In the week Cop 27 kicked off in Egypt, we hear from PDMS chief executive officer and co-founder, Chris Gledhill, about the impact of digitalisation on sustainable trade
What role does trade digitalisation have to play in ensuring we can progress “green trade" policies?
It has an essential role, because of how trade relates to emissions. It’s an area where there’s a huge amount of goodwill, but lots of uncertainty about what is acceptable. People are wary about greenwashing. They’re rightly nervous about making claims they can't substantiate. There are lots of different frameworks for things like offsetting and carbon trading and people don't always understand or relate to them. Ultimately, the principles are straightforward. We need to know the carbon or climate impact of all business activities. And we need to be able to report this through supply chains in a consistent way. Digitalisation and standardisation are the way we'll achieve it. It’s the only way I’ll ever be able to know that a product has a certain carbon footprint, and for it to be something I can factor into my business decisions and reports. It requires us to be able to rely on a universal reporting mechanism, which must be facilitated through trade. It’s about having all the information in order. But this is a new area, where we're going to have to create new procedures and agreements. It will allow global trade to be properly auditable from a climate point of view, and drive the right behaviours in terms of mitigating and changing things.
And what of the role will data play in green trade, given the importance of monitoring emissions?
The data around the emissions associated with something all the way through a supply chain needs to be part of the supply chain. Taking an iPad as an example, when I buy it, it comes with a whole series of standards, a whole set of information around what voltage it will be and all sorts of other things. I can use that to weigh up how much carbon that represents, and the carbon equivalent of using it. Without that information it can't happen. It’s absolutely about the information flowing right through the supply chain in a consistent way. It will be transformational and is one of the prerequisites for greening the economy. And it is entirely doable.
What are the major challenges to this approach?
It is all about information. Is it better to buy local ingredients that require a lot of energy to produce here, or buy something shipped from a more appropriate climate, but that has food miles associated with it? Is it better to get an avocado shipped from Israel, or South America, in a large container with a small carbon footprint per item, or to attempt to grow it in a greenhouse locally with lights and heating? We need to move away from sound bites like ‘food miles are bad’. They're not always. Let's look at it on its merits. We need to see the full lifecycle and environmental costs. That’s not yet done consistently. There's a lot of complexity, because you can't just simply sum it up. I want to know whether products I buy have a positive or negative carbon footprint. It could be something like a laptop. If Apple decides to use science-based targets and internationally accepted offsetting to ensure it is a carbon-neutral laptop, that’s something I need to know. Without it being consistent and auditable and agreed in terms of how data flows, we'll never get to that point.
How can companies get ahead in this area and is there still a first mover advantage?
I've talked a lot about standardisation, best practice, and science-based approaches people are adopting. Any organisation that can provide its supply chain with reliable and consistent information about the full carbon or environmental impact of a product is going to be at an advantage. This is true in any supply chain where people are looking to demonstrate their own compliance down the road. We know this train is coming down the track at an incredible speed, so it’s something that is only going to get more pressing. The first mover advantage is potentially enormous. This is absolutely about competitive advantage; not just well-meaning compliance. This is absolutely the right thing to do out of enlightened self-interest.
What other sustainable trade trends do you see?
One of the things to watch out for is more regulation. Today, this area is not really regulated at all. A lot of it is self-regulated, with different data around offsetting, for example. There are various gold standards implemented nationally or regionally, like in California. It’s not that there's no regulation, it's just there's no consistency and little consensus. A lot of people are looking to offset carbon emissions, as a moral duty. But there's offsetting, and there's offsetting well. There are different levels. It’s the same with any standards: you can decide to box tick so people will stop asking; you can find the cheapest and easiest way to do it. Or you can decide that this stuff matters. There’s a comparison with information security. If you’re a busy organisation that regards information security as an irritation and a cost, the chances are at some point it will come back and bite you severely. If you take it as being about best practice in what you do, the chances are you will find it costs less and you get benefits from other efficiencies. The green agenda is the same. If you address this as being good business, you're going to save energy and save costs. And the chances are, if you properly engage with it and make it a core part of your business culture, it will be good for you. Doing things properly and rigorously rarely serves an organisation badly.