Capability: ESG analysis and strategy

There’s a long way to go, but innovative technology is proving key to tackling waste on the global scale needed to protect our planet.

Waste doesn’t just mean physical deposits into landfill. It’s also about overconsumption and excess, from squandering energy or making unnecessary journeys to wasting water or making needless purchases, even if they are supposedly environmentally friendly. Environmental campaigners promote the mantra ‘reduce, reuse, recycle’ – if you can avoid demanding, producing and discarding an item in the first place, that means there’s less need to resort to recycling as a third best option.

The will to reduce waste is there and growing among consumers. But they need easy and affordable ways to choose low-waste lifestyles and products. Businesses, governments and service providers are stepping up to the challenge of becoming more efficient and sustainable to enable large-scale change. Everyone’s looking to technology for ground-breaking, digitally enabled approaches to waste reduction.

Convenience is key for consumers to prioritise waste reduction

Phone apps can help consumers to manage their waste. Waste processors like re3 have developed apps that provide information about recycling facilities and let people book visits to recycling centres. Local authorities have developed app-based incentives: in Nottingham, residents can earn points and prizes through the Green Rewards scheme by reducing waste with simple actions, from turning off lights to using public transport or recycling responsibly.

Capsule coffee machine owners can arrange free recycling collections for their used capsules through apps or on websites, making it easy to return rather than binning old capsules from brands including Nespresso and Dolce Gousto.

These are encouraging schemes that help avoid waste going into landfill. But there’s scope to use apps and consumer tech to prevent the creation of waste in the first place. The Scrapp app goes further, giving consumers information about the CO2 they save with each responsible recycling action and helping them reduce waste by understanding the carbon footprint of household items, so they can choose better to waste less of the planet’s resources. It also offers a reward scheme.

Apps help promote reuse as well as recycling

Using more reusable containers within a genuine circular economy, rather than recyclable ones, would cut down on production. Supermarket deliveries might arrive in sturdy bags or crates that consumers would retain until the next visit or drop off at a collection point. Applying tracker device technologies (similar to the Tile or AirTag) could make this viable, avoiding loss and theft and making sure customer deposits were refunded accurately and promptly.

This technology can also work for grocery goods bought in-store in reusable containers. Tesco and Loop have been trialling reusable containers for groceries through an app that manages deposits and refunds.

The UK recycling rate for waste from households was 46.2% in 2019

Better planning and analytics help transport organisations cut fuel waste

Commercially and on a much larger scale, technology solutions are helping businesses reduce their consumption of resources, from designing products to use fewer raw materials to cutting down on the energy needed for operations and services.

CACI’s Real-Time Airport system is helping customers in the aviation sector reduce fuel usage. By optimising aircraft movements through algorithms and analytics, Heathrow airport can delay planes starting their engines and cut down on the time they spend queuing before take-off with the engines running.

This has created a massive 10% overall reduction in taxi times at Heathrow – that’s a significant benefit to the environment through reduced fuel burn as well as a better experience for air passengers.

Data modelling can make waste reduction a key factor in overall strategy

Increasingly, organisations will use advanced modelling and simulation to understand the impact of their actions on waste generation. Building in energy and carbon consumption to business models means that companies can shape their strategy and prioritise their activities to minimise waste.

Rapidly evolving artificial intelligence and machine learning capabilities can process more and more detailed and subtle information and show in depth the full range of consequences both for waste generation and wasteful use of resources. Companies can promote their low-waste approaches to customers and show the evidence behind their choices. It’s a more innovative and proactive approach to doing things very differently, rather than trying to reform old, wasteful ways of operating.

Digital convenience is key to influencing behaviour and sharing information

Apps, devices and websites use the power of digital media to raise the profile of waste-reduction and nudge consumers into making better choices. Apps like Nest provide information about heating costs and energy consumption then optimise energy usage throughout the day, cutting down on waste in gas and electricity. Utilities companies provide and connect digital smart meters, giving consumers real-time information on resource consumption so they have the power to change their habits to reduce bills and therefore usage.

Community websites and apps (such as Freecycle and Freegle) for passing on consumer goods and appliances locally give consumers a quick way to get rid of unwanted items or meet a need without buying new.

Private messaging protects privacy and means people don’t have to share their address until they’re sure the other person is genuine.

Carrie Johnson and other celebrities have raised the profile of fashion hire through platforms like My Wardrobe HQ, making it cool to rent an outfit for a smart occasion rather than buying new and discarding outfits after one or two wears. High quality digital photography and easy booking through online apps create a frictionless experience that high-end consumers are willing to embrace.

Using fuel more wisely and optimising electric vehicle transit

In travel and transport, ridesharing and public transport e-ticketing and information apps make it easier for customers to travel conveniently without needing to run their own vehicle, cutting down on private fuel usage.

Home delivery services operated on fast and efficient digital platforms cut down on individual journeys to the shops. But they have driven an explosion in courier and commercial delivery services, adding to urban congestion. Leading delivery networks already use logistics technology and data to optimise the efficiency of their delivery fleets, selecting the best routes and delivery sequences to cut down on fuel usage. As electric vehicles become more commonplace, adaptive software is key to planning routes that factor in battery life and charging times.

CACI route optimisation tools typically save clients between 5% and 25% on fuel consumption. The bigger the vehicle fleet, the greater the saving.

Reduce and re-use first and second

Recycling is good, but reducing and reusing are better, when it comes to waste reduction. Consumers and businesses are both tapping into the power of digital apps and data analytics to inform themselves and adopt new approaches that cut consumption of goods and resources.

Already, organisations can achieve substantial reductions in energy consumption and wasted materials by optimising their processes and harnessing technology to eliminate inefficiencies across their operations. Digital innovation makes it possible to combine this approach with user-friendly apps and websites, so it’s easier for customers to understand the impact of their choices and to consume and waste less.

If you’d like to know more about optimising processes and energy efficiency through data science or developing waste-reducing digital services and tools that meet current consumer needs, talk to the experts at CACI.

Want to read more from our ESG blog series?

• Climate risk disclosure is just the beginning
• Data is key for successful businesses to take decisive action on sustainability
• Driving smoothly into the consumer EV market
• Responsible and sustainable practices

Understanding which ESG factors are most important to your customer is fundamental to meeting their changing needs. With our newly developed ESG Score, you can identify those customers who are most concerned about ESG issues. Download the product sheet to continue your ESG journey.

Consumer demographics insight helps brands to thrive by understanding how embedding sustainability in their policies, practices and products will influence consumer attitudes and behaviours.

In a world with an awakening environmental conscience, consumers want to know more about provenance. Company reputations will increasingly rest on ethical practices – from sourcing raw materials, reducing carbon footprint and embracing climate change agendas to employment rights and diversity and inclusion (D&I) practices. This is about the end-to-end story of how products and services are produced and brought to market. It goes beyond what goods are made of or packaged in, or how far they’ve travelled.

Sustainability is a revenue issue

Customers vote with their feet when they see organisations acting callously or making too little effort in sustainability. In most markets, they have other options if they don’t like one brand or retailer’s approach. That makes sustainability an issue for competitiveness and commercial performance as well as a matter of corporate conscience.

82% of UK consumers feel strongly about buying products that are ethically and sustainably sourced – it has started to matter to 24% only in the last year

53% of UK consumers would never buy from a brand again if it was accused of working with unethical suppliers

41% of UK consumers make a conscious effort to buy locally sourced or produced items online

Opentext consumer survey, 2021

Sustainability is mainstream for UK consumers

We often pin the sustainability ‘trend’ on the younger generation of consumers, spearheaded by Greta Thunberg and other prominent activists and celebs. But Gen Z is just one group in a cross-generational population that’s increasingly mindful of sustainability. It’s a mainstream issue on global political agendas and in traditional and online media, both reflecting and increasing levels of concern throughout society.

Consumer action on sustainability matters in B2B just as much as in consumer purchasing, because the present and upcoming decisionmakers and stakeholders in corporates are people too. They bring their own ethics and value judgements to work with them, reflecting the concerns of their peer groups and of a wider world.

Many local and independent businesses have lately experienced an upswing, despite the constraints of the Covid pandemic. Our consumer data provides clear evidence that the many UK consumers constrained to an existence closer to home are now choosing local suppliers for goods that they might once have purchased in cities or during their work commute. There’s a feel-good factor in shopping local, on top of the sustainability benefit from both goods and customers travelling fewer miles and the positive impact of helping local employers thrive and provide fairly-paid employment in their communities.

Will consumers put their money where their mouth is?

Of course, there’s a financial tipping point in sustainable choices for many people. Customers say they want to purchase greener products and services – but how much are they prepared to pay? More sustainable sourcing, production and employment are often more expensive. And commercial organisations need to remain viable and profitable if they’re to thrive, grow and embed sustainable approaches to lead the market.

To make decisions about meaningful changes in policy and practice, businesses need more granular information about what consumers want and at what cost. It’s the only way they can be sure that doing the right thing is affordable and viable in the longer term.

Local micro-business owners tend to interact with their customers directly. It’s easy for loyal shoppers to give community businesses feedback face-to-face about what they’re doing well or badly, and how important sustainability is to them. For larger organisations with many customers and many channels of engagement, including branches or outlets and online stores, it can be harder to gauge what’s driving success… or driving customers away. Most consumers simply take their custom elsewhere if they’re unsatisfied with a brand’s approach or prices – very few raise their concerns first.

34% of consumers actively choose brands that have environmentally sustainable practices/values

28% of consumers have stopped purchasing certain brands because they had ethical or sustainability related concerns about them

7% of consumers have contacted a brand to raise an issue on their sustainability or ethical practices and values

Deloitte survey into consumer attitudes to environmental and sustainability issues, 2021

Consumer insight allows confident decision-making for sustainability

Consumer data is vital to help organisations understand changing patterns of consumption and to plan outlets and distribution accordingly. It can help them understand how to prioritise and communicate their sustainability policies and actions with impact and integrity. It can inform product development and marketing campaigns, helping to reduce waste in both production and budgets. Crucially, it provides evidence to support investment in sustainability-driven initiatives, helping to predict potential revenues in evolving markets.

Organisations need to review this consumer data and trends regularly, particularly within their existing catchments and among target customer segments. Carrying out customer surveys and providing easy routes to give feedback can provide valuable information about existing customer priorities. But what about prevalent and emerging attitudes among prospective customers or in potential new segments and markets? Is there a difference? Are competitor approaches finding greater favour?

Customers, employees and investors are scrutinising your sustainability

There’s no question that businesses of every size need to take heed of customers’ growing attention to sustainability, in the UK and beyond. It’s already becoming a key success factor in customer recruitment and retention, for brand reputation, in attracting investment and for employee recruitment and retention.

The gold standard is granular data that connects attitudes to sustainability with the behaviour and choices of real consumers across channels and geographic areas.

To support this agenda CACI have developed an ESG score to drill into each aspect of how important environmental, social and governance issues are to individuals, enabling companies to assess both their current and potential customer base and act accordingly.

This takes the form of a series of individual level propensity models based on market research questions about consumers attitudes towards the following:

• Environmental factors such as climate change and pollution
• Social matters around community and social concerns and human capital
• Governance issues around workplace practices such as executive pay and ethics

The product contains three propensities, one for each of the individual aspects of ESG and one unified score to summarise an individual’s affiliation to all the values encompassed by ESG. These probabilities relate to how important each of these aspects are and can be provided at individual level coded or aggregated up to postcode level.

Based on this data, leading businesses can produce consistent and reliable customer insight, using the latest analytics and modelling, to help them prioritise and accelerate their sustainability programmes.

If you’d like access to market-leading insight and evidence about consumer attitudes and responses to sustainability issues, talk to the consumer data experts at CACI.

Want to read more from our ESG blog series?

• Climate risk disclosure is just the beginning
• Technology helps reduce waste for consumers and businesses
• Driving smoothly into the consumer EV market
• Responsible and sustainable practices

Discover more about CACI’s ESG Score and the consumer insight it can provide your organisation in our product sheet:

In the first blog of our topical environmental, social and governance (ESG) series, CACI’s Matt Cooper explains why mandatory sustainability performance reporting in the world of big corporates has implications for companies of all sizes – and how we’re starting to make a difference together.

Climate risk and impact disclosure is officially on the table for large UK companies, the government announced ahead of the Glasgow COP26 conference. The government press release says, “Firms will be required to disclose climate-related financial information, ensuring they consider the risks and opportunities they face as a result of climate change.”

The new regulations come into force in April 2022. They’re based on recommendations by a task force set up in the wake of the 2017 Paris climate conference. The Task Force on Climate-related Financial Disclosures (TCFD) is focused on the challenges presented to investors, lenders and insurers by climate change. Natural disasters and environmental situations caused by climate change are creating new risks for some organisations. At the same time, initiatives and business practices designed to help reduce environmental impact could increase the value and sustainability of commercial businesses.

Commercial risk disclosure can drive positive change

Connecting climate risk and impact to financial markets and commercial investment is important, because it encourages investors and insurers to support the most sustainable organisations. This puts pressure on less sustainable businesses to change their ways, to the benefit of the environment, if they want to continue to prosper commercially. Private enterprise and industry have a major part to play in meeting national and global carbon reduction targets: the TCFD recommendations help to make this a necessary and desirable option from a business standpoint.

The Covid pandemic has shown the consequences of not considering a long-term risk. Global economic performance and the fortunes of thousands of businesses have been altered because of the virus. Some analysts and leaders (famously including Bill Gates) had previously identified this as a potential global risk. If organisations and governments had acted on these predictions, it’s possible that the pandemic could have played out differently.

In the case of climate change, forecasts and warnings are being taken seriously and publicised widely by the world’s media. Governments and powerful financial institutions are now taking tangible action, which includes regulations like these.

Customers also care about sustainable practices

But there’s a wider impact, beyond financial and underwriting markets. Deborah Brosnan, President of environmental consultancy Deborah Brosnan & Associates believes that consumers will increasingly take note of company performance on sustainability and make purchasing decisions accordingly. “Companies that are out ahead and can show how well they are managing risks and contributing to the environment and social well-being will have greater success. Those that aren’t will suffer consequences,” says Dorman, who believes that the younger generation of consumers will be particularly strongly influenced in their choices.

Hubbub CEO Trewin Restorick agrees on the consumer impact of decisions taken by national and corporate leaders. “The COP26 event in Glasgow will see governments and companies taking increased steps to reduce climate change emissions. The return of the USA to the Paris Climate Commitment will build added momentum, reinforced by growing citizen concern,” he comments in Pebble magazine.

Quantifying the cost or value of policies and practices affecting or affected by climate change should help to eradicate the rightly maligned practice of ‘greenwashing’. Investopedia defines this as “the process of conveying a false impression or providing misleading information about how a company’s products are more environmentally sound. Companies that make unsubstantiated claims that their products are environmentally safe or provide some green benefit are involved in greenwashing.”

Clear data is the obvious basis for climate responsibility reporting

The key is the data that large organisations will now have to provide. With a framework and defining metrics for disclosure, organisations must measure their performance against agreed standards. Investors, insurers, partners and consumers can compare these, to understand relative performance and commitment. Carefully worded claims will be exposed, if the organisation can’t back them up with data evidence.

The UK regulations will apply to around 1,300 of the largest commercial firms. But we believe there’s a clear call to action for smaller businesses and organisations. Consumer appetite for accountability should be at least as great an incentive for focus as a legal compliance requirement. If you’re in a B2B organisation, the decision-makers of the companies you serve are human too – ultimately, they represent colleagues and customers of their own who share consumer and societal perspectives. There’s no getting away from the significance of a public declaration of climate risk and opportunity. Now’s the time to report clearly on what you’re doing and to be explicit about your aims to improve.

The call to action for organisations of all sizes, in the UK and globally

At CACI, and among most of our customers, we don’t need to be guilted into action. We already know that we have a responsibility to be more sustainable. We’re motivated to take action and share effective practices, so we can all contribute to decarbonisation. That means thinking differently and innovatively about our products and services as well as making practical changes to our policies.

We’ve recently launched our updated CACI Environmental Policy as well as publishing our energy and carbon consumption and sharing our reporting methodology. As data specialists, we’re expecting increasing demand for advice and robust methodologies to help organisations gather and analyse increasingly sophisticated data. We all want to demonstrate our current achievement and continuing progress in sustainable practices.

This is our first blog in a regular series focusing on environmental, social and governance (ESG). It’s becoming a critical topic for successful and growing organisations in today’s markets. It matters to us as citizens, as an organisation and as data and technology specialists. There’s no doubt that insight and information will be key to monitoring and driving progress and understanding challenges and opportunities in a whole range of ESG areas. We’ll explore some of these in the coming weeks.

If you’d like to share your views on ESG or to talk to us about how data and tech can help your organisation report transparently and drive change, please get in touch.

Want to read more from our ESG blog series?

• Data is key for successful businesses to take decisive action on sustainability
• Technology helps reduce waste for consumers and businesses
• Driving smoothly into the consumer EV market
• Responsible and sustainable practices