You can today collect your utility bills. Automate it. Put this kind of information in to a system, calculate automatically your carbon inventory, and then get out of this the reporting you need. And this process can be streamlined and automated. And this is a great example how the digital thread works also with sustainability data Good morning, good afternoon, or good evening, wherever you are in the world. Welcome to episode 59 of the Sustainable Supply Chain Podcast, the number one show focusing exclusively on the intersection of sustainability and supply chains. I'm your host, Tom Raftery, and I'm thrilled to have you here today. And a huge thanks goes out to this podcast's, amazing supporters. You make this podcast possible. If you're not a supporter and you'd like to join this community. Support starts at just three euros or dollars a month, which is less than the cost of a cup of coffee. And you can find the support link in the show notes of this or any episode or@tinyutinyurl.com slash ssc pod. Now in today's show, I'm delighted to be talking to Klaus Brettschneider from Linx-AS and in the coming weeks, I'll be talking to Kenny McGee, who's the CEO of Component Sense. We'll be talking about E-waste. Andrew Hargest, founder of Supply Club, and we'll be talking about eco-friendly packaging. Simon Kim, CEO of Glass Dome, and we'll be talking about product carbon footprints. And Paige Janssen, CEO of Engie Impact, and we'll be talking about sustainability data, so some excellent episodes coming up. But as I said, today's guest is Klaus Klaus. Welcome to the podcast. Would you like to introduce yourself? Yeah, my name is Klaus Brettschneider. I'm with Linx-AS and I'm the Director of Sustainability or Director of Sustainability Products to be more precise. Okay. And for people who might be unaware, what is Linx-AS? We are a system integrator. We help companies to implement product lifecycle and management systems. And we are specialised in SAP implementations. So we do not only do SAP, but the platform we are using is SAP and help customers to, yeah, implement their processes around R&D, design, and stuff like that. I think I've heard of SAP. All right. Yeah, yeah, yeah, that's seems to be a bigger company somewhere. Yeah. All right. So you have a background though, in environmental engineering and as a software executive as well. So how did that shape your approach to sustainability and supply chain? Yeah, I mean I, I get the question sometimes what brought me to sustainability, especially because of the last 20 years I was not in sustainability. So in our age, we are all basically meant by the Bhopal Disaster, right? This brought me. And the Chernobyl and these are nuclear disaster basically brought me into the environmental movement. And then I decided to study environment technologies back in the 90s. And then back in the 90s was difficult to make money with this. So I moved into the software industry with product life cycle management. And now basically I came back around, did some education and freshed up my memories and points around environmental technologies, and now I'm back in sustainability. Okay. And in that journey from environmental engineering through software back into sustainability, what's surprised you most on that way? Not too much has changed. So, I still quote my professors, because they are still right. And the topics are basically the same. So, if it comes to climate crisis, if it comes to nuclear power, or to fracking, all these things were already known in the 90s and were already addressed in the 90s. What has changed is that we have more standards and more capabilities to measure what we actually do and what impact we have. And I think the picture has broadened. Back then it was really about carbon and biodiversity. And now we have much more aspects to the picture. This has changed, but the fundamental issues are unfortunately the same. And. You know you've been a consultant, software executive, strategist which of those roles do you think influences you work today most in sustainability? I think the software executive I don't know. So even as an executive I was always engaged with my customers or with our customers. And to work with customers to improve their processes, to get systems in place. Where they really take benefits from is what is great for me. So what would I really feel good about? You've recently published a white paper which you were good enough to share with me yeah, yeah, In it you discuss the what you call the sustainability thread. As kind of an evolution of the digital thread, can you explain how this concept helps companies move beyond compliance to maybe proactive green R&D? Yeah. So there are two major aspects. The one is with product life cycle management, you are very close to sustainability anyway, because you describe the products with product life cycle management, you have the specification of your products. And this is something we touched over the last 20 years already. So if companies use palm oil we found a way to track if the palm oil is certified or not certified. We find ways to calculate how much of the palm oil is certified or not certified, or if they use anything else in their product. It's something we keep track already in PLM anyway. So PLM is very close to the aspect of sustainability. I think 50 to 80 percent of the sustainability data are product data anyway. The only difference is how, how deep you have to go into the supply chain to really understand where your materials are coming from has changed a little bit, or it's a little different to the typical internal product life cycle management, but we are already close to product life cycle management. And now I forgot your second part of the question. Well, I'm just asking you, but well, Let's, I guess, step back a bit first and, talk about, first of all, the digital thread, what that is, because people might not be aware, and then talk about the evolution of that to what you're calling the sustainability thread. So, because PLM is so close to sustainability we think that we can also apply PLM methods to the question of how to manage sustainability data. So, and the digital thread is one method how you can organise your product data. The idea is to have a data model. What can be handed over from system to system? What gives you transparency? What goes along the entire product life cycle management? It may be different for different business aspects. So the view on product information may be different in the manufacturing area than in the design area. But at the end, it's the idea to connect systems and data models so that you can really follow the information of products along the product lifecycle. That's the idea of the digital thread. And we think the same thing applies to sustainability data. So that you can build these connectivity between systems, between data models to determine what kind of environmental impact an organisation has. One great example or a simple example is the carbon calculations or carbon accounting. You can today collect your utility bills Automate it Put this kind of information in to a system, calculate automatically your carbon inventory, and then get out of this the reporting you need. And this process can be streamlined and automated. And this is a great example how the digital thread works also with sustainability data. However, though, I have to kind of push back a little because many companies struggle with scattered data, multiple reporting frameworks, et cetera. How does something like a sustainability thread handle that? Yeah, that's, that's the challenge. I'm not saying that companies do this already and everything is fine and glory. That's not my point. But I think it's possible to achieve this digital thread of the sustainability thread. If you pay attention if you collect the data in the right way and keep them digital. And really connect the systems to go there. So the utility bill is, for me, a great example because if you do greenhouse gas calculations, you pull these utility bills, and then basically someone reads them manually and puts them into a system, and then it gets calculated, and then someone else takes it to put it into a report, but this process can really be automated. You have just to sit down. Get the data model clear, get a comprehensive data model, and then do the connectivity between the system to make this flow happen. Okay. And what about things like life cycle assessments and, you know, integrating those into design stages? Is that something that's doable, advisable, being done? I think that's where we are right now. So, I'm not saying it's been done for everyone. I think some companies have achieved to do lifecycle assessments on scale. I think the challenge is not the lifecycle assessment itself. I think there are enough standards out to do life cycle assessments. You can study it today. You can hire somebody to do it. So the life cycle assessment itself is not the challenge. I think it's more the challenge to get the information into the organisation. So companies who have, I don't know, 15,000 SKUs have to find a way how they can actually scale the capability to do LCA. So usually you do an LCA on one product or one component and you have to find a way how to scale this up. And this is not done often. So this is really something where we are right now. I think there's an understanding specifically with carbon that for this one aspect, this has to happen because if I sell a product companies like Walmart or Costco or Aldi wants to know what carbon footprint my product has. So I'm already in the pinch to, to provide this kind of information if it comes to carbon. But this has to be scaled also over other aspects. And this didn't happen so far. So we have some companies doing it with carbon pretty good to scale their products or to scale the calculation and get the information they need. But they still have to add other aspects like water consumption, biodiversity, or, or things like that. So I'm not saying we are there. I think this is all really an, an open environment where different systems have to play together and where system integrators like Linx-AS can play a very important role. Okay, and looking across different industries, are there industries that are doing particularly well, or industries that are facing significant hurdles, you know, in tracking and improving their sustainability performance? Who are the, who are the laggards and who are the winners? If you look into the issue of the climate crisis, no company does very well because we are so far behind what we want to achieve. So that's, that's the first point, but I think that the identified industries, which are difficult, right? Steel production, cement production, I think they are actually on a good way. So they, they figure out ways how to address this issue and they are working on it. Let's say most of them, maybe not everyone, but most of them. And, and for them, it's also not too much a question of collecting data for them is really to change their product and their production processes. So it's not not a question about product lifecycle management. Where it's more challenging is really in this areas where you have agriculture, for example, involved and you have to get to vegetable oils, right? So my palm oil example from earlier. If you want to know if the palm oil is certified and does not harm or creates deforestation you have to be able to track this down. And I think everywhere where you have this kind of agricultural relations, it's very challenging for companies to collect the data to make sure they are really real and then have in their processes them integrated. So if it comes to agriculture, it's really a challenge. You don't have to go to foreign countries or to, to far away countries. Even if you think about almond production, for example, what, what happens in California, right? You have to track down basically what, how much water is used how much carbon is created, and then keep track of your supply chain to really understand. If you want to tell me at the end in this bag is so much carbon, you really have to understand where these elements are coming from. And this is the the challenge, I think where companies struggle right now through the supply chain, specifically in the agriculture. And a lot of that I'm assuming is down to the fact that agriculture is still quite an analog industry, whereas other industries, like, I mean, we talked about SAP earlier. So technology companies, for example, would be far more far further along on their digitization journey. Yeah, that's true. But it's also that from a science perspective over the last five, ten years, many things have changed. So the idea, for example, that we have to consider the, the change of land use. in our carbon calculation made it also a little bit more difficult for companies to figure this out because the standards have changed. So nobody talked about land use before, and now it has to be included for the Science Based Target Initiative, they just changed their standards. So you have to consider this kind of numbers, but then the standard is not there. So it's not, you cannot just blame the farmers to be analog and, and that's also that a lot of things have changed over time and it's difficult for them to keep up. And then it's also difficult for all the industries to keep up. It's an industry, not agriculture I'm talking about now, but the, the whole sustainability industry is one which is still quite immature and changing rapidly. Right?,Yeah also, with every life cycle assessment comes new information and new conclusions, what you have to incorporate. I mean, the old picture that plastic is bad and others is good. And what is good is not so true anymore. So you have really to look into more details to really understand what impact processes have. Yeah, it's it's a very immature, not immature, I would not say, but it's a very changing environment. Specifically, if you want to automate these processes to determine your environmental impacts or KPIs. Sure. And how can companies ensure that materials like, I mean, you mentioned palm oil, mica these kinds of things, how can the, how can companies ensure that they're ethically sourced, particularly in like complex supply chains? Well, there are different ways how you can do this from a technical perspective. So with tokenization and the blockchain, you can actually track along the supply chain where the products are coming from. So, there are systems out what you can use to even identify the plot of land where it comes from. Then there are different certification processes in place, specifically for mica. There's an initiative they certify what mica minerals are. I think it goes around labor laws and stuff like this on human rights, so which are considered to be good. And then there are certifications, and then you have to keep track about these certifications. In the same way, you can, in the system, tokenize your products, and then you know, okay if you hand them over with a blockchain to the, manufacturer or to the retailer, you can make sure the products which are claimed to be certified are really certified. There are there are techniques out to do this it's a little bit difficult because you don't solve for in the human rights area, you don't solve the issues by just making more stringent, because then people just move into other areas. You want to improve really the labor conditions in these areas. So it's a little bit more difficult discussion. It's not just a technology discussion. Then it's also a discussion about social engagement. And what makes it more difficult, but from a technical perspective, there are solutions out to track this. Okay. And any, I mean, you've mentioned blockchain, but what other technologies that are out there are changing the game? I mean, this is the period where AI is bubbling up really to the, to the surface and beyond. So I'm, I'm assuming AI is playing a big part as well, but what about other technologies as well? Like IOT or anything else, you know, what, what technologies are changing the game for us? So, specifically in agriculture, I think satellite pictures is a big deal. Because you can really then, if you know the plot of land, you can actually really watch the plot of land, what happens there. So, this is a big game changer, I think, in this area. IOT, of course specifically if you have to follow your products through the supply chain, IOT plays a big role because you need the information at the end to do your mass balancing to really understand how much of your product is certified and not certified and things like that. AI, I'm a little bit suspicious about AI to be honest. If people claim we can create an ESG report with AI, I immediately pops up. It's greenwashing for me, but uh, but I think AI will play a big role to really find the right data for the right steps. So, for example, if you have to find emission factors and have to assign it to specifically specific materials, I think AI can play a big role. But I'm, I'm careful to claim that AI will solve all the sustainability reporting issues. So, I'm, I'm not a fan of that. I'm more conservative if it comes to that. Fair enough. Fair enough. No, that's good. That's good. And in terms of the regulatory environment, I mean, you mentioned there briefly, the EUDR, the EU Deforestry Regulation, Yeah. what other regulations are out there that are going to be putting pressure on companies either that have been passed or are going to be passed imminently? I mean, the specifically in Europe, the CSRD reporting at the moment puts a lot of pressure on companies. unfortunately, it puts also pressure on sustainability teams because they somehow are now the one who have to report on everything, instead of coming up with ideas really to change something and make it more sustainability, they are now in the under pressure to deliver these kind of reports. And so CSRD is a big one and the other one are the Extended Product Responsibility laws coming up and I have always here in the US the funny discussion that people say, Oh, this is all, all Europe, but I think they should be aware that also in the US there are states putting out these kinds of laws and regulations. In California, you have already to report on carbon. In Oregon and Washington, you will have to report on plastic packaging in the future as well. So it's not just Europe. And these kind of packaging and plastic laws are coming more and more. it's interesting that you are based in the US because there's been a notable push back against sustainability and ESG initiatives there, how do you see this impacting corporate sustainability strategies globally? I think globally, so the, the developments in, in the US are unfortunately for the sustainability world, let's put it this way. But the climate crisis is not going away, so that has to be addressed. There may be a dent now in development. But at the end, the climate crisis doesn't go away, and we see more and more weather related or climate related disasters. So there will be more and more pressure. So then we will have to address it anyway, if we do it today or tomorrow we will have to address it. On the pushback on the DEI aspect. I think it's just an also time to prove that people who claim that diversity is great and good for a team that we also stand up and prove it. If we see that companies who are more diverse are more successful than others this will give them entire topic a push as well. And the third thing, because we talked earlier about AI. People should be aware that AI needs just more and more power and energy. So this is also an aspect. It doesn't matter who runs the country. At the end, we need more energy and the cheapest way currently to create more energy are renewable energies. So this is the cheapest at the moment. So if you really go to your checkbook, you would not invest in the coal mine anymore because the solar energy or wind energy will be cheaper anyway, so I don't like the situation from sustainability perspective, but I don't think it has too big of impact at the end, looking over the next 20 years. And, also globally, I think all other countries basically going further in that direction to put more regulations in for the environment. So I think there's just more globally going on than just the small island of North America. I hope you're right, but I saw a headline today that a member of the AfD was saying that they were going to tear down all the windmills in Germany. So you got to Yeah. yeah, put your head in your hands and go, Oh my God. yeah. Yeah, We'll, we'll, we'll forget about that and move on. yeah, exactly. So, yeah, I mean, at the end, this will not happen either because I think the most windmills in, in Germany are privately owned anyways, so this kind of rhetoric, I don't think should not bother us too much. Let's, let's move on. Let's move forward. Yeah, yeah, yeah, yeah. If you're a sustainability professional or sustainability professionals in general, how can they become more effective, do you think, in advocating for and implementing green initiatives within their own organisations? Specifically in this area of reporting, what basically keeps them busy at the moment, I think a good strategy is to get with your IT department and figure out how your IT strategy can support your sustainability strategy. And this is, I think, a lack we see at the moment. All the companies who hustle to get the CSRD reporting together, I think they are just never lined up their sustainability goals with their IT strategy. Because if they would have done this, they would have talked about double maturity. Maturity is already double the maturity already, they would know what their sustainability goals are, and they would have aligned the IT processes accordingly, but they didn't. So this is for me a proof that this is missing. And If you want to get out of this treadmill you really have to sit down with your IT department, figure out how can I track my sustainability KPIs digitally and how can I streamline these processes. And if you have aligned these two goals and the strategies I think then you find time to really do sustainability programs at not only data collection and reporting. Okay. So Klaus, if you could wave a magic wand and implement one sustainability innovation across all supply chains tomorrow, what would it be? The companies have basically their life cycle assessments all done for all products. They can feed this information back to their designers and engineers and the operations so that everyone has the environmental information available they need to make environmental friendly decisions. This would be the big wand! Nice, nice, nice. Okay. And what would you say is one underrated trend in supply chain sustainability that companies should pay more attention to in the next five, 10 years? underrated technologies. I think it's really digitalise, digitalise, digitalise. It goes back really to product lifecycle management. Sometimes I feel product lifecycle management. We had this 20 years ago, right? We had drawings on paper. We had specification in documents and we had to digitalise all the stuff to make it work for companies. And the same thing is currently true for sustainability. You have to digitalise the information. You have to connect them. You have to make them traceable to keep them rolling. For people in supply chain who are just starting their sustainability journey, what's one actionable step they should take today? Talk to your sustainability officer. Ha, ha, ha, ha. If they not do it already. So, I, think in the supply chain, specifically, it's really important to get with your vendors and with your customers in touch to get on the same page. We can discuss technology and how to hand over carbon footprints and LCA information as much as we want, but if your supply chain is not on the same page with you, you will have a hard time to get anything moving. You really have to engage people, and it's really more a people issue than, than it's really a technology issue. You can only put the technology in place if you have convinced others to provide the data, and then you can use them going further. So, yeah. Yeah, no, that makes sense. That makes sense. A quick left field question for you, Klaus, if you could have any person, or character alive or dead, real or fictional, as a spokesperson for supply chain sustainability, who would it be and why? I think we have to invent one who has really data management in mind. I don't know exactly. A data management superhero. Superhero. Exactly. Superman for data management. Captain data management. It's something like this. Exactly. Yeah. Yeah. Alright we're coming towards the end of the podcast now Klaus, is there any question that i didn't ask that you wish I did or any aspect of this we haven't touched on that you think it's important for people to be aware of? No, I think we covered everything. I think we had a great conversation. Thank you, Tom. Okay, superb, superb. So, Klaus, if people would like to know more about yourself or any of the things we discussed in the podcast today, where would you have me direct them? I'm very active on LinkedIn. So, and people can reach me via LinkedIn and everything we think and write about sustainability thread can be found on our website linxas. com. Under the slash sustainability. There are a ton of information and you can always reach out. Okay. And is your white paper available there as well? Yes, it is. Absolutely. Okay, so I'll put links to all those things in the show notes, Klaus, and that way everyone will have access to them. Wonderful. Thank you. Klaus, that's been fascinating. Thanks a million for coming on the podcast today. Thanks for having me. Thanks Tom. Okay. Thank you all for tuning into this episode of the Sustainable Supply Chain Podcast with me, Tom Raftery. 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