EY confident supply chain sustainability will change world

In mid-March, TBR met with EY leaders to learn about their latest efforts around supply chain and sustainability, extending our previous discussions with the firm covering these areas separately. TBR heard from Glenn A. Steinberg, EY’s Global Supply Chain and Operations leader; Velislava Ivanova, EY’s chief sustainability officer and Climate Change and Sustainability Services leader for the Americas; Rae-Anne Alves, EY’s ESG (Environmental, Social and Governance) and Sustainability Supply Chain leader for the Americas; Martin Neuhold, EY’s Europe West Supply Chain & Operations leader; Lauren Rogge, EY’s senior manager of Climate Change and Sustainability Services; and Akshay Honnatti, EY’s U.S. Sustainability Tax leader.

Standing out by understanding the problem, defining it and tackling it head-on

During the hourlong discussion, three key observations emerged. First, the EY leaders’ emphasis on the global nature of supply chain and sustainability echoed the firm’s ongoing efforts to operate more seamlessly across international — and member firm — borders. Steinberg acknowledged EY’s Europe-based supply chain practice has been a leader globally, with more depth and experience than the Americas and APAC practices, but reiterated the globally integrated nature of EY’s approach to supply chain sustainability. Second, EY presented client stories centered primarily on traditional consulting engagements and outcomes, including strategies, road maps and change management. EY’s decision to play to its core strengths and avoid promoting technology for technology’s sake reinforces the firm’s overall strategy and its approach to clients’ business problems. And third, EY presented five themes, detailed below, which appeared to TBR to be split between regulator-driven and client-driven approaches. Given the nascency of supply chain sustainability as an EY practice and a priority for EY clients, TBR believes this five-themed framework can serve as a useful guide for clients, investors, regulators and any interested parties across both supply chain and sustainability. In short, expanding globally, playing to core consulting strengths and crafting a framework that resonates should be a solid formula for sustained growth.

To set the stage for the discussion, the EY team said their firm’s Supply Chain & Operations Consulting Practice is set to reach 30% year-to-year growth in 2021, and upward of 40% growth in the Americas. Among the drivers for that growth, EY mentioned ongoing shipping disruptions, excessive supply concentration risks and expiring legacy on-premises IT systems. As enterprises invest in tackling multiple related supply chain and operations challenges and increasingly tie every aspect of their business to sustainability goals, EY has seen new roles emerge, including a chief sustainability officer. In all, EY painted a picture of continued uncertainty around financial and regulatory pressures compounded by macro trends outside of most enterprises’ control. In other words, a perfect environment for consulting.

5 key trends define the supply chain challenges now, next and beyond

To make sense of the chaos, EY explained its framework for chief supply chain officers, including a version of EY’s customary “Now, Next, Beyond” approach, and then five key trends explaining what actions and investments their clients have undertaken (at EY’s recommendation). To set the framework, EY defined resiliency as the combination of visibility and agility, with clients encouraged to fully understand their supply networks, including their operating models and workforces.

Similarly, EY defined sustainability as the commonly used combination of environmental, social and governance, with the emphasis here more on clients taking an outside-in view of themselves. Rounding out the framework, EY described the “Now” as “cost-optimized, manual, rigid and linear,” the ”Next” as “agile networked ecosystems,” and the “Beyond” as “autonomous.” Within that framework, EY then introduced five key objectives:

  1. Ensure sustainable and diverse sourcing
  2. Enable traceability, visibility and disclosure
  3. Decarbonize the value chain
  4. Introduce circularity into your business model
  5. Assess impact of new taxes and incentives for a sustainable supply chain

In TBR’s view, Nos. 2 and 5 reflect the changing regulatory pressures around sustainability and increasing calls for structured, common reporting requirements (see this TBR assessment of an EY webcast on this exact issue). Nos. 1, 3 and 4 focus on enterprises themselves and the changes needed to meet sustainability goals and ensure enduring results.

A coherent and complete sustainable supply chain and operations framework

To illustrate the importance EY places on the framework, the EY team walked TBR through several use cases, all tied explicitly to one or more of the five objectives. Across the use cases, three points stood out to TBR. First, one of EY’s most compelling use cases has been EY itself. The EY team shared an example of a global retailer seeking EY’s advice on diversity, equity and inclusion (DE&I) improvements based on what the client understood about EY’s own internal DE&I success. Second, EY’s technology integrations appeared to be a seamless component of solving a client’s problem, rather than an attempt to shoehorn technology into an engagement to sell a solution. And third, EY’s ability to bring regulatory expertise, particularly around tax issues, consistently elevated the firm’s value with clients.

EY has not been alone in trumpeting its own internal success, layering technology into consulting engagements and bringing governance, risk and compliance expertise to the table. What may separate EY, in TBR’s view, is the coherence and completeness of EY’s sustainable supply chain and operations framework. Repeatedly, the EY team came back to the trends affecting the firm’s clients and recognizing the opportunities to make fundamental changes, not simply short-term operational cost-takeout measures. One example of this long-term thinking came from Steinberg, when he noted that the “circular economy is one of the main levers to decarbonization.”

In EY’s own estimation, clients looking to “introduce circularity” into their business model will need to grapple with, among other challenges, “consumption of resources faster than regeneration cycles with an over-reliance on resources which don’t replenish themselves fast enough to sustain the ever-growing demand” and “regulatory requirements” which may create “extended producer responsibility, waste reduction regulations and the banning of certain products and materials.” Most enterprises have not planned for resources regeneration cycles and waste reduction regulations, but EY appears to understand most enterprises eventually will, so the smarter clients will start now, with EY’s guidance.

Comes down to measurement: Who decides, who measures, who cares

TBR believes sustainability and supply chain challenges require strategy consulting and change management-led approaches, not technology-driven solutions, which plays to EY’s strengths in the near term. As clients’ own sustainability competencies mature, EY should be well positioned to provide technology-enabled solutions to help clients sustain their decarbonization efforts. EY works with its Alliance Partners including Microsoft, SAP, Enablon, and P&G to develop and deploy new ESG solutions in the market focused on ESG reporting, carbon emissions, decarbonization, supply chain and product transparency. They have also formed a partnership with Nottingham Spirk, a product innovation company, around embedding ESG criteria into product design for its clients.

TBR’s favorable assessment of EY’s potential hinges in large part on EY’s track record for layering both trust and data into the firm’s consulting and technology solutions. The most critical element for sustainability will be measurement, starting with how the enterprises, regulators, employees and investors come to agreement on definitions for “sustainable” and “decarbonization.” If EY can lead that discussion and provide its clients with meaningful answers, the firm will stay ahead of the sustainability curve and continue growing its supply chain and operations practice.


Blockchain, sustainability and IT services

Join Practice Manager Patrick Heffernan and TBR’s Professional Services team as they connect evolutions in blockchain-enabled digital transformations and acceleration in adoption of sustainability actions and commitments, all in the context of the fast-changing market for IT services. TBR’s analysts will discuss which vendors will most likely benefit from increased demand around decarbonization and managed services and which vendors are best leveraging their alliances within the wider technology ecosystem..


Mark your calendars for Thursday, May 5, 2022, at 1 p.m. EDT,
and REGISTER to reserve your space.

Related content:

  1. Ukraine and the future of digital transformation
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EY on sustainability reporting: Data, credibility and transformation  

Lessons learned from the EY-hosted webcast “How the Corporate Sustainability Reporting Directive will transform your organization”

Accountability comes for decarbonization: KPMG’s Climate Accounting Infrastructure

Are you really cutting carbon emissions?

Not a day goes by without a new sustainability announcement, whether an offering or an acquisition or a commitment to becoming carbon neutral by 202X. Last month McKinsey & Co. announced a new sustainability practice built on an early 2021 acquisition (of U.K.-based Vivid Economics), and earlier this month PwC made a splashy $12 billion commitment to bolster its environmental, social, governance (ESG) practice. As TBR begins assessing IT services vendors and consultancies on both their internal decarbonization commitments and the success or failure of their efforts to draw revenue from clients seeking their advice and solutions implementations around the same, one key focus will be demonstrable, provable, reliably reported and transparent metrics. In short, can you prove you’re as green as you say?

To that end, we’ve been intrigued by KPMG’s Climate Accounting Infrastructure (CAI) offering (detailed in TBR special reports KPMG: Fundamentally what blockchain does is digitize trust and Innovation delivered at scale shapes the course of KPMG’s next chapter as well as our Digital Transformation Blockchain Market Landscape). During the most recent KPMG analyst event, the firm provided further details about CAI, raising new questions for TBR, specifically around CAI adoption and broader climate and sustainability issues. At its core, the blockchain-enabled CAI offering enables clients in the real estate sector and in oil and gas to accurately measure and report their greenhouse emissions. CAI addresses numerous high-priority issues for companies, their employees, regulators and investors, such as transparency, clear and trackable metrics, and has the brand-backing of a Big Four firm, KPMG. So, why haven’t clients jumped onboard quickly?

According to KPMG, most clients’ relative immaturity with respect to ESG generally, and accounting for ESG commitments more specifically, has hindered faster adoption. “Many clients are still in the nascent stages of either formulating or integrating their strategies across the various climate imperatives: decarbonization, energy transition, climate risk, reporting, accounting for Scope 3 (value chain) emissions, etc. Many of our largest, and generally most sophisticated clients, are still putting their ESG infrastructure and processes in place — installing Chief Sustainability officers and their teams, understanding how to operationalize enterprise commitments like net zero, and publishing their first ESG report.” As every aspect of ESG matures, KPMG believes its clients will “understand the value of putting those operational strategies in the context of demonstrating progress toward the enterprise goals with reliable reporting.” We believe this boils down to simply being able to prove you’re as green as you say you are.

Compounding client immaturity, according to KPMG, is regulatory immaturity, which may improve during 2021 if the SEC announces climate disclosure requirements. TBR notes that for the real estate sector in New York City, which is no small sector, regulatory certainty already exists, likely providing some of the early CAI wins for KPMG.

An ecosystem play, from blockchain to data to OT

On broader climate issues, TBR’s recent focus on industrial IoT raised the question for KPMG about its efforts to partner with OEM and OT vendors on filling out the ecosystem around climate accountability. As KPMG is collaborating with physical instrumentation providers, the firm recognizes that “there is a complex, bidirectional road map from policy to data collection and then back. Right now, we’re focusing our efforts within CAI on the ‘data engine’ — the ability to take the physical data, extend/supplement it with enterprise and 3rd party (paid or public) data, and feed that into a robust calculation engine that translates that data into the metrics required for voluntary or compliance disclosures.”

KPMG’s sentiments echo what we heard in the research for our recently published Digital Transformation: IIoT Market Landscape, including this quote from an industrial solutions provider executive: “The other big one, and I want you to put a big red circle on your radar for this, is compliance … there’s a lot of compliance-related activity happening in automotive. There’s a lot of compliance-related activity happening in even your typical industries, from your fresh produce to all the way to lumber.” And we all understand that compliance equals data (or, maybe more accurately, bad data equals bad compliance).

TBR has been seeing increased activity from technology providers, key partners to KPMG, and others in the IT services and consulting ecosystem. Earlier this year, Microsoft updated its January 2020 Moonshot decarbonization initiative with plans to use 100% renewable energy in all data centers by 2025. As TBR said in its 1Q21 Microsoft report, “As part of a 1Q20 update to Microsoft’s Supplier Code of Conduct, entities must disclose their greenhouse gas emissions, which Microsoft uses to assign a tiered carbon tax.”

Similarly, TBR noted in its 1Q21 Salesforce report, “Salesforce launched Sustainability Cloud Scope 3 Hub, a platform that enables businesses to input data on supply chain emissions to better understand how to decarbonize. The platform allows clients to track historical and real-time ESG data. The inclusion of data like ESG will be critical for businesses, especially if government mandates related to carbon emissions are enacted.” While the decarbonization opportunities remain nascent, in TBR’s view these kinds of initiatives benefit consultancies like KPMG, which have accounting expertise and insight on tax policy implications that should resonate with enterprises, particularly those supplying technology companies demanding carbon reporting.

In TBR’s view, KPMG’s CAI stands out as a concrete, easily understandable and likely readily applicable solution to an accelerating issue in ESG — transparently and repeatedly proving to clients, employees and investors that decarbonization promises are being met. As we continue researching vendors’ internal commitments and solutions for clients, we will track the success of KPMG’s CAI and similar offerings, separating the greenwashing from the real results.

New NTT Global Data Centers facilities in Chicago and Oregon solidify infrastructure footprint and position the vendor for continued growth

As part of parent company NTT’s July 2019 restructuring effort, a separate company called NTT Ltd. was formed, which unified 31 global brands to create a 40,000-person, $11 billion company dedicated to offering IT, cloud and colocation services to large enterprises. At the center of NTT Ltd.’s strategy is NTT Global Data Centers, a separate division that offers a portfolio of global data center assets including RagingWire (Americas), NTT Communications (APAC), e-shelter and Gyron (EMEA), and Netmagic (India). With over 160 facilities, NTT Global Data Centers is now the third largest global data center provider.

Americas expansion to support NTT Ltd.’s growth in 2021

On Feb. 25, NTT Global Data Centers held a virtual event to unveil its two new data centers, in Hillsboro, Ore. (HI1), and Chicago (CH1). Both CH1 and HI1 are currently 36 megawatts (MW) but are expected to expand to 76MW and 126MW, respectively, to support increasingly complex IT workloads for both hyperscale and enterprise customers. NTT’s roots in telecommunications allow it to provide a broad portfolio of carrier-neutral connectivity options within each data center. Meanwhile the company’s IT services arm is also strong with offerings such as Remote Hands, which removes the need for on-site service and maintenance and has been in high demand during COVID-19.

The establishment of HI1 and CH1 marks the beginning of NTT Global Data Centers’ Americas expansion efforts for 2021. The company plans to open a campus in Silicon Valley, break ground in Phoenix, and expand its campus in Ashburn, Va., while the attach of various connectivity products and managed services will continue to support growth throughout the year. In a company press release, Doug Adams, CEO of NTT Global Data Centers Americas, highlighted the openings in the context of plans for the year, which he stated “will be a year like no other for our division, and opening these two new data centers is just the beginning [of] efforts that underline our commitment to put our clients at the center and bring data center services to key data center markets across the Americas.”

New data centers are strategically placed to address varied client needs

As the colocation market in the U.S. becomes increasingly crowded, NTT Global Data Centers expands in strategic markets to support its retail and wholesale colocation strategies and address the needs of clients regardless of size. This includes pursuing markets with access to affordable sources, low risk of natural disaster and the ability to support connections to emerging markets, among other factors.

NTT Global Data Centers supports 100% renewable energy

As technology sustainability remains a top-of-mind concern for CTOs, NTT Global Data Centers continues to operate on a message of clean energy and efficiency. Specifically, the new HI1 facility is an appealing option for customers looking to consume renewable energy options, while the new campus has earned a Level 3 certification from the Cleaner Air Oregon program, setting NTT Global Data Centers apart from competitors as it is the only data center in the region to receive the certification to date.

Local cost-saving opportunities support lower TCO for customers

One of the key attractions of NTT Global Data Centers’ CH1 facility is access to state and local tax incentives on equipment. Additionally, CH1 is powered by local energy company Commonwealth Edison (ComEd), which offers electricity at rates ComEd states are 18% lower rates than the national average. These initiatives are designed to support lower total cost of ownership (TCO) for customers through cheaper electricity, sales tax exemptions and lower cooling requirements.

Subsea cabling

NTT Global Data Centers has targeted the Pacific Northwest with HI1 due to accessibility to subsea cables that can connect across regions. With HI1, locally housed customers have an opportunity to access strategic markets in Japan as NTT Communications acquired Pacific Crossing for its subsea cable in 2009, supporting data communication between the U.S. and Japan. This connection with HI1 allows customers to contract with NTT Global Data Centers on a single cable and eliminates the need for multiple contracts, underscoring NTT Global Data Centers’ approach of leveraging parent company NTT to support clients. TBR believes NTT Communications’ strong foothold in Japan will boost NTT Global Data Centers’ ability to provide customers with low-latency connections between two emerging markets, serving as a growth driver and offering differentiation from other colocation peers.

Eyeing the future: Accenture’s fundamentals drive human-centric technology change at scale

‘Leaders Wanted — Masters of Change at a Moment of Truth’

Accenture’s (NYSE: ACN) recent virtual event to introduce its Accenture Technology Vision 2021 kicked off with a quick recap of the socioeconomic headwinds of 2020. These headwinds include four new concerns facing people personally and professionally: an increasing global population driving a need for new ways of interacting; the evolution of “Every business is a tech business” as technology’s role changes with the changing environment; the workforce of the future; and sustainability. Accenture Group Chief Executive – Technology and Chief Technology Officer Paul Daugherty then outlined in detail the five major trends of its 2021 vision.

Delivered under the slogan “Leaders Wanted — Masters of Change at a Moment of Truth,” the vision highlights five key areas, which we expect to drive investments not just from Accenture but also peers and enterprises, given the company’s market-making status in multiple domains.

  1. Stack strategically: While this trend at its core applies to architecting and redesigning organizations’ technology stacks to support the enterprise of the future, which includes attributes from the customer experience to the security layer, it also maps to Accenture’s core value proposition of joining consultants, designers, researchers, solution architects and delivery personnel, all through the umbrella of Accenture Innovation Architecture.
  2. Mirrored world: The resurgence of the digital twin is moving beyond experimental phases, and large enterprises are seeing an opportunity to invest in an area that, in the era of COVID-19, which has led to social distancing and reduced access to physical plants, will allow them to use IoT techniques to enable remote monitoring and control. Accenture’s ongoing investments in mobility and IoT service offerings over the past five years, along with the recent push into product engineering offerings, largely enabled through acquisitions, will enable the company to address demand and increase client stickiness.
  3. I, technologist: The democratization of technology, which has enabled workforces to do more with less and orient their productivity to higher-value tasks largely enabled by automation, while not a new trend, has certainly reached a pivotal point, given the changes over the past 12 months in how employees perform their work. Accenture’s rigorous approach to and ongoing investments in training — including spending $1 billion per year on reskilling and upskilling personnel, with efforts most recently focused on building cloud consulting, architecting and delivery skills — enable it to drive internal change at scale, and then sell its capabilities “as a Service” to clients.

On Feb. 17, 2021, Accenture held a one-hour virtual session introducing its Accenture Technology Vision 2021. While the format was different than in previous years, the 21st iteration of the summit had a similar goal: to portray Accenture’s technology prowess and appetite for innovation and scale. Hosted by Accenture Group Chief Executive – Technology and Chief Technology Officer Paul Daugherty, Accenture Senior Managing Director and Lead – Technology Innovation and Accenture Labs Marc Carrel-Billiard, and Managing Director – Accenture Technology Vision Michael Blitz, the virtual delivery of the content was both a sign of times and a demonstration of Accenture’s ability to coordinate, deliver and manage virtual events in collaboration with ecosystem partners — in this case, Touchcast.