Deloitte and climate emissions reductions - a chat with Marc Van Caeneghem

emissions. In this climate 21 podcast, I will showcase best practices and thought leadership by SAP, by our customers, by our partners and by our competitors if their game in climate emissions reductions. Don't forget to subscribe to this podcast in your podcast app of choice to be sure you don't miss any episodes. Hi, everyone. Welcome to the climate 21 podcast. My name is Tom Raftery with SAP and with me on the show today I have my special guest,

Mark. Mark, would you like to introduce yourself

teams. So it's 20 years now that we started invest investing on this on this on this topic, in order to drive system beauty services up clients. And obviously, not surprisingly, over the last few years, there has been a huge increase in demand not only in France, but more globally. So as it's something where the French team was a little bit more advanced, I was asked by hire our global executive last year to take over this global global responsibility for climate and system which he enjoyed very

much. I like very much.

of them is cyber. So I do cyber, I have teams that do cyber services, all day long, all week long, all year long. And the other one is sustainability. And I believe that on those two topics, we can create an impact that matters, and especially on sustainability, because it's it's it's it's obviously strategic in terms of topic. But I think that you cannot add a strategy without really embedding sustainability at the

core. So I think that cyber is some kind of service that you can deliver or along with strategy that does not that does not directly drives a strategy, whereas system it is truly embedded right from the start in the strategy. And I don't I don't believe that going forward, you can have a strategy that embrace the Sumi T, just as an aside, it's something which is within it. So that's what I

like very much. Okay. And the other reason why I like it very much is that I really believe that it's something that that cannot, that is not only for your clients and for our clients, it's also for ourselves. Not not just because if you want to be critical in the market, we have to do it ourselves. But I think that we are also more committed to that, that we and I believe that if we want to well, we have to do what

we say. And, and I think that for people for our business embeddings to meet you at the core of what we do is definitely key. No, that's that's reason why I like it to be very frank with you.

level. But when when when I decided to speed up sustainability at Deloitte, the first thing I did is that I said, it's not something that should that should only be owned by risk advisory. It's it's something where risk Advisory has to be strongly articulated with our other businesses, right, obviously, with consulting with the Strategy Team with a supply chain team, obviously, with audit as well, because, as you know, what is the future the performance of a company? Is it only the

financial elements? Is it also non financial elements? How do you embrace those non financial issues? So Well, we have ability to articulate ourselves with tax and legal as well, because tax incentives are going to be very important if you want to embed those those changes as our clients. So I believe that it may be it comes from it came from risk advisory because we have teams that are ready and that we are for years now fully

dedicated to that. But I think that where we make the difference is that when we articulate those teams, with the rest of the firm with our other businesses, because that that's, that's the leverage, we need them to be very, very physically efficient as clients, but also to make sure that in the way we deliver our services, our clients, obviously, we put sustainability and the court system within supply chain sustainability within within strategy, suitability within the

finance function, right. I don't know whether you've seen that. But we were, some people tend to seem to think that the CFO will not be the CFO anymore, but that we it would become the CEO, the CEO, so the chief value officer, right. And just by saying that, I think it's very important, it means that you have to each time you talk to a CFO, you have to review totally, but basically its objectives, but also its

overall operating model. And you see that if you in order to do that, if you only onboard people, larger systemic experience, that doesn't apply, it starts to fly if you are able to onboard all the finance transformation team, our details at Deloitte that know very well what to see, well, what has to be attested and not so this is this is what is very interesting, so long to make a long story shorter, I think, yeah, we started from the risk path practice, because that's

where we have people that that have been trained for years around sustainability that have that, that that went to schools and studied that type of topics. But the power of what we do at Deloitte is articulating those people with the rest of the businesses and ways maybe that's something we can address later be detailed some industry specificities, because you know, that by heart, you you are having interviews every year, very frequently with different

stakeholders. And depending on who you talk to, depending on the industry, well, what it means embedding system, VT, while differs significantly, if you discuss with a bank, a banker or an insurer, someone out of the TMT business or the consumer business, what that means is totally different. So obviously, if you if you if you try to address this topic, irrespective of the specificity of the industry, that doesn't work. Yeah,

London Stock Exchange group. And he was making the point very much that the sustainability role in organizations while in the past that might have been part of the marketing organization than the future, it's very much going to have to be part of the CFOs operation.

Yeah. And the ability to capture data, whether you invest in a big on large companies, or whether you invest in in an SME is also to the difference and and, and the difficulty that we face now is this ability to define the proper KPI and the taxonomy that that that maybe investor could use going forward in order to better better address this topic. And I think that that's one of the difficulty we're facing. But that's a challenge, which is very, very interesting. Yeah, for all of us.

on internal topics. And it's not only because I white unicorn, the possibility to be critical in the market, but also that because I believe that this is key for our people. So not not only just to, for it's also for our people going forward that we are best in class when it comes

to those climate engagements. So that's why basically, I've been very much engaged with the with the Deloitte corporate team in order to build this world Climate Commitment that we that went to be kept actually, if I recall, when in September last

year, right? Where we basically we did commit to become net zero by by by 2030, that that's some kind of unimportant commitment to a certain extent, to be to be very frank, I think that for a company like us, Deloitte, it's, well, it's easier than for Shell or for BP or for any chemical industry across the globe. But but but but nevertheless, I think it's an important, it's an important commitment. So it means that we will lead to a bright green that within the next few within the next few

years. So Andy, and we are tracking that and making sure that we go we go that direction. So that's one thing. That's only one pillar of this, this world climates commitment. It's an important pillar, and maybe I have to mention that we've we've engaged discussion with Miss sbti on that in order to make sure that what we commit would be properly follow them and could be and we'd be done in a way which is I don't like the

word scientifically. Good. But that's Yeah, we don't we really want to make it to make it well. So that's why we want to be we want to make sure that it follows these bti DSP requirements, right. Do the other elements of the world Climate Initiative there are two other pillars on top Have these needs to operate operate green, one of them is make sure that

we, we empower our employees. So you know, we are more than three 300,000 people at Deloitte and really there is a there is we are starting to get stronger awareness and education sits session around climate change in particular in particular and

what it means for them. So that it's not only when they when they work at Deloitte, but but but it's, it's more in the in the day to day life, that that they can take into or they can they can act in a direction, which is which, which support this, this, this Climate Commitment. And so that means that what is interesting is that, obviously, we do training we do we do, we do education

session notes have that. And we've, we've had lots of lots of people that came up with, let's say, internal IDs in order to change the way they would operate also, when they when

they work at clients. So for example, when I'm pulling for that, one, one of the system, it's the team, we have in inner geo realized that they were even though they were different, well, there was a VR system with the team, they had the they were the team that that traveled the most Crota globe, compared to the rest of the of the of the

rest of the film. So decided to, to launch an initiative that we call the shift angle, whereby they, well, they, they totally switch the way they would operate in order to just to to move less, you know, they were they were traveling in China in in Canada, just to visit some industrial sites. And so we got to make sure that they were they were cleaning when it comes to social media commitments. So so they started to travel less, and to explain the client, why they

would travel less. And what they realized, you know, after one year is that have you see their co2 emission as has been reduced significantly, but that the clients was very well very interested by the process. And it all it even became some kind of a marketing elements whereby they were far more impactful at clients, just because they switch the way they would if they were starting to

operate. Right. And what was interesting is that the client then started also internally to do the site, the same same type of analysis on their own projects. So that that's, I think, something which is very interesting, Prager and the last pillar of the world Climate Initiative is, basically is investing with our clients on subtopics. Some topics that we think will help shape or change the society. In each of our job, for example, you, we work a lot with, with the West, for

example. And one of the initiatives that we support very strongly is an institute which is called chapter zero, with purpose is basically to onboard boredom around climate change. And we, so we are founding partner of chapter zero, for example, in the UK, we have eight under the board members in the UK, that that are now part of the chapters road initiative.

It's an initiative also that we support in France, it's been launched in November last year that we support in the Netherlands, and in some other geo. And so this is an illustration of the type of let's say, investment that we commit also to do in order to make sure that irrespective of the segments that we do, we we help and support the understanding of what climate change is and some initiative, which we believe we can have an impact in our risk into different view where we are operating.

strategy. I think strategy being really The key the key element where we are working deeply with our clients. So, basically what it means is working with cxos on what climate change means, in practice for them and and in basically what are they, how they can embrace it, and see that either as the risk that they have to mitigate or as an opportunity that they can seize.

And basically supporting our client client defining strategies, defining synergies is a very, very big roll of the work that we are conducting. It's what is interesting is that these requests are requests that come to us either because basically, you we are very well very close to tcfd. So, this is the type of topics which are required when it comes to how you want to report on climate

risk. So, they say with some kind of an auditor, this is the type of request we have, but with with our consultant ads, obviously, this is also the type of request we have, it's basically what what are the possible future for us, whether we are that industry or this industry, for example, we are working for some months now with the association in Europe, which embraces all the chemical

industry. So, the question is what is going to be the netzero strategy of the chemical industry in Europe within the

next 40 years, right. So, this is the type of work that we are doing with with clients and what what we see is that 18 months ago Have you see Have you see there was there were less commitment from clients in from industry or from from companies towards net zero now, they are you the amount of commitment, but it does not mean that the strategy are properly set and that the milestones are properly

defined. So, what is important is that the strategy piece in my view is is a piece which has increased drastically over the last 18 to 24 months and which is still going to be a huge type of services within the next

few years. Then, there is another path to have a type of services that we deliver, which are very much depending on the code that differs significantly depending on which which industry you're talking about basically, which is implementing the strategy, what does it mean for my for my operations to be net zero within the next 10 1520 3040 years? What does it mean in practice? So, it means basically, how do I basically how do I change my my operating

model? How do we change my supply chain, if I want to bring the to operate green? So, it can be if I am a banker or an asset manager, Oh am I able to embed ESG criteria in a way which is similar to the way I have embedded in my operating in my operating model or in my operations, financial criteria. So, you see that that's that's definitely very complex. And if I am in another industry of GST the topic will be will be different for example, we are we are putting some consumer people

on waste management. So around Circular Economy The the amount that that some some specific products are going to be recycled in the near future that we are as they are not now. So it means that we have to create the with our clients all the ecosystem that supports this region this circular iconomy process in order to be able for example to recycle a coffee or coffee cups EULA that you use

from time to time. So and depending on the type of capsule you have, depending on where you are look at the ecosystem, you have to beat my defense a little bit. So you see that. So being big present or being having an impact in the operations, that obviously differs drastically depending on the industry you are you are playing and that that's what what is very, very important. And that's also why I think that a Deloitte we can have an impact is because we have really deep industry

expertise. So being able to embed sustainability within our different businesses within our different research industry team, that that I think is well can can make can help us make the leverage. And this leverage i think is important for our clients because this is the only way for all of us. To move sufficiently fast, okay. And then there is maybe a last topic. Once we have worked on the operations, let's go in this way, which relates more on let's on reporting and communication.

So basically, what does that mean? When am I the client to communicate on the way you have embraced me to climate impacts in the way I report on either the risk or the value I have created. And then you on that you you you can imagine that either Deloitte, we are that said your details. So we means that we need to be best in class when it comes to the current regulation, but also the future regulations. So I can, I can see you that it's moving in all

right in all directions. So being able to navigate across those, that those, those dimensions are absolutely key. And I guess that we are very well positioned when it comes to supporting our clients understanding where the

regulation is going on. And the certain type of services, where we are also very present is, it's one thing to know how the regulation is driving us how the market what the market expect from from from us or from from our clients, as CFO, it's another thing to help and build the operating model that support the finance function. And that's also a set of services that we

deliver. So basically, what we are we are active all along this value change from awareness and education and strategy and strategy, to operations and to communication and reporting to a certain extent. And the way we approach that is that we tend to have people who are very much focusing on specific industry.

So being able to say, well, well, you we don't have a well as a sustainable finance experts that we delivered services at, at Shell or BP, we were being able to embed sustainability in all our industry specific was well, teens is definitely key. I don't know whether I answered your question.

climate topics. But I believe Yes, definitely. You Well, many times I mentioned the finance function many times I mentioned the operations, and this ability to embed sustainability in the operation and in the finance function is absolutely it's a must have otherwise, that will never fly. And obviously says to me, it was SAP is is for Deloi te a strategic partner e work we work all the time ith you guys on most of our pro

ects. So no, I guess that that or you in SAP, being able to embed sustainability in t e operation is is is is underst nd as well, so So I believe tha we have started, but that w need to keep on moving fast on those topics, because tha 's the only way for all of us t be able to embrace sustainabil ty and treat that not as basical y the cherry on the cake. But th t's something which whi h is part where it's more tha part of the solution, it's the olution to that would be the c

re of the cake. It's fundamen al Yeah, it should be within th cake not on the top of the cake And yes, and we have we have we actually we work with SAP on there for different different topics on topics which relate to which are more in the in he field of the CFO, how do we o embedded system meeting the ay I report on top of financial , and also where I think we we have strong comparative complem ntarities and when it comes t helping our clients, not so muc , so that could be another wa

of basically making su e that during the supply c ain, you are the clients but als the suppliers. Sorry, t e suppliers are best in class. bviously we can add on that but I think we're where where I think we need to faster is h w can we help or articulate asically the scenario that we de ined in order to follow the transition pass with SAP, what we see now is that we are clie ts defining strategies, definin scenario defining milestones But that will be a long jour

ey. And being able to prope ly track whether you are on rack or not, is going to be very important. And I guess that on that, if we want to be efficien , the ability to to artic late all that with, with thi technology solution, and SAP, n my view could play a strong role in that, that would be very fuel efficient. Obviousl , we think about SAP when it c mes to financials when it omes to suppliers when it c

mes to operations. But I t ink that more than that, the overarching piece, which is how can I follow on a regular basis hat I am on track or not? Compa ed to the different, let's sa , scenario or milestone I defi e? This is going to be critica .

experts. And those 1000 system 1000 people are basically across the globe in most of the geo and an hour. And my role is to articulate to grow those people and articulate them with the

rest of the firm. And so I think that what is important for me is that for our clients is to be able to want to know that they can look at our dausa irrespective of the image that they can have from Deloitte, maybe no other details in some job or consultants in some others, because I think we are very well positioned to add them basically navigate along this

journey. So not only because we have security experts, but But more than that, because we are able to articulate with the Industry Skills and with the different businesses we have at Deloitte. Sure, sure.

problem. I'm usually very reactive and will be able either to answer directly or to connect them with the wild the pop up people, either on subtopic on some Geo Data active in their space. Super,