As the focus on supply chains takes on more importance in the wake of the coronavirus, Descartes Labs, a tech company with origins out of Los Alamos National Labs, is helping companies distill geospatial information in “data refineries” to better monitor, measure, and predict changes to physical operations across the globe. 

In this interview with Phil Fraher, Descartes Labs CEO, we explore how the company leverages its geospatial analytics platform to blend remote sensing data with internal company data to train AI models and increase visibility into supplier networks. This enhanced visibility allows companies to verify the sustainable production of input materials and products and to track impacts from downstream product use.

Descartes Labs’ transformative value proposition is to vastly improve on-the-ground transparency and sustainability through the detection and verification of physical changes occurring in the world around us.

Please continue reading below for my discussion with Phil Fraher, CEO of Descartes Labs. 

-- Tim Nixon, Reuters Sustainable Business Contributor.

How does Descartes Labs think about sustainability as a business goal?

One of our primary goals is to help our customers accomplish their business objectives in the most efficient way possible. To that end, we’re working on building sustainable solutions for some of the largest multinational organizations throughout agriculture, consumer products, natural resources, and transportation, as well as their suppliers and customers up and down the value chain. The leaders of these companies recognize that a large amount of the institutional capital available today has become increasingly gated on ESG concerns and therefore it’s their fiduciary duty to manage their business with a long-term, multi-stakeholder lens.

As a result, we’re seeing customers in these sectors place a much higher level of focus on sustainability as they try to balance the opportunity and risk associated with decarbonization and overall emissions reduction. Ultimately, sustainability equals efficiency for these companies. It improves their bottom line and increases their long-term value and viability by minimizing climate-related risk across all of their physical assets.

The companies that lead in the future will be those that can minimize externalities at the same rate they maximize profits. Achieving this today is incredibly difficult because most supply chains are opaque beyond a limited view into tier 1 suppliers. Materials sourcing can be extended across the globe and often occur in remote environments with varying levels of regulation. We believe the companies building core competencies in geospatial technology will take the lead by enhancing visibility to tier 2 or 3 suppliers in a way that results in a durable advantage over competitors.

How would you describe the efforts to measure sustainability across physical operations?

In order to make progress on any problem, we need to be able to measure it, create benchmarks to understand progress, and quantitatively evaluate the impact of policies designed to address it.

Part of the challenge with commodity companies is that they are not digitally native - they are physically native. In order to introduce AI and leverage data you need to start by collecting more of it in a manner that can be used to train models. For organizations like Google and Amazon this comes naturally because their entire business exists online. But supply chains for agribusiness, for example, exist across millions of acres. How do you begin leveraging AI and data in an efficient manner when your supply chain exists on multiple continents and dozens of countries?

What are some new solutions being deployed by Descartes Labs to help clients measure progress?

Our platform combines the world’s sensor data, modeling tools, and distributed computing into one package, which means our solutions quickly generate “decision-useful” information to back-up sustainability commitments. The world is placing a major focus on detection and context-aware alerting of deforestation and illegal land conversion at the moment. It’s one of the biggest challenges for agricultural traders, consumer product manufacturers, and the food supply chain in general.

Other solutions include monitoring, reporting, and verification systems for sustainable agriculture practices such cover-crop and no-till techniques. These are exciting because they happen to be some of the most attractive options for large gains in long-term carbon sequestration and agricultural yield improvement.

We’re also seeing companies working to improve their accounting of scope 3 emissions that arise from the consumption of input materials or downstream product usage. We build new solutions for these companies on a daily basis that are amazing and personally inspiring to me.

Will these new solutions raise the bar for everybody in terms of how progress is reported?

Yes. We can already see how our technology is being used to set new standards for the way emissions are reported. Companies are using it to verify and quantify sustainable practices in order to disclose climate-related risks. This is critically important because stakeholders such as employees, customers, policymakers, and institutional investors are increasingly requiring this information as a de facto license to operate, either implicitly or explicitly.

We see companies frequently choose to be on the front end of this change rather than be pulled along. This is true even in historically resource intensive industries like steel production or oil & gas development. By doing so they’re building out long-term plans to generate sustainable returns over time.

You mentioned deforestation above, why is that such a focus?

Accurate monitoring and alerting of deforestation is an urgent planetary need. It’s difficult because of the vast land areas involved and the challenges of prioritizing violations in high conservation areas versus land that has been cleared previously.

Satellites provide an important tool here but traditional satellite based deforestation monitoring solutions have relied on optical technology which can be obscured by clouds during much of the season. Many of the areas threatened by deforestation are in parts of the world with significant cloud cover the vast majority of the year, such as South East Asia and South America.

To overcome this challenge, Descartes Labs has developed a multi-source solution that relies heavily on satellite radar technology that can see through the cloudiest of conditions and provide updates two to three times per month, which is far more frequent in cloudy areas where other approaches may be limited to once or twice a year.

Doesn’t the deforestation solution require changes to farmer incentives?

Deforestation is particularly challenging because the activities behind it are inherently decentralized and cleared land has historically been worth more than forested land. However, in recent years, our customers have made significant progress in changing that incentive. Much of today’s production comes from smallholder farms that feed into larger networks, which makes sourcing extremely difficult to track. But by offering incentives to farmers to implement more sustainable practices, we can verify that changes were made at the farm-level in order to reward sustainable behavior and provide verification for customers downstream that are looking to certify deforestation-free products.

Perhaps more meaningfully, we are also in the early stages of making detailed maps of the most carbon-rich areas in need of protection. We plan to use new sensors to measure canopy height and characterize biomass at a much more detailed level than is widely available today.

What sectors are you working with today?

Our core verticals include agriculture, consumer products, oil & gas, and mining. We also support supply chain analytics - including climate and sustainability solutions - in finance, insurance, shipping, and power generation.

Customers love how we provide access to all of the data in one place and how they can rapidly build analysis-ready pipelines that allow them to focus on their objective, not acquiring or cleaning data, or setting up compute infrastructure.

What is next after or alongside deforestation?

Scope 3 emissions measurement is an interesting area with a lot of potential. We can help companies map their supply chain and measure on-the-ground changes that become the basis of time-series models that convert observed activity to emissions metrics.

As mentioned above, we’re also working on ways to measure carbon sequestration by characterizing forest biomass, and remote verification of sustainable farming practices, such as no-till and cover crops. We are also developing solutions for monitoring GHG emissions, such as alerting for methane leaks associated with oil and gas production. We also have advanced capabilities in early wildfire alerting and monitoring mine tailing dams for structural integrity.

In addition to specific technical solutions, how does Descartes Labs help clients more broadly assess climate-related opportunity and risk?

One of the initiatives we are most excited about is our work with the oil & gas industry and state and local governments. New Mexico is one of the country’s top producers, but the state is also committed to reducing methane emissions associated with production. We believe methane is an area in which industry, regulators, and environmental advocacy groups can all find common ground.

How do you see this issue in terms of your personal mission?

I believe the team here at Descartes Labs, and the public in general, recognizes the climate challenges we have to address in order to reduce the costly environmental volatility we’ve seen in recent years. I also believe that technology, data, and artificial intelligence represent critical tools to measure the impact of these activities and the efforts taken to counteract their negative effects.

For Descartes Labs, we recognize that sustainability represents a growth sector in the years ahead. Our customers represent some of the most impactful organizations on the planet from a climate and environment perspective - agriculture, oil & gas, mining, ocean transportation, power, and diversified industrials. These functions are essential in our modern world and have increased global standards of living.

The question is how do we equip organizations to execute on these sustainability efforts in the most efficient way possible? We believe our technology is an essential tool to do so, providing visibility with data and analytics into opaque operations around the globe.

The Reuters editorial and news staff had no role in the production of this content. It was created by Reuters Plus, part of the commercial advertising group. To work with Reuters Plus, contact us here.