Smart cities – industry and transparency
With cities generating around 80% of global GDP, there is justifiable interest in the application of ‘smart’ technologies that improve transport and urban services, resource efficiency and citizen engagement. The value of the market for these technologies and associated services has been put at £260 billion ($408 billion) by 2020. While there is a focus on municipal and utility services, businesses are key partners in smart city strategies, as well as being agents of innovation. They too are attempting to reduce environmental impacts, enhance resource efficiency and engage with employees and external stakeholders, while at the same time they have to be more transparent.
The transparency agenda
There is a growing list of demands on companies to measure and disclose information on environmental risk and performance. The regulatory picture includes the EU Non-Financial Reporting Directive, Energy Savings Opportunity Scheme (ESOS) and specific industry standards.
For listed companies in the UK, the nature of annual reporting continues to evolve with the latest iteration of the UK Corporate Governance Code and Strategic Reporting regulation (stemming from the 2006 Companies Act), which requires greater description of material environmental and social issues. This is also a backdrop to specific demands around GHG emission disclosure. In parallel, there is a growing movement to combine financial and other information that is relevant to company value, such as that traditionally labelled sustainability – the so-called integrated report.
While these reporting demands on larger listed companies garner all of the attention, the pressure mounts on companies of all shape and size to disclose environmental and sustainability performance on an ongoing and informal basis. This may be through questionnaires from customers or criteria linked to bank lending or private equity investments.
At the same time, the technological advancements seen within the smart cities arena are changing the ways in which companies measure, analyse and disclose information on emissions, waste and resource efficiency. This is exemplified by the growth in the adoption of cloud computing, software as a service (SAAS) and access to big data generated by ground and airborne sensors (the industrial Internet of Things). This in turn is challenging the nature of expectations around what a company measures, how it measures and what it discloses to different stakeholders. For example, the Digital Present report produced by the Financial Reporting Council concluded that investors prefer a timely and clear PDF version of an Annual Report.
Likewise, customers, employees, communities want to know about environmental and sustainability risk on a rolling basis – when contracts are up for renewal, when seeking new suppliers or during recruitment. In parallel, environmental compliance is shifting from a monolithic test and approve approach to one that is more nuanced and based on risk profiling.
While legal and customer compliance remain primary drivers for environmental measurement and management, they have been joined by the real cost pressures attached to raw materials conversion, energy and waste management. Taken together, there is real commercial pressure on companies to take a more sophisticated approach to environmental risk management. While the key technological tool deployed to achieve this goal remains the spreadsheet, there is an opportunity to turn the pain of environmental compliance into an opportunity to improve governance, enhance value and reduce costs.
Harnessing the clean web
Discourse on so called environmental and clean technologies tends to default to hardware solutions such as wind and tidal turbines, energy from waste and water treatment. Within the energy sector, there has been a flowering of smart grid and demand management software, in line with the deployment of so called ‘smart meters’. Developments in software based data processing and analytics stem from this and is starting to change the nature of the energy supply chain.
Software-based ‘cleanweb’ approaches to industrial environmental management have been increasingly adopted by large enterprises. The latter deploy sophisticated sustainability, EHS and carbon management software from global IT vendors or niche suppliers.
Monitoring of environmental quality on a macro-scale has also been undertaken using remote sensing technologies and geographic information systems (GIS), from satellite monitoring of forest cover to assessments of water pollution from aerial scanners. Here, there has been a focus on multinational, national and local government applications, however, this is changing with the rapid development and adoption of open source mapping and GI software, not to mention the revolution in data collection from new satellite platforms and Unmanned Aerial Vehicles (UAVs). Fundamentally though, not all actionable insights can be gleaned from air and space-borne sources, there will always be the need for data from other terrestrial sources – so called ‘ground truth’.
Back on the ground, across great swathes of business, in particular the industrials, manual processes and the spreadsheet still hold sway. These may be sizeable companies and may have environmental managers in place, or they may be medium-sized with no formal environmental management expertise in house. What they all face are the need to control costs and satisfy the varied environmental disclosure demands of their stakeholders – regulators, customers, employees, communities, investors or lenders.
We believe that with the growing adoption and democratisation of cloud computing, data analytics, sensors and geo-spatial technologies, companies can turn the environment from compliance pain to competitive advantage.
It’s all about the data….isn’t it?
There is significant growth in commercial activity around big data and the Internet of Things (IoT). While consumer applications receive media attention, use of new analytical and data collection systems is proceeding quietly across industry. Within this broader spectrum of industrial analytics and sensing, Topolytics has chosen to focus on measuring environmental risk and performance, adding context and sharing the resulting insights internally and externally.
Our core assumption is that the measurement of visualisation of environmental management is best achieved through the lens of geography. The range of data associated with environmental metrics varies widely – from manual billing through to novel sensors. They all however operate in time and space and the latter in particular is we believe the glue that binds of these processes and associated data together.
Topolytics therefore takes discipline and techniques from the world of remote sensing, GIS and big data analytics then applies them to measuring and reporting on industrial environmental risk. This allows us to work with a range of data sources, including satellite and aerial imagery, fixed and mobile sensors, automated meters, spreadsheets and manual input.
Our platform is designed to allow non-expert users to incorporate a variety of data sources and add context such as narrative, documents and images in order to generate a real or semi-real time view of risk and performance. The data can also be exported into standard reporting formats where stakeholders have a particular requirement. The business can update the system or work with their chosen advisors, to maintain the data and content.
Applying geographical discipline to waste, emissions and resources can provide actionable insights and enhance transparency. Data is generated from dispersed sources in different formats, therefore the ‘geography of things’ will be a key component of the wider industrial internet of things as applied to environmental management.
From cleantech to cleanweb
Companies that operate industrial processes in or on the fringes of cities have to manage environmental risk. At the same time they can benefit from municipal adoption of smart city technologies, for example, improved transport systems. Fundamentally though, these companies are facing the same risks of climate change as their host cities, with the added pressure to be transparent on sustainability.
The rate and extent to which business adopts technology varies across the full spectrum of processes. Specifically on environmental management, the cleantech push seen over the last ten years, exemplified by hardware solutions to energy generation is now evolving into the cleanweb era of data, analytics and sensor based risk management and insight.