IBM: A sustainable future calls for industry collaboration
IBM, along with a dozen other enterprises, including Apple, Boeing, Cargill, Dow, PepsiCo, Verizon and others have become the inaugural members of the MIT Climate and Sustainability Consortium (MCSC). Together our mission is to accelerate the large-scale, real-world implementation of solutions to address the threat of climate change.
Cross-industry collaboration is key
Joining the MCSC gives us an opportunity to work hand-in-hand with other industry leaders to define industry roadmaps for achieving sustainability goals and identifying the scientific and technological solutions to execute on those commitments.
IBM Research is embracing a model of cross-industry collaboration to tackle the complex and daunting problems posed by the changing climate.
In combining our Future of Climate scientific agenda, the AI expertise across IBM Research including focused work within the MIT-IBM Watson AI Lab and the wealth of experience from our partners and clients, our participation in the MCSC will translate into valuable scientific contributions and industry solutions.
Strong collaborations with commercial partners, academia, non-profits, and government are critical for prioritizing, validating, and piloting our innovations and enabling a fast path for scale and impact.
IBM’s membership in the MCSC is yet another milestone in our commitment to lead with solutions that mitigate and adapt to climate change.
IBM’s long-term commitment to climate action
Starting with the creation of the first cross-industry guidelines for voluntary corporate environmental reporting back in the early 1990s to our support for the Paris Climate Agreement in 2015 to our most recent membership on the Climate Leadership Council, our dedication to environmental sustainability has been unwavering for decades.
This past year IBM Research launched a new global initiative called the Future of Climate, with researchers across our worldwide labs focused on developing and demonstrating innovations to enable sustainable hybrid cloud, climate-smart AI platforms, and accelerated materials discovery for carbon capture.
- Developing sustainable innovations - As the leading hybrid cloud platform company, IBM is uniquely positioned to proactively address the challenge that datacenter energy consumption is expected to grow to more than 10% of the world’s electricity use by 2030. A sustainable hybrid cloud solution is one that enables clients to measure, visualize, and optimize the carbon footprint of their workloads running in the hybrid cloud. IBM Research is innovating on technologies that enable coordinated placement of containers to optimize energy efficiency and dynamic scheduling based on the availability of renewable energy. In 2020, IBM received 3,000 patents in the cloud area alone, marking our 28th year of patent leadership.
- Climate-clever AI platforms - Climate-smart AI platforms are essential to enable carbon responsibility and business resiliency. As extreme weather events become more frequent and severe, businesses must understand risks, anticipate impacts, and optimize operations. AI-powered platforms for carbon footprint accounting and climate-aware supply chain optimization all require innovations for accurate impact modelling and prediction.
For instance, sophisticated queries of massive geospatial data reveal societal and environmental impact of COVID-19, showing the significant drop in greenhouse gas emissions as a result of regional lockdowns in the spring of 2020.
Physics-informed AI now enables us to build AI models that learn the physical laws of a system which can be directly applied to climate. In recent work, we have shown that integrating physics with neural network models can create robust, explainable models that aid in anticipating and reducing climate impacts.
We have also trained AI models on physics-based simulated data to generate high-fidelity snapshots of the climate system and build an AI surrogate model of a complex dynamical system – in essence, fast and accurate approximations of computationally-intensive simulators.
- Innovating carbon capture materials - Another pressing challenge is to design materials that capture carbon dioxide (CO2) at its emission source, since continued greenhouse gas emissions exacerbate climate change. On average, it takes at least 10 years to discover a new material and bring it to market, but we simply can’t wait a decade for new materials for carbon capture to tackle the climate crisis.
Thankfully, we can now combine artificial intelligence, quantum computing, and hybrid cloud to accelerate discovery. By applying deep search, AI- and quantum- enriched simulation, generative models, and cloud-based AI-driven autonomous labs, we are super-charging the scientific method to accelerate the discovery of new materials, including complex polymers and materials for carbon CO2 capture and separation. In only a few short months the team has already synthesized a prototype membrane for CO2 capture from flue gas.
Solomon Assefa, VP, IBM Research Africa & Emerging Market Solutions and Marina Rakhlin, Partnerships and Strategy, Furture of Climate at IBM, both lead the Future of Climate strategy for IBM Research.
Why investing in diverse suppliers is good for business
Triggered by last summer’s wave of protests against racism across the US, an increasing number of organisations have increased their engagement with businesses owned by under-represented groups, including Black people and women.
In fact, the commitments to diversify supply chains by America’s corporate giants have been staggering of late.
Race riots kicked off commitments to diversity
Since last year’s summer protests, Wall Street giant Citibank announced it was exclusively working with four Black-owned investment firms for a strategic US$2.5bn bond issuance; Unilever committed to a US$2.43bn annual spend with diverse suppliers by 2025; and telecoms giant Vodafone committed to evolving its vendor assessment criteria to give significant weighting to its suppliers’ commitments on diversity.
But that’s not all. CBRE announced a US$3bn commitment to supplier diversity; General Motors doubled its commitment to spending with Black-owned media to 4% of its ad budget in 2022 with a target of reaching 8% by 2025; and Target promised to spend more than US$2bn with Black-owned businesses by 2025, including adding more products from companies owned by Black entrepreneurs, spending more with Black-owned marketing agencies and construction firms, and introducing new resources to help Black-owned vendors navigate the process of creating products for a mass retail chain.
Some companies, like Target, UPS and Pacific Gas and Electric, were already building more diverse supplier pools and have been doing so for decades. But, in recent years and certainly in the last 18 months, there’s been a very real increase and the data bears this out.
Recent research from Bain & Company reveals that spending on suppliers that are more diverse rose 54% between 2017 and 2020. So, what’s leading to this increase? And does it mean that executives are finally seeing that diversifying supply chains is good for business?
Good for society, good for business
Well, in short, yes. Bain’s report, with data provided by Coupa, reveals that the companies in the top quartile of spending on diverse suppliers saw an average of 0.7 percentage points more savings off total procurement expenditures, compared to their peer group. The report further points to tangible advantages of diverse supply chains, including a higher annual retention rate, to the tune of 20+ percentage points.
That there is business value in having diverse supply chains is something Bain’s Procurement practice has thought for some time, but now the data bears this out, with procurement officers increasingly finding business value in such diversification.
According to Andrea Greco, CBRE’s Chief Procurement Officer, “having a diverse supplier pool drives competition and promotes innovation through the introduction of new products, services and solutions”.
Why recognising supply chain diversity as business objective is important
Companies are starting to think of the journey to global supply diversity as one that relates to business performance, rather than just a social initiative, and this pivot in thinking is what ultimately will lead to success. Why? Because businesses will then look to incorporate supplier diversity into the procurement process.
In the past, explains Donna Wilczek, SVP of Product Strategy and Innovation at Coupa, decisions related to diversity, equity and inclusion were happening in silos, which makes it “difficult for organisations to realise their full impact”.
However, by embedding supply base diversification practices within the spend process, it can maximise business and societal impact in concert, she says.
Take Target. The retail giant integrated its supplier diversity goals into its commercial strategy and this has helped the company double spending on diverse Tier 1 and Tier 2 suppliers to US$2 billion between 2016 and 2019. When Target organises and hosts events to identify diverse businesses for specific product lines, for example, procurement staff help potential suppliers get certified and grow.
According to David Schannon, who co-leads Bain’s Procurement practice in the Americas, when “companies stop thinking of diversifying their supply base as a standalone initiative and start to recognise the benefits of investing in under-represented groups, we see meaningful business improvements”.
What's stopping all companies from doing it?
So, why isn’t every company getting in on the diverse supply chain action? Well, according to Bain & Company, there are a number of key challenges that companies need to overcome in order to boost spend with diverse suppliers. Here are a few:
- Stop thinking of diversity as a standalone initiative Many leadership teams eager to embrace supplier diversity limit their efforts to a series of short-term strategic sourcing events. This approach won’t address the long-term engagement required to develop a sustainable pipeline of diverse suppliers. For example, it typically takes 12-to-18 months to fully qualify a new supplier.
- Make sure the organization is aligned from the board to the business unit Boards make strong commitments to increasing supplier diversity but may overlook vital changes in the day-to-day decisions that are critical to implementation. Business units need a mandate to channel procurement spending to a new set of unknown suppliers — and a clear sense of how diversity goals stack up against other competing priorities.
- Don’t assume success will happen without resources One of the key reasons supplier diversity initiatives flounder is that organizations underinvest in the capabilities required to support new or developing suppliers, including onboarding, risk mitigation and mentoring.
- Expand goals beyond Tier 1 spending and suppliers A narrow focus on Tier 1 spending restricts the ability to grow a diverse supplier ecosystem and may render company targets unsustainable. It also reduces the full potential benefits of working with a diverse supplier group, including collaboration and innovation as well as access to new markets, customers and services.