Veritiv and AI
Paula Araya, James Dickey, Faith Hopperton, Nicole Neals, Timothy Sterling
Introduction
Veritiv is a packaging distribution company that is aiming to transition to a more circular business model. Their role in the supply chain process is packaging and distributing packaging materials for their customers so they lie between packaging product manufacturers and a variety of corporations. Veritiv has increased focus on their role in the supply chain process and identified that they can play a role in circularity of the materials they are distributing by connecting their manufacturers and customers with recyclers while deriving new revenue streams in the process. If successful, these practices will contribute to their Corporate Social Responsibility Report. This report currently follows standards in line with the Sustainability Accounting Standards Board (SASB) Multiline and Specialty Retailers and Distributors standard. They released their 2023 report fairly recently, likely in February or March. However, with the power of AI they could streamline processes to generate this report while ensuring alignment with more than just SASB standards. They can increase transparency of their company sooner using AI to generate this report, “With the introduction of these new templates, organizations can address and synchronize their different sustainability reporting needs efficiently, whether it’s complying with the new SEC climate rules, adhering to CA 253 and 261 regulations, meeting CSRD requirements, or aligning their sustainability corporate marketing narrative for their website”[1].
Defining what AI can broadly do for companies
AI in the context that we are analyzing is defined as an intelligent data engine program which can streamline reporting processes typically done manually within corporations. It is able to “wrangle” data, normalize it and match the data to any framework or any new upcoming regulation for reporting purposes. It decreases the time to collect and report sustainability data using machine learning and AI can take data from any source and generate results to help companies set and track progress of their sustainability goals.
What AI means for Veritiv
“AI is expected to affect global productivity, equality and inclusion, environmental outcomes, and several other areas, both in the short and long term” [3]. Particularly for Vertiv, AI could assist with analyzing large interconnected databases to determine optimized action plans for the company’s sustainability. There is also “evidence that AI advances will support the understanding of climate change and the modeling of its possible impacts” [3]. AI is able to find, examine, and then address issues relating to a company’s sustainability. Whether it is calculating scopes 1, 2, and 3 emissions or figuring out which Sustainable Development Goals are able to be reached through the company’s business, AI can help.
A key area in a company’s sustainability that AI can be put to use for is through the technology’s ability to support energy efficiency. Energy efficiency is arguably one of the biggest draws to sustainability for a company, particularly due to the win-win nature of its participation. Companies save expenses on their utility bills while also generating less carbon emissions in the process. AI allows companies to engage and “support low-carbon energy systems with high integration of renewable energy efficiency…” [3]. This sustainability approach encourages participation in a realistic and impactful way to ensure proper efficiency and the optimization of utility savings.
Additionally, AI’s presence in efficiency works across a multitude of interconnected technologies within smart and low-carbon cities that aid in cultivating demand response throughout the electricity sector. Examples of this integration include autonomous electric vehicles as well as smart appliances with precise electricity use and efficiency [3].
Lastly, valuable integration of renewable energy can also be put forth through the use of AI, specifically through customized smart grids. The computing technology can help in the creation of smart grids that are specialized to operate under the schedule on both the consumer and environmental side of electricity demand. Thus, pointing to more efficiency and an increased reliability on renewable energy such as solar and wind electricity generation.
All of these features, among the general possibility of innovation, point to sustainability goals 7,11, and 13 on climate action.
Pros and Cons of AI at Veritiv
Positive:
AI programs like ESGgo allow for collaboration therefore positively impacting various stakeholders. One feature of the engine is that “users can invite colleagues, consultants, or designers to create a fully-fledged, framework adapted sustainability report”[2]. Veritiv’s customers and investors can easily access up-to-date sustainability information when making decisions on which packaging distribution company to utilize in their product’s supply chain process. Companies who would like to track their Scope 3 emissions can rely on Veritiv easily to have that data so they too can be transparent in their reporting measures.
Negative:
AI requires “massive computational resources” which in turn require massive amounts of energy to run [3]. Increased energy consumption inherently does not align with several SDGs. Data centers are particularly difficult to make efficient, as the computational load is the primary driver of energy usage (followed by HVAC used to keep the data equipment cool and lighting required for technicians to maintain the servers). It is also challenging to deploy on-site renewables at most data centers such as rooftop solar, as the roof space available is much smaller than what would be required to power the data center’s load. Data centers also run 24×7, whereas solar power is only available when the sun is shining, further limiting renewables potential. Ground mount solar and/or battery storage may help improve the possibility of on site renewables for data centers. In summary, efforts to achieve SDG 13 on climate action could be undermined by the high-energy needs for AI applications, especially if non carbon-neutral energy sources are used [3].
There are also considerations to be made on the social side of climate change, mainly through the algorithms put in place by AI. In other words, the content that is shown to social media users has the potential to create a misinformation bubble that could deter many from participating in climate action. This negative effect could unfortunately contribute to “political polarization and affect social cohesion with consequences in the context of SDG 10 on reduced inequalities” [3].
In addition to the spread of misinformation, there is also a concern regarding the biases that may arise with the applications that incorporate AI. This bias is found through AI creation being curated to the specific SDG issues that are relevant to the country that the AI developers reside in. This leaves a major gap in nations that currently don’t have AI capability [3]. Without AI consideration for applications relevant to the other nations that don’t have the resources to benefit from the technology, a major, invaluable gap is created in a lens of equity that leads to major economic gaps as a result down the line. In turn, this would impact SDGs 8 (decent work and economic growth), 9 (industry, innovation and infrastructure), and 10 (reduced inequalities) [3].
How will AI help Veritiv achieve the UN’s SDGs
AI will be invaluable to Veritiv in both the short term and the long-term in impacting their social and environmental performance. In the short term, AI can identify the “low-hanging fruit” on the sustainability tree. These are usually processes or ideas that are easy to implement company wide such as retrofitting buildings to be more energy efficient or just maximizing overall efficiency within the company. The SDGs that it would address in the short term would be #7: Clean and Affordable Energy as well as #13: Climate Action.
In the long-term, the more companies start using AI tools to report their emissions, the easier and more transparent it will be for Veritiv to choose the manufacturers of their packaging products. Veritiv will have more information for decision making and also to develop recycling initiatives in a more effective way. This improvement is related to SDG #12 Responsible Production and Consumption.
In the long-term, as AI gets more and more intelligent, hopefully it will enable Veritiv to be a fully circular company by addressing weak points in their circularity model. AI will also hopefully reduce inequalities found in today’s society and in the long run will promote equity across the board. These long term goals strive for SDGs #8: Decent Work and Economic Growth, #11: Sustainable Cities and Communities, and #12: Responsible Production and Consumption.
Sources
[1] Orly Glick (Founder and CEO of ESGgo). 2024. “ESGgo Launches AI-Powered Sustainability Reporting Solution”. https://www.esgtoday.com/esggo-launches-ai-powered-sustainability-reporting-solution/
[2] ESGgo. 2024. “The AI-Powered Operating System for Sustainability”. https://www.esggo.com/
[3] R. Vinuesa, H. Azizpour, I. Leite, M. Balaam, V. Dignum, S. Domisch, A. Felländer, S. D. Langhans, M. Tegmark and F. F. Nerini, “The role of artificial intelligence in achieving the Sustainable Development Goals,” Nature Communications, 2020.
Supporting Links:
Veritiv: https://www.veritiv.com/home
https://www.veritiv.com/sustainability
https://www.veritiv.com/services/ecoscore
