One Networked Team’s Approach to ESG Work
Creating a GHG Ecosystem Vision & Sustainability Solutions for Clients… and the Greater Good
Last year, in the thick of the pandemic, a small group of EPAM business consultants and technologists assembled, digitally, to see if they could dream up some new offerings that might create greater value for our clients. The group, which called itself the Business Research & Development (BR&D) team, saw an opportunity to bring our digital platform capabilities into the greenhouse gas (GHG) ecosystem and other solutions and services in the area of sustainability. Our networked teams ethos, combined with our strong sense of social responsibility, helped us to produce some work on carbon footprint data that radiates uniqueness, optimism and tremendous potential. We spoke to Dmitry Garanin, Head of Sustainability Services—and one of BR&D’s key players—to get a sense of the group, their work and their role within EPAM.
Creating a GHG management ecosystem vision is a real contribution to our business and the environmental world. How did the BR&D group start with this project?
I live in the Netherlands, and the environmental agenda is very strong here. The Netherlands has the EU’s highest nitrogen emissions per square kilometer. In fact, starting in May 2019, all construction projects were required to demonstrate beforehand how they would compensate for their emissions.
The problem is so serious that, as of March 2020, the government decreased the maximum speed limit from 130 kmh (80 mph) to 100 kmh (62 mph) between 6 a.m. and 7 p.m. This measure had nothing to do with road safety. It was, rather, an action to reduce nitrogen emissions and use the saved capacity to issue more building permits and construct more homes. Yes, it helped address the Netherlands’ housing shortage but it also affected motorists—especially commercial motorists, where it’s about time and money—and, most importantly, it did not address the underlying problem, greenhouse gas emissions accounting and management.
This situation spurred my BR&D colleagues and I to develop the idea of a digital ecosystem that would ultimately facilitate GHG accounting.
How did your group come together?
Our CEO, Arkadiy Dobkin, talks about assuming a non-hierarchical structure, a networked structure, within the organization. Think about people getting together not because an org chart dictates that they do, but because they can do some interesting work together. They can create concepts, solutions or business imperatives that can find their way to the market and bring value to our clients.
Everyone on the BR&D team was familiar with the idea of the networked team. Initially, we got together to work on ideas related to our IoT capabilities. Later on, another colleague joined the group, bringing his expertise in product management and financial services.
We worked on solutions such as smart building management and commercial fleet management (including predictive maintenance and GHG emission management). The core idea concerned structuring and improving customers’ processes in those spaces and offering deep digitalization through IoT, computer vision and data science. We were bringing the physical world into their systems.
The group started talking on a regular basis and realized the need for creating end-to-end, cutting-edge solutions that, potentially, would address problems of which clients weren’t currently aware. We thought: “What will be the next big thing? What can we leverage now?”
The GHG ecosystem vision is not our only initiative. We’ve done projects around Environmental, Social, Governance (ESG) data aggregators, connected workers, a smart residential area ecosystem, an energy modeling platform and an energy harvesting shared data platform. We also run internal cleantech projects that we then take to the market. We created a solution for flood detection in St. Petersburg, Russia, and a smart, energy-efficient building project in Minsk, Belarus.
What’s the next step?
We realized that it’s important to scale this approach and created a concept of what we call value creation networks (VCN), where self-organizing teams work on concepts and solutions that matter to them and bring value to our clients. My colleague Vitaliy Bozhkov is now leading a pilot implementation of VCN with several teams (BR&D is one of them) and we look forward to more colleagues joining this initiative.
You’ve mentioned ESG data. This has been in the news lately. A recent piece on CNBC about BlackRock CEO Larry Fink said: “Critics of ESG investing argue that it’s difficult to score a company given the subjective nature of some of the metrics, as well as an overall lack of data disclosure.” How do you deal with such subjectivity and data disclosure?
ESG is a set of factors of measuring sustainability and societal impact of an organization. Companies have been asked to provide quantitative metrics on specific goals instead of offering qualitative descriptions of their performance. GHG emissions is definitely a very important part of this as our planet is heating up, and we have to address this issue ASAP.
The main challenge here is data—its quality, transparency, reliability and standardization. On one hand, we’ve got a number of standards around management and disclosure, such as the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD), that help to address the issues related to disclosure. On the other, actual data management and standardization are tremendous challenges.
When you have to argue the importance of sustainability, what do you say?
I like to cite the IISD’s definition: “Sustainability is the ability to meet the needs of the present without compromising the ability of future generations to meet their needs.”
The fact is, businesses need to become very involved with sustainability. Why? This is about the whole world’s economy. If businesses leave nothing but a wasteland and destroyed communities behind while making profits, it won’t last for very long.
Doing business in a way that’s harmful to the environment and humanity is not only just a questionable practice but also a huge risk to businesses themselves (think of all the resource depletion and supply issues). Then there’s the disruption of global supply chains due to hurricanes and general climate change.
Furthermore, in financial services, the evaluation of loan portfolios and asset pricing now includes ESG factors. This is part of the risk-evaluation process. Investors are increasing the pressure on businesses to implement initiatives around sustainability and track and report on their performance.
We all need to think of doing business in a sustainable way. GHG emission management, ESG and general sustainability are topics to consider in order to do that successfully.
So, on a company level, is this mostly about helping businesses being a good investment?
It’s important, but it’s not the whole deal. When sustainability is embedded into a company’s strategy and processes it becomes strong, transparent and profitable. For instance, building a supply chain strategy with sustainability in mind would positively impact a company’s bottom line and make it more resilient in the long term, as the company would be much less exposed to risks of regulatory actions and disruptions in supply.
How does networking with other organizations function here?
Networking is extremely important on all levels. I met some great, like-minded people while doing a Sustainable Business Strategy program at Harvard Business School. They work for commercial organizations, governments and NGOs all over the world and brought so many perspectives to the table.
We’re all building networks. One day we will even meet, say, a sustainability director at a government institution and remark: “We’ve got all the expertise and technology to help you to build a more sustainable city—let’s work together.” It is good for them, it’s good for us and it’s good for sustainability in the grand scheme of things.
Speaking of customers: How aware are they of ESG right now?
They’re becoming increasingly aware. ESG is all over the news; governments are increasing pressure from the regulatory side, investors are demanding a stronger ESG focus and consumers are expecting action. This pushes organizations to become purposeful about sustainability, establish and hold strong ethical standards and demonstrate all this in an efficient, transparent way. The big challenge is not just to implement change but to sustain it and continuously improve. Companies realize this and are now turning to their partners and to technology. We work with clients on integrating sustainability into their strategy, processes and tech.
I’m sure that there are many companies out there who would say: “We’ve been in business for years and are doing just fine. Why do we need this? The whole ESG thing is going to pass.” What do you say to them?
The Sustainable Development Goals (SDGs) introduced by the UN, and set to be achieved by 2030, aren’t going anywhere. Although SDGs have not been mandated to businesses (yet), 193 countries have signed on and are taking action on local levels. Thousands of businesses have started their sustainable transformations.
Can an organization simply ignore all this and continue with business as usual? Absolutely. But as Dr. W. Edwards Deming, the American continual improvement genius, once said: It is not necessary to change. Survival is not mandatory.