Industry Voice: Boston Consulting Group explains how AI tools can cut a company's emissions by as much as 40 per cent
We have seen increased pressure on COP26 emission pledges and commitments throughout COP26, but despite good intentions, companies say they are struggling to cut their emissions in line with targets. Their inability to measure appropriately is the leading roadblock.
Yet one company has been able to bring forward its net zero target by a decade to 2040, thanks to the use of a simulation tool to prioritise retail initiatives, while another has cut its industrial carbon emissions by a fifth. How have they done this? By applying AI tools to optimise their operations.
Tools to accurately measure emissions
AI-enabled tools can automatically record and report data in real time, helping companies to calculate their carbon footprint but also to run simulations, set targets and identify the best abatement initiatives around the world.
BCG's observations and experience shows that AI can cut a company's emissions by as much as 40 per cent by identifying the best opportunities for reduction, tracking the results of projects and optimising operations that use a lot of power, such as freight routing.
Key findings four BCG survey
However, currently companies are struggling to measure their emissions. BCG's recent global survey found that 96 per cent of respondents have set targets to cut their greenhouse gas emissions and 85 per cent of organisations are concerned about their emissions, yet only 11 per cent have actually met their own ambitions in the past five years.
The main reason for this, was that organisations were unable to measure their emissions accurately and exhaustively. Fewer than one in ten said that they measured their emissions comprehensively, with four fifths admitting to failing to record all of their internal, or Scope 1 and 2, emissions. Two-thirds of those questioned did not record any of their Scope 3 emissions, those that occur in their supply chains or through their customers' use and disposal of their products.
Yet 86 per cent of respondents reported that they were still recording and reporting their emissions manually, using spreadsheets. No wonder 53 per cent measure so infrequently that they find it difficult to make and track decisions and two thirds want to report more frequently.
Advantages of using AI to measure emissions
With new tools, supported by artificial intelligence, companies can meet the challenge and transform their ability to measure and track emissions without thinking about it, using techniques such as automated data retrieval, cleaning and matching, extrapolating missing data and making inferences about value chain emissions.
Organisations need to halve their emissions by 2030 to help meet the requirements of the Paris Agreement, on the way to becoming net zero by 2050. To achieve this, they must be able to measure exhaustively, accurately, and frequently. Only with understanding the full extent of their emissions, both internal and external, will they know where to start when it comes to cutting them.
To find out more read our full report here.
This article is sponsored by Boston Consulting Group.