It is fair to say that everything we hear has two opposing sides, some more credible than others. For instance, plain cigarette packaging - campaigners claim it makes them less appealing to younger people, but tobacco companies claim it makes them easier to forge. Both are technically correct, but ultimately this creates a relatively partisan issue - those who work for tobacco companies don’t like the idea, most other people do.
However, one of the least partisan and most divisive topics is globalization, with strong arguments existing both for and against it. It is no lie that it certainly allows consumers to have a considerably wider range of goods for cheaper than they otherwise would, but at the same time it impacts working conditions and often forces down wages. However, the single biggest challenge of globalization is that tracking what happens on the other side of the world is incredibly difficult.
It has meant that companies like Apple, Nike, GAP, and hundreds of others have found out that not looking at their supply chain in enough depth has led to considerable issues surrounding labor and environmental issues. This isn’t a problem limited to global supply chains, but the unintentional impact of seemingly innocuous decisions anywhere in the world have the potential to have a huge knock-on effect.
For instance, the US’ staple food, the hamburger, is one of the worst products for the world environmentally. It takes 1,800 gallons of water to produce one pound of beef. 17 billion pounds of fertilizer is used to grow feed for the cows, which then gets into bodies of water and creates algae blooms where nothing can survive. It has also been estimated that, in total, 6.5 pounds of greenhouse gasses are created to produce just one burger. It means that each year McDonald’s burgers alone create 640,575,000 pounds of greenhouse gasses, the equivalent of flying around 400,000 people between New York and London every year, just for the beef they put in their burgers. The average American eats three burgers per week, which means that in 64 weeks the average American releases the same amount of greenhouse gasses from just the meat in the burgers they eat as a flight between LA and New York.
These kinds of figures are not incorporated into any kind of company calculations into the cost of making a product, mainly because there is too much data to track. The cost of producing one burger needs to incorporate a huge and diverse set of calculations beyond the comprehension of most people. For instance, it doesn’t even begin when a calf is born, it needs to include the additional resources the mother has during the pregnancy, where that feed comes from, the impact that it will have on the land from the method of farming used, the greenhouse gases emitted transporting that feed, the environmental cost of building the vehicle transporting it (divided by the number of trips it takes), the potential loss of habitat through using it for farming over forests etc etc. There are so many different costs from both a financial and environmental standpoint to consider, from a huge variety of areas, that it would be impossible to try and piece everything together within traditional business models.
Alongside this are the secondary impacts of any business decisions made on the other side of the world. For instance, if a smartphone company needs to increase its manufacturing by a factor of 2, suddenly they need to increase production all the way down their supply chain. What kind of impact is that going to have? If this smartphone company decided to increase output by 200%, is it likely that they have modeled the impact that the specific mix of chemicals released in a Tungsten mine in China would have on the surrounding waterways based on the relief of the land and rainfall during mining? It’s something that modern data science allows companies to do, and in future it will become increasingly necessary to model in these ways.
Global warming and environmental destruction are the biggest challenges that humanity faces and data will have a huge impact on this at an individual and corporate level, but the issue is that it will make creating new products considerably more difficult. Even the smallest change to a product will need to be costed because ultimately it could have a huge impact 10 steps down the supply chain. Data will allow this to be considerably quicker and more trackable ahead of time to see more accurate costings.
One of the sticks with which the environmental lobby are beaten is the idea that ultimately it is a government issue and that companies simply abide by the rules set down by lawmakers. This is fair, but ultimately the impact that climate change will have on companies has the potential to be devastating. According to the NASA Earth Observatory, climate change will potentially create ’increased risk of drought and increased intensity of storms, including tropical cyclones with higher wind speeds, a wetter Asian monsoon, and, possibly, more intense mid-latitude storms.’ When you consider that the cost of Hurricane Katrina in New Orleans was at least $120.5bn without including business losses and the increased intensive farming means that each crop costs more to produce and causes more environmental damage from the increased chemicals needed, you can see that it is very much in businesses’ interests to solve the issue too.
The only way to prevent this potential environmental disaster is through understanding the wide-ranging impacts that even the smallest decisions have at a local level, something that currently businesses don’t do. Data is already having an impact on this but will increase in prevalence and speed as we move forward. The big question is whether enough companies can adopt it before it’s too late.