Consumer-led Industrial and Commercial (I&C) flexibility allows large energy consumers (factories, retailers, office blocks, data centres, hospitals etc.) to adjust their net energy consumption for short periods in response to the needs of the grid, incentivised through flexibility markets.

In the electricity market, this enables demand to respond to supply, a crucial shift as sectors move towards electrification and as electricity production shifts to cheaper, cleaner, but more intermittent, renewable sources.

Flexibility forms up a core part of the government’s Clean Power 2030 Action Plan and is explored in depth in the Clean Flexibility Roadmap. It also delivers clear value, from reducing system costs for networks to unlocking new revenue streams and resilience for energy users. But, realising its full potential and accelerating the transition to Net Zero requires market-wide adoption.

Benefits of I&C flexibility

For grid operators, enabling flexibility can deliver:

• Reduced generation curtailment
• Reduced need for expensive grid-scale energy storage projects
• Reduced costs for grid capacity upgrades
• Alignment with Ofgem’s forthcoming RIIO-ED3 price control

For I&C Consumers, benefits include:

• Lower energy costs
• New revenue streams
• Reduced expenditure on grid connection upgrades
• Increased resilience for key consumers, such as hospitals, in times of grid stress

Data is the common thread

And yet, I&C flexibility isn’t one-size-fits-all. It encompasses a spectrum of approaches from direct demand response (where consumption is increased or decreased for a set period) to more sophisticated coordination of co-located technologies like solar, battery storage, heat pumps, and EV fleets.

What connects these approaches is data. Granular, trusted data sharing enables I&C sites to assess what options are feasible and maximise the benefits of participating in flexibility markets. Electricity networks also need real-time, high-quality data to plan and operate their networks, and to balance supply and demand. Without this, take-up of I&C flexibility will not reach its full potential, or will be costly to implement.

Sharing large amounts of data between diverse groups or organisations can lead to challenges including:

• Varying data formats, standards and semantics
• Separate representations of network assets and constraints
• Different data publication schedules
• Non-interoperable licensing and permissioning frameworks
• Issues with machine-readability
• Commercial and security sensitivities
• A lack of easy consumer data portability
• Fragmented data on existing I&C flexibility participation and performance

For I&C consumers, these barriers make it harder to identify viable flexibility opportunities and build robust business cases. This increases cost and complexity, often diverting time and investment elsewhere.

Unlocking flexibility at the speed and scale required to decarbonise the grid will therefore require a fundamental shift in how data is shared.

A data sharing scheme to accelerate I&C flexibility

The market needs a way for I&C actors to securely and easily share data with authorised parties to assess, plan and deliver flexibility at scale. Open Energy’s mission is to collaboratively define and develop a data sharing Scheme to support this, recognising that delivery is a co-ordination challenge, requiring collaboration to solve.

No single organisation can solve this alone, and implementing technical solutions without understanding the needs, constraints, and capabilities of others risks becoming an expensive exercise with unreliable outcomes.

The scheme will align with wider energy and cross sector initiatives such as NESO Data Sharing Infrastructure, RECCo Consumer Consent Solution, Elexon Flexibility Market Asset Register, Market-Wide Half-Hourly Settlement, and Smart Data policy), strengthening the overall data ecosystem and enabling interoperability.

Open Energy brings together energy system and I&C participants to build the data foundations for accelerating flexibility. IB1 acts as a neutral facilitator and data governance expert supported by the Energy Sector Trust Framework, a ready-to-use mechanism for governing the exchange of data in a consistent, trusted, and scalable way, without the need for centralised infrastructure.

How your organisation can benefit

If flexibility impacts your organisation, whether as an opportunity, a challenge, or a dependency, being part of Open Energy gives you a seat at the table, where the future of data sharing is being built. You’ll also help shape how the Energy Sector Trust Framework evolves to meet the specific needs of the flexibility market.

For networks:

• Contribute to, and benefit from, sector-wide alignment on data classification, licensing, and access controls
• Reduce the risk of costly inconsistencies emerging as flexibility markets mature.

For flexibility providers and aggregators:

• Access cleaner, more consistent data pipelines
• Access a governance framework that makes it easier to operate across multiple network areas.

For large energy consumers and trade bodies:

• Gain faster visibility of viable flexibility opportunities and incentives
• Access insights to support adoption and decision-making

Join us & your peers

To find out more about the Industrial & Commercial Flexibility use case, or to join Open Energy, get in touch with us at openenergy@ib1.org

And register for our upcoming webinar: https://events.humanitix.com/oe-i-and-cflex-webinar

The decisions being made now will shape the direction of the energy sector for years to come. Those helping to shape it will be best placed to benefit from the opportunities that follow.

with Rohan Graham, Head of Asset Data, National Grid and Jay Chen, Data Process Administrator, IT&D Data Engineering and Process, NGED

Data sharing is key for reaching our net zero targets; this is something IB1’s strategic partner National Grid Electricity Distribution (NGED) has long recognised. And, as the company looks to cement its position as a digital leader in the energy industry, IB1 remains a key component and catalyst in accelerating its digitalisation journey. 

We caught up with Rohan Graham from National Grid and Jay Chen from NGED, to discuss how interoperability across Distribution Network Operators (DNOs) is fundamental to unlocking the potential of open data in the energy sector.

Building trusted open data

Last year, NGED identified a need to improve how it publishes assured open data. While the DNO had already established an open data portal, it wanted to review both what it was publishing and how it was publishing it. This shift signalled a commitment to providing data that is trusted, consistent and usable across the sector. 

“Our goal is to contribute to the broader movement of publishing interoperable assured open data, explore genuine shared-data use cases, and understand how to make that data available securely through trust frameworks, while considering and aligning to the DSI under development.” Rohan Graham. 

Sector-wide collaboration

NGED sits within a much wider ecosystem of UK DNOs, all of which publish similar datasets. Because these datasets are used across the energy sector, (not just within each DNO’s own business) ensuring their interoperability is essential.

To achieve the level of interoperability required and to build sector-wide collaboration, harmonisation is essential. Once in place, the value of this interoperability is far-reaching: it strengthens trust, encourages the wider use of data across the sector and ultimately accelerates the entire sector’s digital maturity. 

“Over the next 3-5 years, we’ll see the increase of interoperability of data between organisations as well as the increasing use of flexibility services across multiple DNOs.” Jay Chen, NGED. 

Data Action

The Data (Use and Access) Act might also be a catalyst for positive change in the sector. Its focus on the roll-out of smart data schemes is a move in the right direction. But, whether this alone will galvanise the sector toward a more connected, net-zero future remains to be seen.

“It’s definitely a positive move. It’s set up some of the frameworks for how Open Energy can be pushed forward, but really, the Act alone won’t create immediate change. Specific to Open Energy, the real push comes from facilitation by Icebreaker One, a common purpose and active participation from members of the ecosystem.” 

Rohan Graham, National Grid

IB1: The great facilitator 

Through our Open Energy programme, IB1 has helped to establish best practices for publishing open data; focusing on machine readability, standardised metadata and overall consistency; all of which help to facilitate trust across the sector. 

“Working with IB1 has been really valuable in providing awareness, guidance, and direction, mainly from an open data perspective, so far. One of the biggest benefits has been driving the collaboration between the DNOs through steering and working groups. This kind of collaboration is crucial for progressing interoperability and shared best practices”. Rohan Graham.

“Our strategic partnership enables NGED to have a driving seat in shaping the future of decarbonisation through working groups with sector organisations, facilitated by IB1.”

Jay Chen, NGED

What’s next?

Looking ahead, National Grid is set to continue its progress toward a more connected, digital energy system. Central to achieving this vision is the ability to continue identifying datasets that truly move the dial on flexible energy markets and decarbonisation.

“Understanding who needs that data, why they need it, and how to deliver it securely and at scale will be key. The sector needs to  remain focused on publishing what truly drives progress toward net zero – whether that’s open or shared data.” Rohan Graham. 

IB1’s work in Open Energy is creating a connected web of energy data – making it more discoverable, interoperable, and impactful, in the collective mission to reach net zero.

If you’re interested in becoming a Strategic Partner, an Open Energy member, or part of our expert network, you can join us at ib1.org/join or reach out at partners@ib1.org to start a conversation about unlocking data for net zero.

The responsible use of LLMs includes understanding their energy use and the net zero implications associated with them. Both LLM model creation and usage are known to use a significant amount of energy and so this guide includes considerations for reducing energy consumption in LLM usage.

Consistent with our commitment to transparency, we have built upon the excellent work of mySociety’s AI Framework to produce a practical guide for internal use. We are publishing it so partners can understand our approach, adapt it for their own contexts, and engage with us where collaboration would be helpful. The guide addresses how to use LLMs responsibly as research tools while maintaining rigorous oversight and expert review.

Written by Paul Johnston

Read our full Guide to Using LLM’s here

In December last year, Perseus entered its pilot stage which was launched to gather feedback on the technical, legal and user experience aspects of Perseus. As part of the Pilot, the Development Bank of Wales used Perseus in its due diligence processes for green business loan products.

Today, Perseus has progressed to the launch of the sandbox, which will allow Perseus members to safely and easily experiment with sharing energy consumption data.

How it works

The sandbox uses synthetic energy consumption data, meaning organisations can test and experiment without concerns over personal data. It also provides identical trust services (Registry and Directory) to Perseus in production.  

“Successful integration with the sandbox will make a business ‘Perseus-Ready’ – a sign that they are ready to provide the innovative new services enabled by automated carbon emissions reporting between data providers, businesses, carbon accounting platforms and lenders”.

Chris Pointon, Project Manager, Trust Services.

What does being ‘Perseus-ready’ mean for your business?

For Carbon Accounting Providers:

• First choice for Financial Service Providers seeking market-scale data powered by Perseus.
• First to market with Perseus-enabled products 
• Major visibility to all participating Perseus banks
• On-ramp to real-world case studies, leading to wider sector visibility 
• Prepare your teams, technology and processes to strengthen your competitive advantage
• Opportunity to launch a new revenue stream, and develop new tech capabilities for your business

For Financial Service Providers:

• Test technical processes for ingesting Perseus data 
• Inform product innovation, reporting and compliance
• Build relationships and technical partnerships with potential data partners for new sustainable finance opportunities
• Develop new tech capabilities to build scalable access to sustainability data ecosystem

If your organisation is interested in using the sandbox and becoming ‘Perseus-ready,’ please get in touch via Perseus@ib1.org

The news is a significant milestone for the Perseus scheme, which makes it easier for UK SMEs to access green financing by automating their sustainability reporting and helps banks use assurable data to underpin their decisions. 

The innovation means the Development Bank of Wales is offering more favourable loan rates to SMEs by using assurable data to benchmark and check that they  comply with the terms of its green loans. 

With Perseus, SMEs can share accurate emissions data with their bank to access green loans. They can receive emissions reports generated based on their electricity smart meter data and share them with their banks or lenders to unlock green finance.

The Development Bank of Wales is among a group of leading businesses and non-profits taking part in the Perseus pilot – including Sage, Perse and SmartDCC.

Over the last year, the Perseus team has designed the key operational, legal and technical elements of automated sustainability reporting. It is guided by a group of over 180 people from commercial businesses, non-profits, public bodies and trade associations, with support from the UK Government. 

Matthew Kelly, Sustainability Manager, Development Bank of Wales, said: “This is a first of its kind pilot, using technology to drive down the business burden of reporting for SMEs and increase the accuracy of carbon abatement assessment and monitoring.

“We believe that Perseus will help scale green finance by giving us access to assurable, trustworthy data. It means that SMEs will get the capital that they need to boost their productivity while decarbonising, therefore helping us to get to net zero faster.”

Rebecca Evans, Cabinet Secretary for Economy, Energy and Planning in the Welsh Government welcomed the announcement. She said: “The Development Bank being named as the UK’s first bank to use Perseus further demonstrates Wales’ commitment to promoting sustainable business and securing a low carbon economy.

“It’s an important milestone for the Development Bank and we are pleased to see them taking a lead role in making it easier for UK SMEs to access green financing so that we can support their productivity and reduce emissions.”

Gavin Starks, CEO of Icebreaker One, which runs Perseus, said: “This milestone takes us from use case to case study – showing that unlocking access to data, with the permission of the customer, can help get green finance flowing to SMEs. 

“It’s a major proof point that the Perseus Scheme can enable trusted smart data to flow between SMEs, carbon accounting platforms, and banks – and help accelerate access to billions on the race to zero. 

“Small and medium-sized businesses account for 50% of UK business emissions, but often struggle to get the capital they need to decarbonise. Even if they have the intent, they often lack the time, expertise and money to act. We want Perseus to help the market solve that: to go far, we go together.”

The Perseus pilot is still underway, working with banks, carbon accounting providers, small businesses, and others. Find out more about joining Perseus.

The Perseus pilot – in which banks will allow Perseus monthly emissions information to be used in the decision making process for one or more green loans – represents a huge step towards automating reporting for UK SMEs, bridging the gap between real-world energy data and financial decision making.

We’re speaking to those involved in Perseus – from Banks, Carbon Accounting Providers, non-profits and policymakers – to explore what the pilot will mean for their business, their customers, and the broader net-zero transition.

In our latest conversation, Conrad Langridge from Sage discusses the challenges SMEs face in carbon reporting, particularly around education, data accuracy, and complexity. Through Perseus, Sage aims to simplify these challenges, enabling SMEs to easily track their emissions through smart meter data and detailed analysis, helping businesses save money and reduce their carbon footprint.

Timestamps

00:00 – Introduction to Conrad Langridge and Sage Earth

01:00 – Sage’s net-zero strategy overview

02:40 – How Sage supports SMEs on carbon accounting

03:22 – Common struggles SMEs face in carbon emissions reporting

07:30 – The shift from traditional accounting to carbon accounting

08:54 – Sage’s role in educating SMEs and accountants in carbon accounting

09:53 – Advantages of smart meters for SMEs

13:00 – The value Perseus brings to carbon accounting providers: Granularity & Accuracy

16:30 – The wider adoption of smart technology and data sharing trends

19:00 – Conrad’s experience and perspective on Project Perseus’s organisation and momentum

Transcript

Conrad: Conrad Langridge from Sage, the accounting, HR and payroll software company that you all know and love. Probably recognised from the Rugby if you’ve been watching that recently. But I work for Sage Earth, which is the carbon accounting sort of body or business unit within Sage. So, yeah. So Sage carbon accounting, it’s as the sort of name suggests, it’s a carbon accounting solution, which helps businesses better understand their environmental impact and sort of start to build strategies on how they can reduce their impacts. Yeah.

Ross: Yeah. No. Really interesting. And you’re sort of going into it there, but could you go more in depth on, you know, Sage’s plans in the net zero space? For yourself, you know, in terms of carbon carbon emissions.

Conrad: Yeah. So if we’re looking if we think about Sage’s net zero strategy, it largely sort of falls into two buckets. One is getting Sage to net zero. So these are looking at all of the you know our offices, how we commute, all of those sort of things, which probably make about 20% of our emissions. Then the two big buckets are: the use of our products, so people actually using Sage solutions and then also our suppliers. So all of the people we spend money with, marketing agencies, office management, that sort of stuff. So we’ve got that’s one part of our strategy. But we’ve also got SMBs to net zero so this is looking at small businesses and small and medium sized businesses and understanding their impact on the planet. And we’ve worked out that the emissions of our customers alone is in the tens of thousands of orders of magnitude greater than Sage’s impact. So, you know, we obviously work with businesses across all different sectors. But, just a few thousand construction companies is going to have a greater impact than a big software company. So yeah, so we’ve got this big opportunity to support small and medium sized businesses across the globe. And that’s sort of one of our biggest parts of our sustainability strategy is doing just that. Not only are we offering carbon accounting, carbon footprinting functionality to SMBs directly through Sage Earth or Sage carbon accounting, but we also do it through an API service. So we’ve been working with a number of banks including NatWest, who are part of the project Perseus initiative, and we work with others as well. So we’re offering those carbon accounting API services to sort of a broader range of enterprise businesses and banks.

Ross: Yeah, that’s really interesting. On that, I was going to ask, you know, what problems do SMEs come to you with when they’re trying to report their emissions? What kind of things do they struggle with?

Conrad: Yeah. So thinking about SMEs and where they struggle from a net zero or carbon accounting perspective, education is probably the biggest piece. We went to Accountex a couple of years ago and we polled their generally accountant audience there, but also includes sort of businesses. Everyone, nearly everyone knew climate change. A few knew net zero. But then as soon as you get into the sort of the sort of language which you really need to know about things like scopes and carbon accounting, people didn’t understand that terminology. And really, to build a sustainability strategy, you need a bit more of a sort of an understanding in terms of education. So education is a big piece. Money is a blocker, but it’s not often the biggest blocker from my view. The blocker is, the education and understanding of how to use the software and what information to capture. And then the nuance on all of the details, which goes into like building a strategy and understanding which parts of your carbon footprint are really material, so where you want to focus your energy. So that’s, I guess, where they struggle.

But using a tool like ours. We’d like to think the process is nice and simple. We take them through that journey. We also have a net zero hub, which does that sort of upfront educational scene setting and building the business case. But yeah, the tool really, as I say, hopefully takes them through that journey to make it easier, but then also gives them the hotspot analysis, which allows them to see which areas of their business have the material impact. So I think that’s where actually the biggest learnings come for small and medium sized businesses. Suddenly they can see where they actually need to focus their energy. And I think from a Perseus perspective, the same thing is true, right? So scope two is a really important part of a carbon footprint. Not always the biggest, but it’s one which is always sort of in the control of the business. It’s one of the levers they have an impact over, unlike some things within scope three, like your supply chain, which is much harder to manipulate. So yeah, looking at scope two and being able to see the emissions associated with your electricity consumption allows businesses to see; in terms of how they’re operating, what changes they can make. So linked to the benefits of smart meters, if you can see your business is using electricity, you know, at a peak time and you’re doing lots of peak consumption, you’re going to see your carbon footprint’s potentially higher. And normally, your bills will be higher. Whereas if you’re using off-peak, you’ll be able to reduce your emissions and your costs.

Project Perseus allowing us to connect to smart data meters is going to allow businesses to see when those emissions are ramping up and start to control that. Yes, it’s great the emissions are likely to be lower but the big thing for small businesses is they’re going to pay a lot less for their electricity.

Ross: Yeah, that’s really good. It’s really interesting that you brought up that education, guidance piece as well. Because if I think of accounting in the traditional sense, not carbon accounting, I can see how you’ve developed that and then moved into carbon accounting and grown that guidance for businesses, which is really good to see.

Conrad: Yeah, I guess I’ve got a follow up point on that. So if you think about financial services or accountants within a business, often they’re the trusted advisor for all of those things to do with money, cashflow, all that sort of stuff. And, when it comes to carbon accounting and net zero, businesses are going to need the same sort of support. Well, they can either educate people internally to bring them up to speed, or they can go to a carbon accountant. But more and more, there are loads of great carbon accountants. Well, sorry, there are carbon accountants and they’re great, but there’s not loads of them, so there’s not really enough. Well, there’s definitely not enough to go around. So we either need to get way more carbon accountants or we need to educate accountants in carbon accounting so they can be the trusted advisor for the thousands of small businesses they work with. And we’re seeing that trend at Sage, we see increasingly, numbers of accounting firms who were traditional accounting firms a few years ago, turn and either focus on carbon accounting as their big sort of differentiator in market, or they add it as a subsidiary service, which is giving them a new revenue stream. And, I don’t know if it’s just the ones we speak to, but all of them are doing really well because there’s so many businesses, small businesses out there who are looking for this support and accountants are doing, you know, a great job at educating themselves on it. Even across a carbon account there’s no one who’s sort of nailed that. It’s not a direct, exact science like accounting is. With accounting, you can count every penny and things can, you know, line up perfectly with the carbon accounting. There’s sort of boundaries in which things can be shifted or you can sort of pull things in and out of scope. And so it’s not a perfect science yet. So just starting or just getting your SMBs on that journey is really the best place to be.

Ross: Yeah, definitely. And like you said, once you know, we start integrating smart meters more, we can get more reliable data for improving that as well.

Conrad: Yeah, I think the benefits from smart meters, there’s kind of two sides to it. I see for SMBs or SMEs the benefit is the smart meter even at that end, there’s loads of benefits for them. Being able to see when you’re using your electricity, using electricity off peak, going from like a fixed meter where you pay, you know, they’re taking that money from you, whatever. There’s the current system and this is how I’ve got at home, admittedly, I’ve not got a smart meter for my sins. But I’ll be billed up front and I’ll be paying for electricity, which I’ve not used for like months and months, and it builds up and I get all this credit. But for a small business, that’s actually cash flow, which could be worked into much better effect within their business. And there’s all these different benefits paying for electricity that you’ve actually used, automating it so you don’t have to report your electricity consumption back to a provider, seeing it in like a smart environment so you can log on and it’s just there rather than thinking about your smart meter every, few months and you forget about it. So there’s loads of benefits from a small and micro sized business perspective on smart meters. And then there’s a sort of subsidiary benefit which is a better understanding of your carbon footprint. And again, why do you need to know your carbon footprint? There’s obviously great benefits from a sustainability perspective, but businesses need this information for a whole host of other reasons, even small businesses. So if they’re looking to do business with central government or the NHS, you need a carbon reduction plan, PPN 0621, if you’re working with a big supplier, say for example, you work with Sage or you work with Sainsbury’s or whatever, suppliers are going to be asking for carbon footprint data to feed into their emissions reporting.

But you’ve also got banks. Increasingly, banks are going to their small businesses and asking them for carbon data including scope two electricity consumption, and offering them loans based on their net zero trajectory. So if you’re a small business that has completed a carbon footprint and has got a net zero plan, you’re a much lower risk than the exact same business within your sector who hasn’t started that journey. Because there’s a lot of risk associated with your activity. And the fact that you’ve not even started looking at that is a bit of a red flag to banks. So if they can start working with small businesses who are clued up on all of this stuff, even if they’re in a riskier sector, there’s more likely that business will come through and actually become profitable, will remain profitable. So yeah, a whole host of benefits.

Ross: Yeah, definitely. And I think I’m just thinking there, obviously I can see if we sort of move into Perseus here a bit. It was always very clear to me the benefits for small businesses because you can access green financing. And then for banks, you know, they’ve kind, if you use that carrot stick thing, they’ve got regulation behind them where they’re having to report on this. But then for carbon accounting firms where do you see the benefit of this work more generally and Perseus?

Conrad: There’s a whole bunch of benefits for carbon accountants and carbon accounting software providers. For me, probably one of the biggest things is granularity and accuracy. And with that comes trust and traceability and just general confidence around carbon accounting. So our current methodology, we’d typically or one of the methodologies we would use, would be understanding what someone spends on their electricity consumption, and we could read this from their accounts really quickly. But with that, that might be, you know, a month’s worth of energy usage of which we don’t know whether they’ve used that in peak or off peak or when it was a particularly windy day and there was lots of renewables in the grid, or if it was sort of peak times during EastEnders and there was no wind, or when there was no wind and the sun was shining and it was like natural gas was 70% of the grid. So we can’t see that within our system. So any estimate on carbon footprint is exactly that, an estimate, and that sort of over a year or average out. And it won’t actually be too far from the truth. But month by month, it could be sort of wildly or wildly inaccurate. But moving to a smart meter data reading and going from monthly data to Half hourly data just reduces that error risk within that calculation.

So that’s one thing. It improves the number the user sees. But also with that old methodology, if a business makes a change to their carbon footprint or their consumption, the only way you really recognise that is from reduction in cost. And that would come from moving to an off peak piece. But actually with the 30 minute reading, you would be able to see the direct changes more clearly. So if someone had moved all of their charging to overnight or at different times, but perhaps the price hadn’t changed, we’d still be able to see the benefit from a carbon reduction perspective, and all of that would be tracked within the system. So it just gives, it’s like that positive feedback loop so a business can make changes to their operations. And with this Perseus model, they’ll be able to see those changes within their carbon footprint the next day because the information would be there. Versus waiting a month and not really knowing if you’ve made a difference, you have made a difference, but it’s not actually recorded because of the existing methodology.

Ross: Yeah, that’s really interesting getting that kind of instant behavioural change. But for whole businesses. Sort of going off on a tangent a little bit, you know, there’s a big push now from smart data from governments and there’s more recognition now of this kind of work. Are you seeing that, you know, influence with the banks you work with or the businesses, whether there’s more willingness to open up to, you know, open data, smart data, and these kind of areas of work?

Conrad: I think because it’s such a, it’s like a topic which touches society at large. It’s such a big trend. I definitely think the adoption of these technologies is just happening across the board. But I think that’s just as the general public gets on board with this sort of technology in their lives. I think that’s where the biggest shift is, because I think you can see trends within enterprise businesses adopting different technology. But that’s only the sort of very few people who sort of operate in that sort of business landscape. But for something like smart meter adoption and amongst micro and SMEs. That’s really just a reflection of society much more broadly. And there’s so many, you know, when you talk, think about micro micro-businesses and small businesses. There’s literally millions of them. So it’s just like, is the general public seeing this adoption of technology? And it’s generally. Yes. So that’s what the trend is. There’s not like a quick shift like you’d see in a sort of enterprise where you only only see like a few thousand people need to be convinced it’s the right thing to do. And those people are looking out for things which they can do to adopt. This is millions of people who have got millions of other things to worry about. So the behaviour change is a lot slower, but it’s really positive, I’d say.

Ross: Yeah. Those are most of my questions. But is there anything more, you know, on Perseus, on the pilot specifically that you wanted to talk about? Basically, how it’s going.

Conrad: Yeah. So I guess I’ve been involved with Perseus for a couple of years. Since it’s sort of ideation, really. And I’ve always been impressed at how well it’s run, from an organisation point of view. Yeah, the organisation, the structure, the sort of this is what we’re going to achieve in year one. And this is the sort of process in which we’re going to do it, and this is how we’re going to engage with the stakeholders who are on board and the sort of the working group structure, all of that sort of stuff, I’ve been really impressed with. I’ve been involved with other sort of similar projects which launch with the same amount of excitement, but the momentum isn’t kept. And that’s not because people aren’t excited by it, but it’s because it’s not run properly and the expectations aren’t set and the operational structure isn’t in place for it to work well. And I think Project Perseus does have that super you know, the organisational structure, the AGMs, the updates, the email updates, the different working groups, all work to keep people, to keep the many stakeholders on board so people know what’s going on. So yeah, I’d say that’s one of the best parts of it, is essential what keeps it going.

The upcoming Perseus pilot – in which banks will allow Perseus monthly emissions information to be used in the decision making process for one or more green loans – represents a huge step towards automating reporting for UK SMEs, bridging the gap between the real and financial economy.

In the lead up to the pilot, we’re speaking to those involved in Perseus – from Banks, Carbon Accounting Providers, non-profits and policymakers – to explore what the pilot will mean for their businesses, their customers, and the broader net-zero transition.

In this conversation, Ian O’Donnell MBE from the Federation of Small Businesses (FSB) talks about being a voice for the small business community, sharing insights on how to empower SMEs to report their carbon emissions effectively. With SMEs accounting for 99% of UK businesses and nearly 50% of business emissions, they face significant barriers to carbon reporting, including limited resources, restricted access to energy data, and complex landlord-tenant relationships. The FSB continues to advocate for stronger government support, standardised carbon accounting, and financial incentives to ensure SMEs can play a vital role in the UK’s transition to net zero.

Timestamps

[00:00] Introduction: Ian O’Donnell, Federation of Small Businesses (FSB)
[00:40] Defining the small business community: The importance of representing micro-businesses
[01:40] SME challenges: Reporting carbon emissions, resources, and limitations due to tenancy arrangements
[03:17] SMEs represent around 50% of UK business emissions; importance of government support
[04:33] Value of Project Perseus for FSB: Simplifying SME emissions reporting, particularly scope 1 and scope 2 emissions
[05:55] Working through challenges of data accessibility with Perseus
[06:40] Simplifying carbon accounting by connecting SMEs with existing tools
[08:35] Main barriers for SMEs engaging with Perseus and opportunities to improve uptake
[10:00] Future of Perseus & Future use cases: Water, electricity and gas.
[10:35] UK Governments role: Need for targeted SME education and tailored support. Differentiating big / small business
[12:40] Landlord-tenant challenge: Impacts SME’s ability to invest in energy improvements
[13:45] Financing complexities: How tenancy duration affects investment decisions for SMEs
[15:00] Geopolitical trends and their impact on SME commitments to sustainability
[16:30] Importance of consistency and stable deadlines for SMEs in sustainability strategies
[17:05] Closing remarks: Simplicity, accurate data, procurement access, and inclusive finance for SMEs

Transcript

Ian: I’m Ian O’Donnell, I’m deputy chair of policy at the Federation of Small Businesses and one of the non-executive directors there. And as an organisation, our role really is to support and help the small business community, both through a range of sort of support tools, including insurance and things like that. But also, crucially, and the key reason for our being is to talk to stakeholders at national and local level, in government and otherwise, about how they can make sure we have the right environment for the small business community for them to thrive.

Ross: Yeah. And I guess, yeah. So the small business community there, what kind of size are we looking at?

Ian: So we, we represent the SME business community. But the majority of our membership and the businesses we engage with are at the micro end of the small business community. So less than ten employees. Though we have a fair few members as well who are sort of in the 10 to 50 employees and a few who are bigger than that. But primarily we’re there to support sort of the smaller end of the SME community. And to really ensure that they get a voice when individually they wouldn’t have a voice. So obviously each of those individual small business owners don’t have the time or the resources in the way that a large business does to speak to government. So we very much act as a collective voice for that small business community.

Ross: Yeah. No. Really cool. I guess moving in into the net zero space then I guess there’s a, thinking about what you just said there, it’s like, do they have the education? Do they have the power to, you know, track their carbon emissions? You know what’s SMEs plans in that space?

Ian: Yeah. So the challenge here is two-fold. Obviously A. The rules coming down the line in terms of reporting of carbon footprint, carbon calculation. And particularly actually that’s already being felt through the procurement process. Obviously larger businesses have already got to report on scope three. And obviously that inevitably means if they have small businesses in their supply chain, those small businesses are being asked to report on their carbon footprint, even though actually legally as yet, they don’t have to report. And so the supply chain already means that this is coming into effect. And, the problem for many micro and small businesses is they don’t have the knowledge, they don’t have the skills, and they don’t have the access to resources to A. Monitor and measure their carbon footprint. And B. Sometimes don’t have the ability to put changes into practice in order to reduce their carbon footprint, if they’re in shared premises, if they’re in a tenanted building, rather than owning their building, short term leases quite often often means they don’t have the capacity to to make the changes that they want to, for example.

Ross: Yeah, definitely. Yeah, it’s a really good point the, it’s always quite clear when it’s like large corporations what they need to do to stay in line, but the small businesses actually make up the larger businesses supply chain.

Ian: Exactly. And also in terms of the economy as a whole. So it’s why it’s so important that we don’t and the government in particular, doesn’t leave the SME community out of this sort of race to net zero in terms of their support and enablement for that. You know, five over 5 million of businesses in the UK making up over 99% of the business community are SMEs, and over 2 million of those are less than ten employees. So this is a significant proportion of our business community here in the UK. So if we don’t solve the problem for those businesses, we are not going to solve the macro problem of how we get to a net zero carbon neutral economy.

Ross: Yeah. No. Very true. I was reading this SMEs make up around 50% of UK business emissions as well.

Ian: Yes, exactly.

Ross: I guess now it’s good. We’ve, we’ve kind of set the scene now to lead into Perseus. And just where do you see the value of Perseus for FSB and, and your, your SME customer base?

Ian: Yeah. So the real value of this, from our perspective, is if we can automate and simplify the process by which a micro or small business can get the data it needs to report on its carbon footprint, particularly in their scope one and scope two emissions from micro business, because they have less requirement to report on scope three, but certainly their scope one and scope two, they’re having to report up supply chains. It’d be invaluable.

There are challenges to it, and it’s great that you know what Project Perseus has also given that opportunity to discuss some of the challenges around how this happens, because what with many small businesses being in tenanted premises or even in shared premises, they often don’t have direct access to metering and details of their energy consumption. And so I know it’s been really good recently through Project Perseus, to have some of those discussions about how do we still enable those small businesses through other forms of technology, to be able to report in using the project Perseus mechanism, to then allow that data to be transferred.

Ross: Yeah. Yeah. That’s amazing. Really good. Really good to hear that you’re working through those challenges. And I guess you work through the challenges in a collaborative environment as well, so you can hear other people’s pain points.

Ian: Yeah. Exactly that. You know, it’s been great with Project Perseus that you’ve got, you know, a good range of people, from the financial institutions to the those involved in the metering through to representatives like myself, representing the business community. And sort of all looking at the problem in different ways, but all with an overall passion to say, how do we make it as easy as possible for the SME community to be able to get the data it needs to be able to report accurately?

Ross: Yeah. And how do you think, thinking more long term. How do you think Perseus could slot into you know, what you offer SMBs? Could it be part of your offerings, like education, teaching them on sustainability? Could Perseus that slot in there.

Ian: Yeah. So I think for us it’ll be about connecting people up. So you know what carbon calculators are out there. Accountancy packages, all the rest of it. How do we work with those to make sure they’re plugging in data when it’s available through Project Perseus and other things that may become available to simplify for SMEs that process of producing a carbon report.

We’re also involved in organisations like UKAS, which is the UK accreditation service, on how do we make sure that there is a common standard and universality about data reporting, because at the moment, as many, you know, and we’ve discussed again through Project Perseus, is actually you can go to several different tools and get several different answers on what your carbon footprint is. So how do we create some consistency and some certainty about the data, which is obviously vital when it comes to SMEs accessing. Two key things one procurement opportunities and second biggest issue affecting many SMEs – access to finance. And with banks obviously requiring to know what the carbon footprint is. And wanting some assurity of that data. Anything we can do to help create that is vital. But notwithstanding that challenge of making sure that all SMEs have access to the data. Which isn’t necessarily going to come through half hourly metering for all of those SME community.

Ross: What do you think the barriers might be for SMEs engaging with Perseus. We can help with this kind of work we’re doing right now. But how can we improve engagement?

Ian: The reality is SMEs themselves are probably not going to be engaging with Project Perseus directly. They’re going to be engaging with the partners who come on board, who provide that mechanism for that data, to then become available in the tools that SMEs are using. So when we look at accountancy packages; Xero, QuickBooks, Sage, etc. you know, it’s vital that they engage with Project Perseus because then that data flows naturally into those systems and they, you know, just the same way as I can do my balance sheet of my accounts, I can go on there and I can get my carbon report. If we connect all the dots well, through Project Perseus, that’s where SMEs are really going to see a benefit for those that have got access to that data in the current form. And also I think where Project Perseus, as it starts to see that success and that enablement, there’s increasing pressure to say, how do we solve the problem of businesses that don’t have access to half hourly metering? And, you know, I’m sure you know, as a collective we’ll be able to create pressure and, and also create some of the solutions to how that data can be sourced.

Ross: Yeah, definitely. And there’s also the fact that, you know, this is our first use case is electricity. And then it could move into to, a lot of people are saying gas, at the moment. But there’s loads of other ways to go.

Ian: Water is, you know, the three big ones for any micro business, small business is going to be electricity, water, gas. So if we can solve those, those big three and automate that, and then obviously we then move into many other areas in terms of travel and so on. But those are more in scope three. But if we look at scope two, those are the biggest. How can we make that simple and straightforward for the SME community?

Ross: Yeah. Really cool. Yes. I’ve spoken to Sage and I’ve spoken to a few others, but, I think FSB is interesting in the sense that you work with government and policy makers. I wanted to talk about what inkling you get from the government on, you know, on this topic and how important it is tracking SMEs emissions. How important is that for the government?

Ian: I think, you know, overall, this government has continued to be fairly positive on the discussion around how do we reach a low carbon economy. And so continue to have that as a focus, or at least there’s been some consistency for a while now around the importance of reducing carbon footprints for all businesses. Um, I think the challenge, as inevitably government understands big business a bit more readily than it understands small business. And I think the reduction in carbon and the way that a big business can adapt is very different from a small business. And I think one of our key roles has been to sort of have that constructive discussion with the government to sort of say, yeah, that that scheme, that program you’ve got over there works very well if you’re a big business. But actually small businesses are different. And how do you help them and support them in a slightly different way. So. And one of the key areas of that is around education. So it’s great that we’re through Project Perseus creating the tools. But we’ve also got to provide the education and support for that small business to be able to adapt and change and deliver on a carbon reduction plan within their business over the next few years.

And alongside that, also, we’re very much in discussion with government about, well, how do you facilitate that? So I know I keep going on about it, but the sort of the tenanted aspect, small businesses do not generally own their own premises – actually creates not just the challenge of access to data, but it also creates a big challenge in terms of the ability to affect change. If I own my premises and it’s a big premises, it’s no problem to stick solar panels on the roof. It’s no problem to switch over to air source heat pumps. If I don’t own my premises. I don’t necessarily have the access and the ability to make those changes. And also, if I’m perhaps only got a five year tenancy as opposed to a 25 year tenancy that a bigger business might have if it is a tenant, I don’t have the ability to finance that and get return on investment within that relatively short timescale. So how do we again looking to government for support and perhaps creating the frameworks whereby you can have transferable finance around, adaptations to buildings and things like that?

Ross: Yes. Is that a data problem or a legislative problem?

Ian: It’s partly a legislative problem. It’s partly just a you know, the finance industry is not used to the fact that who owns the the asset is quite challenging in that scenario. So if I as the business don’t own the building, but I’m the one who wants to put on the solar panels, but I might be moving out in five years, how does that journey look from a financing perspective? That’s not something that is a traditional financing model that they’re comfortable with. Especially as some of the technologies we’re talking about are emerging technologies. And so again, financiers are also slightly wary of that. So really we’re looking for business to step in and give some assurity to those who are providing finance, to be able to give confidence in the data about carbon reduction that these will provide. How, through Project Perseus, we can get accurate data about the impact it’s having for that business. And how do we solve the problem of, in effect, the landlord tenant split on these things.

Ross: Yeah, fantastic. And just thinking there on, this is again more geopolitical. But you’re talking about big businesses and banks there, and there’s this trend that seems to be coming from across the pond. HSBC, BP now changing its sustainability targets when you’ve got these big businesses changing their net zero plans. Do you think that’s going to have a knock on effect for SMEs, or is it more time to double down on SME emissions?

Ian: It’s really interesting sort of seeing the way different big businesses are responding. So, some are actually responding by saying no, we think this is the right thing to do. We are in, we actually want to locate in the UK because it’s a good place to be from a support and a framework around low carbon. But other businesses, obviously, as we’re seeing perhaps located elsewhere, are reducing their targets. And I think it does create a challenge for SMEs because any business wants certainty, any business wants to know the landscape into which it’s planning. When you’ve got a lack of certainty and moving targets, then it becomes very difficult to plan. Bearing in mind that a small business needs ROI on a much shorter timescale than a large business can afford to have when making investments such as carbon reduction, type investments will tend to be. So yeah, one of the things that’s really vital is that we we have a consistency of approach, and that deadlines and timelines don’t keep moving for SMEs, because otherwise I know from experience, from conversations that we’ve had in the community, is that if the timelines keep moving and keep getting pushed back, the response is, well, actually what I will do is not bother because it might never come anyway.

Ross: Yeah, definitely. And that’s really, really interesting. I don’t know if you wanted to add anything to discuss on Perseus itself or, or even anything coming up for FSB you think might be relevant?

Ian: No, I mean, I think the key things that I think we are affecting the small business community is simplicity and a assurity of data, so that if data is available, that we can know it’s good and that it’s simple and easy to report on. And that we give access to data for the whole small business community. So solving the problem around access to data, if you don’t have half hourly metering available in whatever building you do, bearing in mind, as I was talking to somebody just earlier, you know, working in a garden office in their home, you know, what does that look like from an energy reporting business for a small business, when it’s part of your overall household energy bill? And then making sure that we maintain access to procurement and access to finance for SMEs and don’t exclude them as carbon accounting and the sort of requirement for scope three emissions reporting becomes ever more prevalent. Let’s not exclude small businesses, but let’s use supply chains to help and enable them to make that transition effectively.

Date: 22nd October 2024 10:00-11:30 BST

Location: online

Co-Chairs: Zarina Banu (Tide); Laura Townshend, (IB1)

Secretariat: IB1

Meeting aims:

1. Update members on progress
2. Review and agree communications plan
3. Review risk register

Summary:

• The communications plan was reviewed and agreed by members 
• Members were asked for their thoughts on: 
  • Changes required to the communications plan
  • What each organisation can contribute to the execution of the plan
• Members agreed to provide support across the communications plan:
  • In the form of blog posts and social media pushes, with a focus on parliamentary pushes
  • By using their connections to increase the diversity of engagement

• It was noted that the requirements and inputs from AG1-3 have been consolidated to understand what is in scope for the pilot communications
• It was noted that the purpose of this round of communications is to:
  • Get more businesses involved in the development of the process
  • Get government and regulators to trust and endorse this as a development process 
• Key points of the communications plan were discussed: 
  • There will be a parliamentary event in December to present Perseus to parliamentarians through the lens of ‘What will it take to get SMEs to decarbonise’?
  • There will be the report launch in mid-December to highlight the technical progress that Perseus has made and the legal, technical and security credibility of the project
• The risks associated with taking the pilot to market were discussed and members agreed the updated risk register
  • It was noted that comms teams should be included in the process of Perseus communications going out, where branding and name are included 

Next meeting: 2025 date TBC

Formal records are maintained by the secretariat. These are confidential to the Advisory Group Members.

“There’s two ways to tackle this issue; either through supply options like reservoirs or through demand management. And, with a 5 billion litres per day gap to 2050 across the UK, regulators are saying half of this will be achieved through demand management.” Lina Nieto, Water Net Zero Manager, at Affinity Water

Water Neutrality 

Water neutrality, which involves reducing the water footprint from activities as much as  possible, is an example of demand management. Water companies and developers can, together, ensure that new developments are built as efficiently as possible, for example, by installing fittings to prevent leakage. But this is only one part of a multifaceted problem. A lot of the issues surrounding water use can be boiled down to behaviour and our perception of water. 

“Lots of water is being wasted because no one really looks at a water bill in the same way they look at an energy bill or a mobile phone bill. The challenge really comes down to the way that people perceive water.” 

Project Zero

Lina and her team recognised the behavioural element that comes into play with water usage, leveraging this in their water neutrality campaign, Project Zero. Using a combination of customer behavioural change, technology installation and offsetting, Project Zero’s goal was to bring down water consumption across three sites covering around 1,000 homes each in ‘Bidwell West’ in Houghton Regis, Bedfordshire. 

“In our supply area, new properties are expected to use an extra 83.03 million litres of water a day by 2032, on top of what is already being used. By working with behavioural change specialists, we created pledges for people to commit to and found that almost 100% of people stuck to their pledge and successfully changed their behaviour in relation to water usage”. 

These pledges helped people to quantify the amount of water they use and ultimately the amount of water they could save through small, everyday changes. One example is turning the tap off while brushing your teeth, which can save 20 litres of water. And, while the project found that behaviour change alone could reduce water use by an average of 24.9 litres per household, people still need to use water. To achieve water neutrality, the project also set about offsetting water consumption in non-households like schools and businesses. 

“Water offsetting is in its infancy with different geographical approaches being trialled to achieve offsetting targets, and buildings of social value are being prioritised. This first, very localised approach, ensured that the water used by new homes and its offsetting, is linked to the same water source.”

Government attitudes

Government attitudes to the water sector have also played their part in the industry’s apparent lack of progress: “We’re ten years behind the energy sector. Water is cheap, people take it for granted and so it hasn’t had the same focus that the energy sector has. We weren’t even part of the government’s net zero roadmap, which is surprising because water is a very energy intensive industry”. 

But, with a parliamentary refresh in the shape of a new Labour government, there have been some more positive signs. A new Water (Special Measures) Bill was laid out in the King’s Speech, part of which referenced a requirement to install ‘real-time monitors at every sewage outlet, with data independently scrutinised by the water regulators’.

A smart move

As the project pushes to the next phase, it plans to move away from the time-consuming process of manual meter readings, instead choosing to install smart meters. Smart meters provide a more granular and timely view of water usage, as well as saving time and money when compared to manual readings:

“While costly, installing smart meters has proved worth the outlay, as taking manual readings is time-consuming and costs money. The data quality of smart meters is more reliable with a granular level of data, which supports the understanding of the impact of the campaign.” 

The meeting aimed to provide members with an update on the progress of the programme as well as its finance and governance processes.

Meeting Aims

1. Clear understanding on scope, progress, plan (programme, finance, governance)

2. Endorsement of the direction of travel
3. Commitment to support on funding conversations

Summary minutes

Date: 24th July 2024 15:00-17:00 BST
Location: online
Present: CDP, FSB, ICAEW, Innovate Finance, IoD, LSTDB, Open Banking, Startup Coalition, UK Finance
Apologies: British Chambers of Commerce, Cabinet Office, CBI, EAMA, IIGCC, Scale Up Institute, TheCity UK, UNEPFI, World Energy Council
Observers: ACCA, DESNZ, PCAF

Principal: Heather Buchanan, B4NZ
Co-Chairs: Tony Greenham (BBB); Gavin Starks (IB1)
Secretariat: IB1

Summary

1. The Delivery Oversight Committee (DOC) noted that:
   • This function is in place to demonstrate to markets and funders Perseus is operating effectively, governance is in place around the whole project, and how Perseus’ decisions are made against objectives.
   • From the DOC point of view, Perseus is in good shape. For example, it has a risk register that moves and adapts, indicating it is doing the right things in the right manner.
     
2. An overview of the risk register and changes to risks was noted, including:
   • Reduced risks stemming from political uncertainty following the general election
   • High risk of not hitting full funding but is manageable: planned re-scoping to mitigate this has taken place and is reviewed regularly.
   • Increased risk in formal alignment due to low advisory group attendance. Efforts are being re-doubled to ensure attendance and to make voting/endorsement easier so they are quorate.

3. On political engagement, it was noted that:
   • The new government has a material focus on cross-party and cross-government engagement to enact change. They are working very hard to break down silo-driven decisions and work.
   • We have seen promising ambition and rapid progress in sustainability efforts by the new government
   • We have observed significant ambition in terms of SMEs as part of Net Zero and a focus on private investment. Perseus supports both of these goals
   • B4NZ have been intensively building relationships with incoming politicians with sustainability experience and cementing existing ones
   • The announcement of the National Wealth Fund may have an impact on Perseus, and may affect the role of the British Business Bank.
   • The King’s Speech announced the creation of the Audit, Reporting and Governance Authority (ARGA) to replace the Financial Reporting Council (FRC) as the regulator for the audit and accounting sector. The ICAEW are pushing for standards to be made a priority for the ARGA.
   • The King’s Speech also announced the Digital Information and Smart Data (DISD), which has a material positive impact on Perseus as one of the few cross-sector smart data programmes in the UK. 

4. Internal research was presented by Elise Katilov (British Business Bank), titled ‘Estimating financed emissions for UK SMEs, PCAF Working Group report on sector-based emissions factors’:
   • Due to the availability of corporate emissions data being overwhelmingly from large global corporates, they are a poor representation of SME emissions which are systematically overestimated (the paper explains why that is the case)
   • SME-focused financial institutions should still consider using PCAF5 in any case with an appropriate disclaimer as this provides an opportunity to discuss, in general terms, the carbon exposures in their portfolio at a sector or sub-sector level, and to explain the data challenges. (BBB have taken this approach although other SME lenders have decided not to use PCAF5)
   • Perseus will ultimately make such estimates unnecessary. It is important that SME stakeholder groups (including, potentially, DESNZ and ONS) collaborate with PCAF to develop better sector-based SME estimates.

5. The Advisory Group (AG) co-chairs noted that:
   • AG1 (Market & User Needs) continued to hone in on the pilot use case, and has been working to identify and prioritise future use cases
   • AG2 (Technical Requirements) has built prototype services for the pilot and finalised core data format specifications
   • AG3/AG5 (Legal & Policy) has drafted a dispute resolution procedure and grant of permission, as well as a Data Protection Impact Assessment for the pilot
   • AG4 (Communications & Engagement) has prepared an announcement of new members, highlighted a profile of Perseus in The Times, and created a roadmap of comms opportunities for the rest of 2024

Next meeting: Q4 2024 (exact date TBC to align with COP) 

Formal records are maintained by the secretariat. These are confidential to the Steering Group Members.

Date: 17th July 2024 10:00-11:30 BST

Location: online

Co-Chairs:

• Frank Wales, IB1
• Ross Doherty, Normative (apologies)

Secretariat: IB1

Meeting aims:

1. Formal sign off of key milestones
2. Updates on directory service and prototyping and documentation plan
3. Identify new lead for WG2 – Platform and Systems
4. Clarify remit of working groups for the next quarter

Summary:

It was noted that:

• AG2-WG2: Platforms & Systems gave the following update:
  • Work is focused on the requirements for the Directory Service and specifically how companies will be able to register for an account
  • The group is seeking existing open banking Directory Service providers and for members to share RFI/RFP questionnaires.
• AG2-WG1: Data Standards gave the following update:
  • Work on permission and emission specifications is detailed in the WG’s outputs doc.
    • The group is considering how to evidence permissions, and it was agreed that this would include separate timestamps for permissions revoked and expired fields.
  • Defined by AG1, the bank’s requirement will be to receive emissions data at monthly resolution, annually.
    • It was agreed that data will be provided only for whole months up to the end of “last month” to prevent smaller increments allowing finer-resolution data to be retrieved
    • Consumption information is currently not planned to be included for banks. AG2 is awaiting confirmation from AG1 whether consumption information is a requirement for banks’ ESG reporting before adding it
• The user journey and authentication flow was presented to members.
• Voting will now take place via Google forms. Members will be able to vote in the lead up to the meeting, during and seven days following the meeting.
• An update on the directory service and prototyping was presented with a platform demo.
  • Next steps: documentation on user authentication and consent; continue work on directory prototype
    • 1. User accounts to manage organisations
    • 2. Certificate issuance
    • 3. Directory listing endpoints
• Q3 deliverables include:
  • Smart Meter energy data provider integration
  • BMS energy data provider integration
  • Bank integration
  • Provenance definition
  • Directory platform instantiation
  • Registry platform instantiation
  • Technical/developer documentation
  • Monitoring systems defined and running
• Working Group 2 (Platforms and Systems) and Working Group 3 (Tech and Dev Documentation) are seeking leads.

Voting outcomes:

• Approval of the data specifications for electricity consumption; tariff; and emissions data
• Approval of use of openly-published ESO regional intensity data
• Approval of permission mechanism and representation

Next meeting: October 16th 2024

Formal records are maintained by the secretariat. These are confidential to the Advisory Group Members.

Date: 15th July 2024 10:00-11:30 BST

Location: online

Co-Chairs: Zarina Banu (Tide); Laura Townshend (IB1)

Secretariat: IB1

Meeting aims:

1. Agree H2 comms goals 
2. Approve risk register
3. Review key comms opportunities for rest of 2024

Summary:

• Upcoming project milestones and communications opportunities were discussed:
  • New members announcement
  • Prototype launch
  • Pilot launch
• It was agreed that:
  • We will communicate around three upcoming milestones in the second half of the year outlined above
  • AG members were broadly happy with the H2 2024 comms goals with an strengthening on the language around value proposition and customer segmentation
• It was discussed that:
  • Value of messaging for individual segments, including more focus on value proposition and when / how to engage them in Perseus
  • Having materials and messaging ready in time with other key political events/actions in August / September and launch would be more impactful
  • Some of the risks raised by WG2 are wider project risks, and warrants being raised to the programme group to ensure escalated appropriately 
• It was noted that:
  • Perseus product progress & timeline and Pilot user journey preliminary mapping (with parameters) were presented
  • AG3 (Legal & Policy) members are reviewing a Data Protection Impact Assessment (DPIA), and Dispute and Complaints Resolution Procedure 
• It was noted that updates on AG4’s working groups (WGs) were presented:
  • AG4-WG1 Identifying opportunities to communicate momentum
    • Held a discussion where Perseus needs to strengthen brand identity, firmed up three coming milestones 
  • AG4-WG2 Mapping and monitoring communications risks
    • Discussed and added to the risk register 
  • AG4-WG3 Government and regulator relationships
    • Working with stakeholders on communication and aligned policy. Their key focus is developing a stakeholder map of key relationships across the policy ecosystem, in the Labour government and other key players that have influence on policy. 

Next meeting: 22nd October 2024

Formal records are maintained by the secretariat. These are confidential to the Advisory Group Members.

Date: 11th July 2024 10:00-11:30 BST

Location: online

Co-Chairs: Chris Martin (Pinsent Masons); Adam Jackson (Innovate Finance)

Secretariat: IB1

Meeting aims:

1. To discuss key works in progress including DPIA for pilot, permissioning and consent and governance change recommendations.
2. To vote on the proposed Dispute resolution procedure and proposal to not use an external consent manager for the pilot.

Summary:

• It was noted that a draft DPIA for pilot was presented for feedback.
  • Scenarios where sole trader information is classified as personal data will be identified.
• It was noted that a first draft of the consumer facing aspects for the grant of permission/consent was presented for feedback.
  • Permission is used rather than consent as Perseus deals with personal and non-personal data.
  • The first draft currently includes potential customer facing wording covering either single or dual consent structures – the structure will be finalised pending legal advice.
  • AG1 has established the data needs of banks/finance providers to comprise the following derived data:
    • An estimate of current emissions
    • An estimate of projected emissions following any proposed intervention(s) that could be financed
    • A periodic update to corroborate projected emissions savings
  • It was discussed that:
    • Banks may need energy consumption data to offer green loans as carbon data doesn’t not completely cover legal requirements.
    • The user journey and UX implications were considered.
• It was noted that the pilot user journey was presented.
• It was agreed that a working group would be formed to discuss ‘regulatory/governance and legislative change’.
• It was noted that members were asked to vote on:
  • The draft dispute resolution procedure
  • The proposal to use/not use an external consent manager for Pilot
• It was noted that an update on AG4’s stakeholder map was shared including the strategy to align on core asks and policy requests.

Next meeting: 17th October 2024

Formal records are maintained by the secretariat. These are confidential to the Advisory Group Members.

Meeting Summary

• It was agreed:
  • to amend the definition of the ‘financial provider’ to include Banks and Lenders.
  • that the use cases would be covered by the AG1 team, meeting separately as a WG, and to allow broader discussion amongst members.
  • that the user needs will be discussed in Working Groups to allow for focused work to determine stakeholder needs. Discussions will then be taken to the relevant Advisory Groups (2-5).
• It was noted that the governance and structure of the Advisory Groups for 2024 was presented to AG1:
  • The purpose of the Advisory Groups will be to define the direction, scope and oversight, and adopt recommendations made by the WGs. AGs will report into the Steering Group and meet quarterly.
  • Members will need the ability to approve requests and processes raised in the AG meetings on behalf of their organisations.
  • There are five pillars of AG activity: User Needs, Technical, Data Licensing and Legal, Engagement and Communications, Policy.
  • Working Groups (WG) will be introduced to explore specific issues in depth and that the AG1 Working Groups proposed include:
    • Use cases for pilot
    • User needs
    • Assurance 
    • Ecosystem map 
    • Future use cases
  • It is important to ensure documents are read prior to meetings to enable discussion.
• It was noted that priorities for 2024 are:
  • Q1: Update existing Members and gain new members; initiate detailed design for governance, assurance, legal terms, codes/regs; design onboarding for pilot with members, map data flows from reporting solutions to banks.
  • Q2: Members renewed and expanded; register members in TF; refine prototype and build learnings into Pilot Plan; design and agree assurance terms, legal terms, codes/regs.
  • Q3: Pilot onboarding & implementation; register members in pilot scheme, engagement workshops; pilot communications design & engagement; legal terms signed; code interventions initiated.
  • Q4: Pilot live; user feedback; member-led communications; Perseus report and 2025 plan.
• It was discussed that governance will be crucial when going to market to ensure credibility and for senior endorsement.
• It was discussed that the Members will need input from internal departments (e.g. legal) before supporting or endorsing work in the AGs.

Background

Icebreaker One, in partnership with SSEN Transmission, IBM and Palantir, is working on the NIMBUS (Network Innovation and Meteorology to BUild for Sustainability) project, which aims to accelerate the transition to net zero by prolonging the life of energy assets through the introduction of granular weather data sources into the asset risk modelling methodologies. The NIMBUS project is funded by the Ofgem Strategic Innovation Fund (SIF), the SIF is delivered in partnership with Innovate UK.

In this consultation we present key findings from NIMBUS regarding the asset data sharing practices in the UK energy sector and the use of granular weather data as part of the CBRM (Condition Based Risk Management) methodology. 

We seek your input to ensure that we capture a wide range of expertise and views that reflect the data sharing landscape relevant to the NIMBUS use case, specifically pertaining to data on energy asset management. The proposals  presented in this consultation draw from prior NIMBUS project work incorporating desk research, Advisory Groups convening various members of TSO and DNO organisations, and stakeholder interviews to evaluate the current landscape of asset data sharing and the approaches to CBRM in the sector.

Important Details about the Consultation below:

• The consultation is open until 5pm on 12 March 2024. 
• Please submit your responses to: julija.hansena@ib1.org
• In your response , please indicate whether you are happy for your response to be published openly, attributed to you and/or your organisation. 
• If confidentiality is requested, your submission will be anonymised when Icebreaker One publishes their response. Please email Julija to discuss if you have specific anonymity requirements. 
• Comments are particularly encouraged from all transmission system operators (TSOs) and distribution network operators (DNOs) in the energy sector, however responses from utilities with similar assets such as water, rail and telecommunications are also welcomed.
  

Proposal

Through analysis of data gathered via Advisory Groups, stakeholder interviews and desk research, we have identified the following approaches to asset data sharing and the use of CBRM in the energy sector:

Statement 1

The sector is generally embracing the concepts of open data and data sharing, especially since the publication of Ofgem’s Data Best Practice Guidance which promotes data sharing and reuse. Many TSOs and DNOs have created their own open data portals (e.g. SSEN-T Open Data Portal, SSEN-D Data Portal), however there is still a noticeable lack of shared data standards, methodologies and tools that govern asset data sharing in this sector.

Questions about Statement 1: 

1. What is your organisation’s experience of sharing asset data?
2. Are there any data standards, methodologies or tools that are used in your organisation to facilitate data sharing and publication of this type of data? 

Statement 2

CBRM is a widely utilised methodology across the energy sector to facilitate asset risk management and reporting. However, asset managers report that it is somewhat limited in its approach and may well benefit from integrating weather data experienced locally by assets into the asset risk modelling process. Project NIMBUS aims to address this by assisting to integrate granular weather data into asset risk assessment methodologies, with the aim of optimising asset inspection schedules and subsequently reducing asset degradation and the associated costs.

Questions about Statement 2: 

3. In your organisation, are weather conditions experienced by assets currently integrated into the asset risk assessment methodologies?
4. If so, have you been able to measure and quantify the impact this has had on your asset inspection and maintenance cycles and the associated costs?

Statement 3

TSOs and DNOs handle large volumes of data of various levels of sensitivities, which need to be handled appropriately. In order to assist with data security, as well as enable data sharing between organisations, a framework like data sensitivity classes can be applied. For the NIMBUS use case, SSEN-T Open Data Portal makes use of a data triage process which is applied to all SSEN-T datasets prior to publication, with the results of the triage processes being published here. The data sensitivity classification framework that forms part of this triage process is closely aligned with IB1’s data sensitivity classes, whilst simultaneously adopting the classes to fit the needs of the business.

Questions about Statement 3: 

5. Are there any existing data triage processes or frameworks that aid in assessing data sensitivity levels of asset data in your organisation? 
6. Are they based on any existing processes or frameworks?

How can you help?

We are seeking responses to the 6 questions listed in the ‘Proposal’ section above. It should take no more than 30 minutes to respond. The consultation is open until 5pm UK on 12 March 2024 and responses are encouraged from all transmission system operators and distribution network operators in the energy sector, as well as adjacent organisations working on matters relevant to the NIMBUS use case.

To submit your responses, or if you have any queries please email: research@ib1.org

Aligned with our ethos of collaboration: ‘to go far, we go together’, they contribute to our mission of making data work harder to reach net zero. Now we want to highlight some of the important work they do for both people and the planet. 

In this conversation, I speak to Gerrit Sinderman, who has recently taken on the role of Executive Director at Green Digital Finance Alliance (GDFA). Our discussion looks into GDFA’s initiatives on developing novel business models and financing approaches for sustainable circular cities and helping the financial sector to integrate biodiversity risks for oceans into investment decisions.

Ross: Congratulations on moving into your new role as Executive Director at Green Digital Finance Alliance (GDFA), can you give an idea of how the role’s going and your background that led to this point? 

Gerrit: Thank you! I transitioned into the climate space around three years ago, after more than 20 years in Banking and Fintech. I was raised in an environmentally conscious household and having followed climate and environmental debate closely for a longer time, this felt like an overdue and relieving move. I had long wondered how I could leverage my financial sector and entrepreneurial experiences to be more impactful. There had been a few touch-points with environmental topics during my earlier career. For instance, as an equity analyst, I got the opportunity to initiate our bank’s renewable energy coverage. Or working for a Telco, I had investigated potential energy efficiency offerings for the retail customer segment. Over the years, my sustainability-related values and concerns started to influence the way I evaluated personal and professional choices.

The real shift started happening shortly after I had assumed the country manager role for a Fintech and Insurtech accelerator. At the same time, the Swiss government had announced its ambition to make sustainable finance a core pillar of the Swiss financial centre. It was here that things suddenly fell into place. We entered a collaboration with a US renewable energy accelerator and started recruiting Climate Fintechs in preparation for a fully dedicated Climate Fintech programme. At that time, team and corporate partners got less excited about the prospect of dedicating a significant share of our time to a climate-focused program. That was when I made the full-hearted decision to ‘change sides’ and shift from a fintech-focused entrepreneurial career to a climate-focused one, in the wider sustainable finance space.

My new responsibility of leading GDFA hasn’t been a sudden change but rather a slowly evolving and now formalised change. During my two years with GDFA, I led our foundation early on, ad interim, when my boss decided to leave a couple of months after I joined. When my new boss joined a few months later, I worked closely with her, jointly managing the operations of our organisation. And so, when my boss decided to transition into an advisory role for GDFA, I was relatively well prepared to continue the transformation of our organisation. Of course, on some matters, I still needed to craft, formulate and convey to our board my own vision and plan of approach.

Ross: Can you describe the kind of work that GDFA does? 

Gerrit: GDFA acts as a catalyst for green and blue digital finance innovations. We design and test the ways in which digital data and digitally enabled business models can facilitate the green transition of the financial sector. Equally, we explore how to support the financial sector and more effectively fund the mitigation of climate change. Thematically, we focus on how digital finance and data-driven business models can accelerate the development of sustainable circular cities and of a sustainable blue economy. We have worked globally over the last seven years, but currently have a strong focus on Europe and Southeast Asia.

Ross: Can you tell me more about your work on Oceans?

Gerrit: Leading a consortium with WWF, HUB Ocean and Copenhagen Business School, we investigated how ocean biodiversity risks could be made accessible and actionable to investors of the so-called blue economy in the Nordics. Prioritising industries according to their relevance in terms of investor and asset manager portfolio exposure and impact on ocean biodiversity, we chose the shipping industry as a first research object. We developed a prototype of a geospatial risk metric that leveraged the geolocation data of shipping assets (i.e. vessels), linking those to mapping data of marine protected areas, to determine the degree to which shipping companies were adhering to such protection areas. We also involved major ESG data providers to validate our work, and identify their needs to maximise chances of a broad industry adoption.

In the next phase of this research we will further deepen our work on the shipping industry, and expand to further blue economy industries, as well as intensify the engagement with ESG data providers and financial institutions. Beyond that, I would like to explore other ways we could accelerate investments in a sustainable blue economy, such as through blue digital bonds.

Ross: You participated in our Impact Investing & ESG advisory group last year, have you seen any recent developments in standards and regulations that might impact your business?

Gerrit: Less in standards and regulations themselves, more in the resulting challenges of the different stakeholders dealing with them. In the last few years, regulation has started catching up more and more with climate and nature-related matters. Intergovernmental agreements and commitments were followed by voluntary pledges that struggled to build the momentum required to tackle global human and economic challenges – the much quoted tragedy of horizons and tragedy of commons. The markets, however, have failed to address these challenges. Now, industries are being shaken by a still growing regulatory tsunami, and struggling to keep up with the pace of expanding obligations.

Businesses, for a long time, have been built with predominantly economic ambitions. Now they need to catch up on their accountability and responsibility towards society, as well as being re-designed, re-built and operated in a very different manner. Businesses will need to collaborate with different stakeholder groups and leverage technology-induced sustainability leaps. And they will need large amounts of funding to do this.

Our work in initiating and driving collaboration on digitally enabled green finance, across industries, disciplines and regions, will hopefully be an essential contribution to address these challenges in a scarily shortening time window.

Ross: What’s coming up in 2024 for GDFA?

Gerrit: In 2024, we will be concentrating our efforts on expanding and intensifying our work especially within our thematic focus on sustainable circular cities and the blue economy, always leveraging insights on data-driven digital financial solutions and business models in very different contexts. Furthermore, we will aim to expand some of our recent work, started in Europe, to Southeast Asia, building on strong and ambitious partners we have there.

Now, in the midst of COP28, as we await the first Global Stocktake of Paris Agreement emissions targets, our attention is fixed firmly on world leaders, in the hope that real tangible action will be taken.

Navigating a water-stressed world 

The discussion of water in reaching our net-zero goals is a timely one, not least because COP28 is taking place in one of the most water-stressed regions in the world. Indeed, high on the agenda this year is a focus on conserving and restoring freshwater ecosystems, enhancing urban water resilience, and bolstering water-resilient food systems.

This is underscored by the fact that the water sector constitutes approximately 10% of global greenhouse gas emissions, with an investment gap that, according to the World Resources Institute, would require $1.04 trillion annually from 2015 to 2030 to fill.

Icebreaker One’s role

There are a number of data-driven levers we could pull on to help curb emissions in the water sector. But, to really understand its impact, it’s first useful to understand the broad spectrum of data at play. This ranges from data on drinking water quality, which is open and can be accessed by anyone. To data on customer’s financial details, which is closed and can only be accessed internally. In between these, we have data on water network maps which is limited to named access only. 

There’s a clear variability in levels of accessibility when it comes to water data, and Icebreaker One has a firm grasp on this. As part of the Stream initiative, we’ve been working to establish a widely accessible open data platform along with the associated governance and data standards that underpin it. The potential benefits of this are far reaching, unlocking water data for customers, society, and the environment. 

By making UK water industry data openly available, backed by clear data licences and data standards, the Stream initiative will aid academics, innovators and campaigning organisations to analyse and better understand the relationship between water use and climate change. This can then be translated into tools and initiatives to support consumers and businesses to reduce water consumption, minimise water wasted through leaks, and identify and implement solutions for water pollution’. Ceri Stanaway, User needs Researcher, on the Stream programme

Unlocking water data

Making water industry data openly available can improve transparency in the sector, which can help spur on more data-driven decision making. Unpacking this; if all stakeholders across the water sector’s ecosystem can access the necessary data required to understand the potential challenges they face, then new and innovative solutions of ways of working can come to the fore. Collaboration will also be encouraged as policy makers, regulators and businesses gain a better understanding of their shared challenges. 

Collaboration is also a critical component when creating a standardised approach to reporting greenhouse gas emissions in the water sector. Data on greenhouse gas emissions can vary both in terms of availability and accessibility, which can give rise to unreliable emissions targets that are difficult to act upon. More than this, it can lead to organisations underestimating their carbon impact. A standardised approach will help to address these variabilities, pushing the sector to more accurately measure its emissions and achieve its net-zero targets. 

All eyes on COP28

Now, as the UN pushes for more significant emission cuts by 2030, to align with the Paris Agreement, the spotlight intensifies on COP28. We hope as the conference unfolds, more attention will be given to decarbonising the water sector. But more importantly, we hope to see a growing recognition that data is the tool to get us there. The realisation of these net-zero ambitions are not achievable without a tangible blueprint. Icebreaker One and the Stream consortium certainly understand this, with the Stream Open Data Platform (Minimum Viable Product) to launch on 18th December 2023.

Almost all of the data we need already exists. But it’s not getting to the right places. 

Lack of trusted data flow leads to poor decisions that make it more risky and difficult to quantify and invest in the transition to net zero.

Better data infrastructure – like licensing, assurance, and security – will make it easier to make net-zero decisions at speed, with confidence and at a global scale. 

The world must be able to find, share and trust the data we need to get to net zero. That requires data-sharing infrastructure – and Icebreaker One is developing it.

A FOSDA/Icebreaker One analysis of net zero data brought this opportunity to life. It identified a series of data gaps and holes – problems with data availability, reliability and comparability. It found ‘hotspots’ of problems where data is too difficult to find or too difficult to trust – like energy consumption and production by source, greenhouse gas emissions, and supply chain reporting. 

This is why trust in data is one of the main areas for improvement highlighted in the EU’s July 2021 revised sustainable finance strategy, which aims to improve ESG ratings. 

This isn’t a challenge that needs new technology. Many attempts to consolidate data—new databases and portals—struggle to scale. We need to develop the rules of the road, not a new database. Unless we act now, we’ll let the opportunity to modernise slip through our fingers.

Who needs data-sharing infrastructure?

All Icebreaker One projects involve identifying use cases – specific examples of user needs around data access and use in order to achieve a particular net-zero outcome. They allow us to understand who needs to access data, what data they need, and the impact it could have. 

Three use cases from our projects illustrate the wide range of stakeholders who need better access to data to get to net zero.

Use case 1: getting more electric cars on the road

Just one electric car on the roads can save an average 1.5 tonnes of CO2 per year, according to EDF. But more than 30% of households in the UK cannot install at-home electric vehicle charge points, highlighting the importance of affordable and nearby on-street charging. 

Distribution Network Operators (DNOs) are an essential player in getting more charge points on the UK’s streets. Their connection departments are responsible for processing and managing requests to the grid for electricity in the here and now, as well as forecasting future capacity requirements so that they can prioritise where to invest in greater capacity.

They need to know when and where charge points will be installed (domestic, public, commercial and industrial), the nature of these charge points (slow, rapid, ultrarapid, for example), and how they are utilised. But there is currently no mandatory registration of installations, with data having to be pulled from multiple sources. Data on utilisation of different types of charge point and plans for future installations is even more patchy and problematic to access. 

They need data infrastructure that implements a Trust Framework , which automates data licensing, security checks, and technical integration. Using a Trust Framework, a DNO will be able to access this information more quickly and cost-effectively, accessing hundreds of datasets with just one round of authentication and technical integration.  This in turn helps them make sure that grid capacity can meet the demand from newly installed EV charge points. 

The trust framework also allows DNOs to collaborate more effectively with other industry stakeholders. As well as accessing others’ data, DNOs can publish their own data securely, safe in the knowledge that only authenticated users can access it. That will help ensure that the UK is able to meet its ambitious targets for EV ownership by 2030 and beyond. 

Read more

Use case 2: making our homes more energy efficient

The energy consumption of existing buildings accounts for around 34% of the UK’s annual carbon emissions. What’s more, 80% of buildings in use today will still be in use by 2050, the same year we have pledged to reach our net zero emissions target. It is therefore evident that the decarbonisation of our buildings and homes through retrofitting is a fundamental requirement if we are to stay within the boundaries of the Paris Agreement. 

Data has a central part to play in realising these retrofitting goals. In fact, the looming task of making our buildings more energy efficient cannot be realised without data. Our Standard for Environment, Risk, and Insurance (SERI) programme recognised this when we designed a climate-ready building passport (C-RBP). The C-RBP is a tool for insurers to pool together data on the physical, environmental, financial, risk and regulatory elements of a building, and in doing so, provide a more well-rounded, accurate and timely view of risk. 

By improving the discovery, access and use of data with the C-RBP, insurers can more accurately price risk while incorporating climate change mitigation measures into their policies. This incentivises net-zero behaviours from their customers such as retrofitting. The impact of data goes further still, helping asset owners and investors align their assets with ESG regulations. 

Read more

Use case 3: unlocking green finance to help small businesses cut emissions

There are more than 5.9 million Small and Medium-sized Enterprises (SMEs) in the UK, accounting for around half of the country’s business greenhouse gas emissions.

But there is no common process to follow when reporting emissions, and many reports are based on inaccurate estimates. SMEs’ stakeholders like banks and corporate customers are therefore receiving low-quality data that is not comparable or actionable. 

To address this, Icebreaker One is working with Bankers for Net Zero to convene a cross-sector coalition – called Project Perseus – to build the data infrastructure we need to improve emissions reporting. 

Perseus will enable automated sustainability reporting for every small business in the UK, so that we can reduce emissions faster. It will make it easy to share accurate, assurable data that sits behind emissions calculations. It will inform investment decisions, enable targeted decarbonisation interventions, reduce reporting burdens and unlock green finance. 

Read more

Now, in the lead-up to COP28, with a climate emergency on our hands, we want to reinforce this common thread, highlighting why our work is more pertinent than it has ever been. In order to achieve this, we’ll be revisiting past use cases. These demonstrate our action-led work, showing the potential impact better access to data can have, and its critical role in keeping us within the boundaries of the Paris Agreement. 

Impact investment & the built environment

For this programme, our focus was the development and improvement of data infrastructure and practices for the sharing of impact investment data. Impact investments are defined here as ‘investments made to generate positive social and environmental impact alongside financial return’. We therefore needed a use case that would hold significant environmental weight, while also providing a financial impetus for investors. And, given the breadth of impact investment, we also wanted to refine the focus of our use case, looking to the built environment as a suitable lens for doing so. 

Europe’s building sector alone is responsible for 40% of energy consumption, more energy than any other sector. It also accounts for 36% of the EU’s GHG emissions. This of course is not isolated to Europe, the same can be seen in the United States where buildings are the single largest energy user, responsible for a third of national GHG emissions. To meet the EU’s 2030 climate target, €3.5 trillion of total investment will be needed this decade to decarbonise Europe’s buildings through renovation. Based on Member States’ current plans, the investment gap to 2030 is estimated at €2.75 trillion. 

Icebreaker One’s role

Icebreaker One, set about finding a point of leverage that would help plug this investment gap, mobilising finance while moving the built environment closer to net zero. We focused on long-term risk data as a way of homing in on a particular data point in the sector. Long-term risk data is a crucial component in the sustainability and resilience of the built environment as it includes data on environmental risks such as climate change exposure as well as operational risk relating to an asset’s performance. Investors need to know the long-term risk associated with an asset in order to make more well-informed decisions. With this front of mind, we arrived at our use case question: How do organisations and investors currently access reliable, standardised long-term risk data for the built environment, globally?

Data granularity 

Part of the information used to evaluate long-term risks is asset-level data. We discovered that access to granular asset-level data is proving to be a serious issue for the industry, with the data that is available, mostly regionalised. Not only this, but our research uncovered a fundamental disconnect between the increasing demands of regulators and investors for more detailed asset-level data when it comes to ESG reporting and the data that is actually available to satisfy these demands. 

José Cordovilla, Director of Infrastructure Advisory at Typsa, echoed the challenge of accessing granular asset-level data. He cited flood risk data as widely available in Europe and the US but scarce in other countries, highlighting a significant issue in the industry’s data flows. According to José, a lot of building pre-design data is government-owned, not public and can only be accessed once an organisation has won a building contract.

The lack of data granularity can be damaging for the industry, leading to inaccurate asset valuations and potentially deterring investment. But, if improvements can be made in accessing more granular asset-level data, investors can more accurately assess the performance and energy consumption of their assets. This could save investors money while ensuring they’re aligned with ESG reporting standards. 

Standardisation 

Many ESG reporting frameworks are not mandatory however, and those that are, lack standardisation. This leads to inconsistencies and difficulties in comparing organisations. Having a standardised method of ESG reporting that provides guidelines or best practices for reporting could lead to improved data quality and better long-term risk assessment. Standardisation has the potential to create consistency in the market. This increased consistency could make it easier to assess and compare the long-term risks associated with assets, a powerful tool for investors. One existing solution for comparing organisations is the free-to-access Built Environment Carbon Database, designed to become the main source of carbon estimating and benchmarking for the industry. 

Retrofitting & whole-life carbon assessment

Retrofitting is one example of how access to reliable long-term risk data can be used to provide value for investors and the planet. By retrofitting an asset, asset owners can align themselves with ESG regulations as well as enhancing the long-term value of the asset. On top of this, long-term risk data can provide a more accurate cost-benefit analysis, helping to justify investment in retrofitting efforts by demonstrating the potential long-term savings.  

‘ESG initiatives present an opportunity for investors, owners and occupiers to focus on value creation and mitigation of risks. Much of this opportunity is centred around the management, retrofit and refurbishment of existing real estate assets.’ (Carl Brooks Global Head of ESG, Property Management, CBRE). 

Long-term risk data can also help to provide a comprehensive whole-life carbon assessment (WLCA) of a building. Conducting a thorough WLCA can provide a more accurate figure on the carbon emissions of an asset and is a crucial step in reducing GHG emissions in the built environment. In turn, a WLCA can help investors set more accurate emissions targets and help them comply with government regulations. 

Industry challenges 

Despite deep-rooted challenges, regulatory hurdles and a tension between financial growth and sustainability, we believe that improving access to reliable and standardised long-term risk data in the built environment could act as a driving force for decarbonising the industry while mobilising finance. This can best be seen through the potential benefits that retrofitting and a WLCA of a building can have. 

Now, in the lead-up to COP28, with a climate emergency on our hands, we want to reinforce this common thread, highlighting why our work is more pertinent than it has ever been. In order to achieve this, we’ll be revisiting past use cases. These demonstrate our action-led work, showing the potential impact better access to data can have, and its critical role in keeping us within the boundaries of the Paris Agreement. 

Shipping & Net Zero

Shipping plays a crucial role in the world’s economy, with 80% of the world’s merchandise trade transported by sea. However, the shipping industry was responsible for emitting 1.07 billion tonnes of CO2 in 2020, according to The International Maritime Organization (IMO), with this figure projected to surge by 130% by 2050. 

Navigating the murky waters of decarbonisation in the shipping industry has proven difficult. Not least because shipping was omitted from the Paris agreement in 2015, due to the difficulty in regulating ships, which were often owned by one country but registered with another. Following this, in 2018, the industry agreed to cut carbon in half by 2050 but these targets faced widespread criticism. Since then the IMO has revised its goal to net-zero emissions by or around 2050, as well as committing to an uptake of alternative zero or near-zero GHG fuels by 2030. Sadly, the vague language and absence of concrete targets indicate an uncertain future for the industry. 

Icebreaker One’s role

In partnership with Lloyds Register, Icebreaker One undertook a project aimed at giving initiators and investors an understanding of how data sharing and risk model changes can expedite zero-emission ship financing. Not only did Icebreaker One uncover a severe lack of open data during this research period but we also uncovered a significant level of uncertainty in regard to local government policies. Namely, information of future green fuels and a lack of visibility on available funding. 

Sheree Hellier, Lead researcher on the project states: ‘We interviewed a number of industry stakeholders to uncover what they perceive as the main challenges and opportunities for the decarbonisation of shipping. From a legacy-driven, fragmented industry to a lack of data sharing and transparency, the challenges are widespread. We explored how better access to data could drive investment in net zero shipping. Increased collaboration and transparency between major ship owners, particularly in regards to innovation and data sharing, underpinned our recommendations’.

Data to decarbonise 

The potential benefits of enhanced data can be found, first of all, within vessel supply chains. Parallels can be drawn with the built environment, where adopting a whole lifecycle view of the asset or in this case, a vessel, can prove instrumental. It does, however, require a deep understanding of the shipping industry’s complex supply chain, comprising numerous stakeholders, geographical locations and logistical challenges. But, better access to data could enable end-to-end visibility of the supply chain, meaning stakeholders are better able to track cargo, creating market efficiencies. This improved transparency also has the potential to build trust amongst consumers. 

Another potential avenue where data can accelerate decarbonisation in shipping is through Port grid connections. These aid the reduction of emissions while the ship is at berth, as well as providing power to those ships with batteries. With better, real-time data on vessel arrivals, departures and congestion, Port operators can optimise how they allocate power resources. Equally, shippers can plan their routes to be more energy efficient. Despite this, Icebreaker One discovered two key areas of contention with Port grid connections. The first being the disparity in infrastructure across Ports, with some lacking the funding and investment needed to provide the appropriate grid connection for vessels. The second issue is that some of the energy supplied by the grid is still derived from fossil fuels, undermining emission reduction efforts.

We have identified a lack of granular, real-time data as a common issue in many of the projects we work on. But, in the context of shipping, improvement in the granularity of data and more consistent metrics would enable stakeholders to fully assess their emissions and more accurately report their environmental performance, ensuring alignment with reporting frameworks. For example, under the IMO’s new certification scheme, all ships need to report energy efficiency and carbon intensity data, with ratings to be issued in 2024. For shipping companies, having the granular data to prove their commitment to decarbonisation may allow them to access debt instruments at preferential rates such as sustainability-linked loans. 

Developments

The lack of hard targets poses a real problem for the decarbonisation of the shipping industry, especially given the United Nations recently pitting the potential investment required to do so at $100 billion. What’s more, the industry is not accustomed to sharing data, in particular, not with the end consumer. Shipping companies often retain data internally due to the need for frequent negotiation of commercial contracts and the sensitivity of such information.

Yet, the Energy Efficiency Existing Ship Index (EEXI) regulations (which will require ships to report on their energy efficiency from 2025) may serve as a catalyst. Enhanced data granularity holds the potential for shipping companies to prepare for impending regulations and align with net-zero goals, even if it requires a cultural shift in data sharing practices.

As we head toward COP28, the role of data in the shipping industry’s decarbonisation efforts remains more critical than ever. Data illuminates the path, providing transparency, accountability, and spurring innovation, vital components in our shared mission to combat climate change and reach net-zero.