The Retailer Winter Edition 2022

THE RE TA I L ER

6

CATALYSING NET ZERO TRANSFORMATION THROUGH CLOUD TECHNOLOGY

Anna Bancroft Partner (Enterprise Strategy & Cloud Transformation) PwC

Jason Sutherland Director (Enterprise Strategy & Cloud Transformation) PwC

Tarik Moussa Manager (Innovation & Sustainability) PwC

C IOs and the effective deployment of cloud technology will be central to unlocking rapid decarbonisation Climate change is the greatest challenge the world faces. The United Nations has called it a code red for humanity, and it’s rapidly emerged as a top priority for the C-suite. Last year’s COP26 climate conference in Glasgow generated a barrage of commitments, as governments and the private sector looked to ramp up fidelity to achieving ‘net zero’ emissions. For all the talk, however, action is still lagging behind rhetoric - PwC analysis has found that society needs to decarbonise more than eight times faster than we have over the course of the 21st century to avoid dangerous levels of warming. Anew face is emerging as a central support to this mammoth task: the CIO, andwith them, the cloud transformation that will be critical to getting to net zero faster and cheaper. The UK retail industry is at the forefront of this net zero transition. As a central player connecting supply chains and customers, we have unparalleled potential to drive meaningful action on climate change. Our stakeholders care about this and are increasingly putting pressure on us to act, with more than 80% of customers and employees wanting businesses to act on sustainability issues.. In response, the industry has set a leading ambition to reach net zero by 2040 , a decade ahead of the government’s 2050 goal. Reaching that goal won’t be easy, with a lot of the difficulty centred on access to high quality and timely data - whether for emissions from complex supply chains, managing just-in-time logistics, or effectively engaging customers and suppliers. When viewed as a data challenge, it’s clear that the CIO should and must be driving solutions to the net zero transition. Through this lens, we see that digital cloud-based transformation and net zero transformation are increasingly intertwined, and both are critical to a company’s future success. Both are built on a foundation of faster innovation, powered by better, more transparent and richer data insights. Both will rely on applying technologies like the Internet of Things, Artificial Intelligence powered processes and predictive analytics to enable quicker, more informed decision making. With Chief Sustainability Officers playing a conducting role for net zero action, the success or failure of a company’s net zero plan will ultimately depend on the CIO and their tech agenda. Retailers need cloud-powered insights to reach net zero

Generating better insights on your biggest sources of emissions

It’s well known by now that switching to the cloud can have a direct impact on emissions, with a 2018 Microsoft study estimating that the cloud is up to 98 per cent more carbon efficient than on-premises solu tions. Though this is no doubt important to reducing an organisation’s IT emissions, the benefits of cloud computing go far beyond. The cloud makes it easier to acquire and manage data, streamline operations and gain integrated visibility across organisations and ecosystems. It also makes it easier to innovate faster than ever before, a useful trait given the urgency of the climate crisis. Take supply chain management, for example. In retail, supply chain emissions are on average 28 times as high as operational emissions. For years now, the best method for understanding these emissions that most large retailers could deploy was simple economic modelling, based on procurement spend and economic sectors. This approach is not without its merits, and often serves as a useful first step on a net zero journey, but it offers limited insight on which individual suppliers are generating the most emissions, and where a retailer should focus their engagement efforts. The next generation of supply chain transparency and traceability solu tions are addressing this gap. Retailers like Asda and Co-op are replacing legacy software with cloud-powered approaches that make it cost effective to collect data from thousands of suppliers. The streamlined approach means they can generate data insights on a more granular level than ever before, and this is one of the factors which has allowed Asda to commit to publishing a supply chain emissions reduction target for the first time ever. CIOs have the opportunity to lead on net zero Cloud-enabled digital transformation promises the potential to enable and accelerate the net zero transition, whilst cutting costs and generat ing new revenue opportunities. As a CIO, you have the opportunity to collaborate with others in your company’s leadership team to achieve that goal, and play a central role in driving the journey towards net zero. To support your organisation’s net zero journey, consider the following recommendations: • Engage with leaders driving sustainability in your organisation. Practitioners within your organisation are working on scaling often bespoke sustainability data approaches to the enterprise level, and need your expertise to avoid false starts, for example Chief Financial Officers will be most concerned with meeting upcoming climate disclosure requirements, investment require ments and payback periods - secure their support by pitching cloud transformation as aligned to these needs.