, the time that I've been doing this work in the past couple of years, I really feel like with most large companies, at least, we've gotten past the why and into the how, and so 70% of the Fortune 500 already have a net zero goal, something like 25% of the of the Russell 2000. But according to our research and our CEO survey, only 5% of CEOs say that they have the data to actually achieve those goals. And so one of the things we're working on, we're working with a lot of clients to set that initial goal, we're also working with a lot of clients to figure out how to achieve a goal that they've already set. 

Sean McMahon  22:31

Yeah, I'm glad you brought up data, I have a lot of conversations with folks are trying to tackle some really complex issues. So obviously, data is a key theme. My question I like to ask everyone is, do we live in a world where there's too much data, or not enough?

John Mennel  22:43

Yeah, I mean, that's, that's interesting. There is a lot of data out there. One of the challenges for our clients is to is to select the right data. And I'll give you two examples. One is physical and transition risk. So we have a lot of clients who are running, trying to understand my facility here, my supply chain nodes, if weather becomes more and more extreme, what's the risk to those assets. There's a ton of data out there on those that topic there. They're over, you know, 30, public sector and commercial satellite services that provide satellite data. But it can be really hard to figure out what data to select which of the important data sets how to put them into a model. And so we help a lot of clients figure, Figure that out. And we have a sustainability data platform that we pulled a lot of that data into the platform, so we can help clients select the right data set. Another example is on supply chain. Right. So companies have been doing scope three footprints and scope three plans, including purchase goods and services for a long time. they've mostly been doing that with proxies. So using an emissions factor to estimate what the what the supply chain content is. And more and more they're moving to real data from their suppliers, from specific suppliers, usually specific facilities, specific emissions for transportation. And so that's an area where getting to that granular, real non proxy data is a challenge that companies are working on now.

Sean McMahon  24:16

Okay, so obviously, companies are trying to establish data collection systems and protocols and things like that. So what should they prioritize? I mean, it sounds like you just address a couple of examples, you know, supply chain and things like that. But are there any other overarching priorities that they should keep in mind?

John Mennel  24:31

When I talk to CIOs a lot and kind of the technology functions trying to support the business? We have a maturity concept of are you working on compliance? Are you working on improving the business? Are you working on transforming the business and to give you some examples? If you're working on compliance, most large companies need to comply with some voluntary standards, probably the CSRD standard in the EU and upcoming SEC regulates shins in the US. In order to do that, you need to be able to produce data that's at the company level that's provided on a quarterly basis. And that is, has a mix of proxy data and real data from suppliers and customers. So that's kind of one test. And if companies, that's where companies are, they should focus on the data they need for that. If they're working on enhancing the business, it's usually it's management information. And so they're working on, okay, we have a footprint, how do we get to our target? And how do we do that in a way that's economical, and, you know, good for the business, and usually positive returns for the business that requires data that's at the business unit level, or more granular that's on a monthly or weekly basis. So it's just a different kind of data. It's what you need to manage. And then companies that are trying to transform the business, they're trying to launch new businesses, new products, so they usually need data, like at the product level, the facility level, it needs to be real data going all the way from the supplier to the customer. And it usually needs to be on a weekly or daily, or even more frequent level. And so the way that they think about the systems and the data requirements really depend on which one, which one of those levels of maturity are there in the goals of the business.

Sean McMahon  26:20

So what's the mix in terms of priorities you're hearing from folks and those three kinds of choices? They're the compliance, the enhancement or the transformation? I imagine all those CIOs have all three of those things on their radar screen.

John Mennel  26:33

And that's exactly where I was gonna go. And you talk to a CIO of a really large company, they'll say, in different pockets, we're in different places, right? And so there's usually somebody at the company level, who's saying, well, we need to comply, we need to issue reports, and those reports need to be accurate and timely, and we need to be able to sign off on them the same way we do our financial information. And then there may be, you know, a CEO, or somebody who's leading facilities who's saying, Where do I have the most, you know, the dirtiest electricity? And how do I start replacing that, and then you may have somebody who's launching a new business, that they really need deep product level information. So like we're working with large food company, now that's doing low carbon proteins, chicken and beef, and the kinds of data that they need, going all the way back to their farmers is really, really detailed, but that's, you know, it's a multi billion dollar business that they're gonna build in that area. So it's, it's worth it to make those investments.

Sean McMahon  27:30

Are there any specific challenges within scope one, scope two, or scope three of reporting standards? Like? What are companies running into the most that might present the biggest problems?

John Mennel  27:41

Yeah, so it's a good question. scope one and two, a lot of it is, you know, is what do we do to replace those fuels and, and dirty electrons and clean electrons, the big challenge that companies have is figuring out how to make those changes in an economical way. And so you know, the good news is, when I started doing this work with clients, about 10 years ago, you would build the marginal abatement curves that Matt curves and show kind of economically, what were all the projects they had to do. And they were all money losers, right? The good news is today that because of the path that renewables and EVs have gone down, and you know, decreasing cost by about 20%, every year for the past decade plus, and then also the credits and incentives that have come come on board, usually about 70% of that total plan actually makes the company money, it saves, you know, it saves money, things that they would do in scope one and two. So a lot of times what we're doing is helping them optimize that plan, figuring out what is the capital budget they have? Is there a minimum internal rate of return that they need? And then how to prioritize? You know, like, which facility first? And is it on site solar, or power purchase agreements, and so to make those, like, really nitty gritty, operational decisions, and then in scope, three, the issues that clients are dealing with is one how do we get good information? And then, you know, how do we bend the curve on things that aren't completely within our control? And a lot of that is the you know, the issues understanding what's happening to your end of their supply chain, so their suppliers, suppliers, suppliers and kind of how the how the carbon how the emissions build up. And then on the downstream side with customers, it's how do we affect you know, customer behavior in ways that reduce our footprint and for example, we worked with the electronics producer that a lot of what we helped them do was move from selling that piece of equipment to doing it as a service so when the equipment is obsolescent, they get it back and they can refurbish it. And that's an example of, you know, something that's good for their scope three footprint, it's also really good for their business. That's right, because they get they get a recurring revenue model where before they were just selling widgets.

Sean McMahon  30:05

So obviously, with all this data, and you know, it's in the hands of leaders of these companies, and they've got to navigate this intersection between what their stakeholders expect and regulatory expectations that might be in place or coming down the pipeline, you know, what the SEC and things like that. So what are they doing with this data to help navigate that intersection for ESG?

John Mennel  30:24

It's an interesting question. And so far, and this is, especially in the United States, ESG. And sustainability has been driven by stakeholders rather than regulators. So it's it's voluntary reporting, three big stakeholder groups that are driving all of it. And those are investors, customers, and talent. And all three of those stakeholder groups are really important. What's interesting is a lot of times when we do the business case, for ESG, reporting, talent alone justifies the entire business case, because it's very clear that employees care about the sustainability of their company, they're more engaged, they're easier to recruit, they're easier to retain. And so there's just a clear business case on that alone. But all of those stakeholder groups are important. And what's happening now is that there there are new regulatory standards that are becoming more important, the CSRD standard in the EU, any company that has more than 150 million euros in sales in the EU needs to report to CSRD. And so that's virtually every large US company needs to report to those standards. And that's starting to drive behavior. And then, you know, the SEC standards haven't been published yet and likely won't include scope three and kind of some of the detail that's required and CSRD. But it's really changed the conversation that I've had conversations with several Fortune 100 CFOs recently, and what they ask is, okay, so we don't know exactly what's going to be in the regulation and when it's going to come out what's going to be required. But what's the chance that I'm going to have to report out on my carbon data in the next three to five years? And the answer to that question is almost 100%. And that is changed the way that, you know, the company and in particular, the CFO and the finance function are looking at the quality of the data that it needs to have the same procedures controls data sourcing is as their financials would. And that's really changed the way that you know that companies are, are thinking about the challenge and kind of the the seriousness around it.

Sean McMahon  32:33

Getting back to me, you talk about the different stakeholders, talent, customers, investors, things like that. Yeah. Are you detecting any kind of a change there? I asked that because one of the things I'm kind of hearing in the markets is that what the macroeconomic uncertainty companies are facing, and quite frankly, some are already experiencing hard times, the focus is kind of shifting back to the making money side of it, or maybe the investor side of it. And there's less attention being paid to some of the other stakeholders. Are you detecting any of that I won't ask you to name any companies. But you know, are you just did murmurs like that?

John Mennel  33:03

Yeah, the interesting thing is, so ESG and sustainability and making money usually don't trade off, right. So I saw I have not seen that retrenchment. You know, the the talent picture hasn't changed, we do a a millennial survey every year. And the data is really consistent. If anything, it's increased about kind of preference for where to work. And so any company that recruits in demand, especially, you know, high skilled employees, like they have to care about this only from an employee angle, you know, customers, people are still looking for buying sustainable products, they usually want those products to be good products, as well. And so people are not going to buy a bad or expensive product because it's more sustainable. But they do want to see that as part of the the value proposition. You know, in food and consumer packaged goods. We did a survey with the Grocery Manufacturers Association, that it's really clear that people across all age cohorts are buying on ESG sustainability purpose, they define it differently, but it's important for consumers. And then for investors, the you know, the same and I would say that investors are largely looking at ESG factors as a way to understand the company and the risks and how well it's managed. And so investors are not, you know, investing in ESG for largely for do gooder reasons. It's just, you know, if you have a company that's a manufacturer or retailer, an energy company, and they're not thinking about their climate risks, and that's just a bad investment. Right. And that's, that's the way that investors are, you know, or are thinking about it. So I really haven't seen that, you know, that retrenchment, but it will be important for advisors like us that we we help companies see the end right. So how can this be good for for the environment and for the company and I In most cases, the things that companies need to do for sustainability are also help them reduce costs or make money and they're, they're just good for the company.

Sean McMahon  35:10

Okay, we'll keep our eyes on that. And like I said, hopefully hopefully that retrenchment doesn't expand or take place. Circling back to the solutions part of this, right? Like there's so much data, so much information coming at companies and corporate leadership. So one of the reasons I want to bring you on is like I mentioned the top of the show, Deloitte kind of sits at this unique intersection of all these companies. You can see what they all need and the same pain points they might be sharing or you know, needs they have. So I recently saw you have a product coming out called Greenlight solution. Tell me what that is. Yeah, so

John Mennel  35:39

we've we've released a couple of products, Greenlight is the first one we released and Greenlight is, is our decarbonisation strategy solution. So it helps clients all the things we've been talking about, it helps them set a target, develop a GHG inventory and greenhouse gas inventory, understand the sequence of investments they need to make to achieve that target. And then to optimize that sequence of investments over time. And we have some clients who enter right at the beginning, they've never set a target, they need to set a target and calculate an inventory. We have other clients who have been at this for a while and they have an abatement strategy and abatement plan that for a large company can be 800 to 1000 separate projects and investments. And in Greenlight in the greenlight optimizer, we can help optimize that portfolio based on current economics current technology and help a client say I only want to invest in things that will make or save money, but I have a very large capex budget. So if we can get to you know, 8% IRR, then I've got unlimited capital to do it. We have other clients that say I have very little capital, so I'm willing to do things, but I need to space them out, or I need to look at, you know, maybe replacing the machinery a little bit later in its in its life. And I'm willing to take a little bit longer to get to the, to the goal if I can do that. And so this helps clients optimize and understand how to make those economic choices.

Sean McMahon  37:12

So if I'm a company that is coming in with with nothing, right, and I need to go from the early phases of even just establishing a plan, an emissions reduction plan, how long does it take me to get from that, to the end, where I'm actually kind of reporting back on my goals?

John Mennel  37:28

It depends a lot on the size and complexity of the company. But it's usually, you know, several months, we're working on a new feature and great Greenlight called industry sketches that uses all of the third party data that's out there about the company to provide an initial sketch an initial estimate of what their footprint is going to be and what the abatement strategies are. And so that way, when we start a project, we can go on and say, day one, this is about an 80 90% accurate estimate of what your footprint is going to be and what your strategy is going to be, let's start working on those things right now. And then in parallel will take a few months to get this from an 80 to 90%, you know, sketch estimate to something that's reliable that you can implement on a report on.

Sean McMahon  38:12

Alright, what are the other cool things I saw Deloitte was doing was greenspace. Tech. Yep. To me, I see it as kind of like a clearinghouse or kind of an exchange where companies come together for ideas. So So walk our listeners through what that is.

John Mennel  38:24

Yeah. And GreenLight and GreenSpace are very complementary. So whereas GreenLight helps you put together that plan. And a lot of the technologies that are needed for a company get to net zero plant already exists, they're already mature. I love the book, no miracles needed, right? It talks about all of the technologies that already exist are there. But for every company, there will be some things they need to do to reach net zero, where the technologies are either not there or not mature. And that's where GreenSpace comes in. GreenSpace is a an AI based climate hard tech Navigator, and it helps companies understand what are all the technologies that I will need, how mature are they today? When are they likely to be mature in my plan, and then who are the companies, the research institutions, the other r&d nodes that are working on this now that I should be doing pilots with establishing partnerships with making investments and perhaps acquiring and that's, and that's how green GreenSpace fits in? It's all that new technology, climate, hard tech, so all the physical stuff that companies need to be able to get to their goals,

Sean McMahon  39:34

and almost sounds like kind of a climate tech incubator, if you will. I know that's that's the wrong word. But it's kind of close

John Mennel  39:39

to that. We call it a navigator. There are three parts of it. There's this AI solution that basically crawls all the available data sources and then makes inferences to be able to suggest like which are the important technologies that will feed into I might need, you know, electrification of heavy duty vehicles, like what are all the technologies that feed into that and the AEI does that and make some connections. We then have a network that's now over 100, universities, venture firms, incubators and accelerators that we use to kind of vet that information. And then we provide this as a service. So they're always people who are experts in that technology, who are, who are interpreting what, you know, what comes out of the AI. So we call it a navigator. But it's those three parts.

Sean McMahon  40:24

I gotcha. Are there any examples of technologies that have kind of come out of that navigator were early stages, and then the navigator really got them going?

John Mennel  40:32

Yeah. So we were working with a global mining company, that what they really wanted to understand was, how to use renewable power at the mine site, and then to electrify, or take all their very heavy mining equipment off fossil fuels. So whether that was electrification or fuel cells, and we use the GreenSpace Tech to be able to show them all of the different technologies, the levels of maturity, the companies that were furthest along, and that led them to make a number of investments out of their venture team, so they had early access to those technologies. And they're few more examples like that. But it's always, what are the critical kind of known unknowns that that, you know, that that client has, they know, they need to know more about this area, but they they don't know where to start? That's where it comes in

Sean McMahon  41:24

the land of the known unknowns? Now, that sounds pretty cool. I mean, imagine you have your mining company, you're out there, far, far away, you know, it'd be best to kind of not be trucking, fossil fuels back and forth. Right? Okay. Well, that's great to hear about GreenLight and GreenSpace. Are there any other offerings that delights has out there for people in the sustainability field,

John Mennel  41:44

We have a bunch of other stuff we're working on that's really that I think will be really interesting. One that we announced recently is called ClearCarbon. And ClearCarbon is a product specifically for companies in the food space, that help them coordinate both data and incentives all the way back to the to the farmers and ranchers and their supply chain, to be able to produce low carbon food and then monetize that carbon reduction through an inset or Offset Strategy. So it's a product that helps food companies create a whole new business model from from low carbon food by implementing regenerative ag practices. And it's really valuable because food is 15 to 20% of total carbon emissions, a lot of that comes from proteins. And they're really good verified methodologies, and regenerative ag to reduce the carbon footprint of those value chains. But there's never been a way to monetize it to pay for it. And so this is a tool that helps you pull together all the data so that you can create those new new businesses pass those incentives all the way back to the farmers, and, you know, reduce the carbon in that value chain.

Sean McMahon  42:50

Yeah, that's, that's interesting here, because we had Lily on Esposito from Wendy's on the last episode. And she was talking about that exact topic about how the, their food supply chain specifically proteins, is one of the biggest areas of their emissions footprint that they're trying to tackle. Yeah. And you've been working sustainability for a long time. So how has the industry changed in the years that you've been on the beat, as they say, in my, in my industry? Yeah. So

John Mennel  43:13

three things I mentioned one of this before. The first is that the technology has changed so much that this has gone from an area where companies felt that this was important to do and there was a business case, but nothing really penciled out everything kind of cost money. And companies just had to agree to invest the money to do that. That's really changed. And now like I said, you know, 70% of the plan actually makes or saves money. A lot of times when you're eliminating carbon, you're eliminating waste, you're eliminating cost, right? When you're moving to from renewables to a power purchase agreement or on site, that stuff actually saves money. Right? So it's, it's, that's been pretty, pretty cool, a pretty transformative, and it's one of the things that makes me really optimistic. The second thing is, it's become an it's related has become much more in the core of the business. And so, you know, 10 years ago, we're usually working with a sustainability team. And frankly, we were helping them convince others in the C suite that they should actually pay attention to this. And now like that, that why, you know, we've won the why, right? And now it's the how, right you go to a CEO, the CEO gets why he or she is just trying to, to understand how they get there. And so that's been another huge, huge change. And then the third thing is exactly what we've been talking about, is the use of technology that even a couple of years ago, most of this was on, you know, in Excel and PowerPoints, right? And when we set up our practice, or Global Practice, to three years ago, our CEO asked me what I wanted to do and I said, I want to do all things technology, because I you know, just knew that the direction you know that this was going is that it was is going to have to be much more technology intensive, much more data intensive to so that big organizations can really make the management decisions they need to. So those are, those are three big changes that I've seen that make me you know, pretty optimistic about, you know about where things are gone.

Sean McMahon  45:17

Okay, well, now that I've asked you to look backward, you know, what's coming next, I'm gonna ask you to look forward. So do you have any bold predictions about where this space will be in, say, five or 10? years? Good question.

John Mennel  45:27

So, in five to 10 years, we will be past 2030, obviously, so most companies have a 25 to 50% reduction goal in 2030, I think we'll be there will be there, because companies will have done most of the, quote unquote, easy things, or at least the kind of the easier things. So they'll, we'll see, most large companies will be on all renewable power, they'll have all or mostly, you know, non fossil fuel fleets, they'll have done a lot of efficiency in their buildings. So move to heat pumps, you know, all of those kinds of things. I think we'll see a lot of that will be if not in five years and 10 years, a lot of that will be done, which is super exciting, if you think about it. And then what we'll be focusing on 10 years from now are everything that we call, hard to abate, I think right. So we'll still be working on green steel, green cement, green food construction processes. And a lot of those things are just going to take us more than 10 years to get there. But if you look at, you know, the market demand that's coming forward, I'm also you know, I'm also pretty optimistic that the market for those kind of commodities, and just the technologies, the process change is going to look look really different 10 years from now.

Sean McMahon  46:46

Well, John, I'm as excited as you are about that future and the prospect of all those boxes kind of being checked. Listen, I appreciate you taking the time to join us today. I really appreciate your insights.

John Mennel  46:55

Yeah, thank you really appreciate the time.

Sean McMahon  47:04

All right, everyone. Well, that's our show for today. Thank you all for listening. And if you haven't already, please subscribe or follow this show on Apple, Spotify, Google, or wherever you listen to your podcasts. And as always, please be sure to share it with your friends and colleagues. Have a great day.