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7min chapter
#43 - Digital sustainability in a Tech behemoth: Japan with Trista Bridges and Paul Beddie
Green IO
Driving Digital Sustainability in Japan
This chapter explores the push towards digital sustainability in Japan, citing the role of civil society, NGOs, and legislative initiatives. It delves into the importance of adherence to international standards like ISSB, the emphasis on maintaining a responsible image for key stakeholders, and the potential impact of new regulations on Japanese corporations.
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Transcript
Episode notes
💭 How can a country defining itself as an high-tech spearheader can embrace IT sustainability? Japan is a fascinating example of both the contradictions and the synergies that such a journey creates.
🎙️ In this episode, Gael Duez welcomes two long-time Japan-based experts: Paul Beddie, VP and Sustainability Lead at Capgemini, and Trista Bridges, the co-author of Leading Sustainably, and a member of EcoVadis' Purpose Committee. Their exchange on IT sustainability initiatives in Japan led to many takeaways including:
🤝 the stakeholder-oriented nature of Japanese society,
🌱 the emergence of Japanese startups focusing on sustainability,
⚖️ the role of regulations in driving sustainability efforts in Japan,
And much more.
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Learn more about our guest and connect:
📧 You can also send us an email at contact@greenio.com to share your feedback and suggest future guests or topics.
Trista and Paul's sources and other references mentioned in this episode:
- Digital Sustainably
- Capgemini
- EcoVadis
- Japan PM Suga vows goal of net zero emissions by 2050
- Together for Action: Japan’s Initiatives for Achieving the Common Goal of Net Zero by 2050
- JERA ends ammonia co-firing trial at coal power station with positive results
- JERA and ExxonMobil to Develop Low Carbon Hydrogen and Ammonia Production Project
Transcript
Gael Duez 00:00
Hello everyone. Welcome to Green IO, the podcast for responsible technologists building a greener digital world one byte at a time. Every two Tuesdays, our guests from across the globe share insights, tools and alternative approaches, enabling people within the tech sector and beyond to boost digital sustainability.
I must admit that this episode is a kind of a treat for me. I had such a big shock when I was a teenager and I started to discover Japanese culture. My first exposition being with the manga Akira, like many of people of my age, and that was pretty crazy back in the old days. But anyway, regarding sustainability and technology, actually, I started to realize a few years ago that I was wondering how a country which has built its reputation about being always the cutting edge innovator when it comes to high-tech, robotic, etcetera, etcetera, would be able to manage the wave or it's not necessarily a U-turn, but at least a significant change when embracing sustainability and approach things like low-carbon technology, or even sometimes low-tech or wise-tech or you name it the way you want. I'd rather prefer wise-tech as a combination of high-tech, low-tech and no-tech. So, I wanted to explore how this country is embracing sustainability and more specifically, IT sustainability. But to be honest, this won't be a very technical episode, it's more a geographical exploration.
And for this to happen, I'm delighted to have two experts on Japan on the show. The first one is Paul Beddie. He's actually one of the most vocal voices in Japan on sustainability at large. Not necessarily only IT sustainability, I think he publishes every day or every two days on LinkedIn. He's got crazy numbers of followers and he's well respected for this. But he also has an impressive track record holding executive positions in several IT companies such as Peoplesoft, Genpact, SAP, and now Capgemini, where he's now Vice President, Global Client Partner, and most importantly, Sustainability Lead.
Trista Bridges is the co-author of Leading Sustainably with Donald Eubank, and she has been in Japan for over ten years now, advising SME and startup about sustainability. She's also a member of the purpose committee of the EcoVadis, a famous ESG platform. So both guests are pretty knowledgeable in sustainability and in Japan. This is why I'm so delighted to have them today. Welcome, Trista. Welcome, Paul.
Paul Beddie 02:54
Thank you.
Trista Bridges 02:55
Hi. Thank you for having us.
Gael Duez 02:58
That's a pleasure. I think my first question for both of you will be exactly as I stated in the introduction, how is Japan embracing sustainability today? Maybe, Trista, you want to start?
Trista Bridges 03:13
It's a very interesting question because I've been looking at this topic for the last probably eight years or so. I kind of started writing the book with my co-author, Donald, about, gosh, it was about eight years ago now. And at that time, it was right after the SDGs were launched. And we kind of wrote the book because we were pretty fascinated with why we kept seeing the SDGs everywhere in Japan. But not used in a kind of, I think I would say in a serious way, but used in a very frivolous way in the beginning, right. You'd see, like, little posters and cutesy things and these types of things. But people really seemed to like the SDGs, which kind of stood in contrast to my home country, the US, where nobody really paid much attention. My adopted home country, France and Europe, where people respected it, but maybe weren't kind of living by it as kind of the code of sustainability, per se. And so at that time, you know, Japan really wasn't doing that much. Although I would say that the lifestyle of Japan in some ways incorporates a lot of elements of sustainability, right? You know, it's a chain of islands who for a long time don't have any resources, so have always had to kind of look at things like recycling, for example. There's a very kind of sophisticated recycling system, for example. But, you know, if you looked at a lot of the elements of the SDGs, whether it be climate or other things, you know, Japan was definitely not kind of at the forefront of those things. But then that started to change, and you probably remember, you may or may not remember, there was a prime minister, Prime Minister Suga. He basically committed to net-zero for Japan, 2050, I think that was in 2021, perhaps. And then we had Prime Minister Kushida, who came in and he kind of continued in that same vein. And you started to see in the last, I'd say, two or three years or so, you're seeing a lot of momentum around this topic, particularly around ESG and we can talk later about different regulations and these types of things that are kind of coming into play. But I'd say at the moment, Japan, there's a lot of momentum around this topic. But does Japan have a long way to go? Absolutely. And there's a lot of different structural and historical reasons for that that we can dig into during the discussion.
Gael Duez 05:31
Oh, and we will. Paul, you might want to bounce back on this.
Paul Beddie 05:37
Sure. I'll add a little bit more color as to what Trista just said, by the way. It's great to be on with you, Trista. I know when I came back to Japan for the third time in 2020 from China, your book, and you and Donald were some of the first people I met when I came back to Japan to plug into the sustainability community here. So, it's great to be on the call with you. Some of the things that I know, I mean, in Japan, we have the SGD train. Some of the subways are totally plastered. SDGs. SDGs. Everybody in Japan is wearing the beautiful multicolored pen. They're saying, look, we're all for the SGDs. You go to every construction site around Tokyo, they've all got a huge billboard out in front of the building that they're building, the 40-storey steel ginormous building with tons of concrete, that they're very concerned about SGDs, and they knocked down perfectly good buildings to build those. So it's a really interesting place. They give a lot of lip service but I have to say, I'm not sure that Japan really understands what it needs to do to really become sustainable. The odds of it actually hitting the goals that the government's put out by 2030, in my opinion, are very low. But it's interesting. I actually came to Japan initially in 1991, and worked for a very large Japanese engineering company. Very unusual experience. I was the only foreigner in their global sales development group, in their inaugural environmental business development company, selling scrubbers to coal fired power plants. And when it comes to hardware, and this is really typical for Japan, their hardware excels. This is a country of mechanical civil engineers. And they love products. They love making things that they can really engineer the heck out of. And so it was really interesting early on in my career to experience from a power generation. How do they actually look at technology to reduce emissions while burning coal? Here we are nearly 35 years later, and the companies here are still burning coal. A lot of it. They're the world's largest consumer and user and buyer and trader of LNG, Liquefied Natural Gas, which is a marketing coup to call methane natural gas. And in fact, one of the major utilities here, power generators, a company called JERA, just this week started the first ever ammonia co-firing of a coal-fired power plant anywhere in the world. And they've also recently just, this is obviously public information, they're in discussions with ExxonMobil to get 5,000 tons of ammonia a year out of the US, ship it to Japan so they can try to get 20% to 30% of volume for their thermal power plants from ammonia versus coal. So, from a technology perspective, and this is probably a lot more than just IT, Japan is definitely advanced in trying to go hydrogen, trying to go ammonia, and trying to do things that not necessarily the rest of the world has bought into yet. I don't think at the G7 meeting, anyone besides MHI was excited, Mitsubishi Heavy that is, was excited by the current prime minister's announcement that they were going to be going ammonia co-firing for power.
Gael Duez 09:00
Yeah, maybe we'll jump to the IT part later, because I'd like to unpack a bit what both of you say. It seems that on one hand, the Japanese way of living is pretty sustainable and it comes with cultural roots that I would actually love Trista to elaborate a bit on. But on the other hand, it also seems that they've got not a fully systemic understanding of what is going on and the need to shift, and they're more like adjusting with engineering prowess to fine tune what is going on, but not necessarily embracing the systemic vision that, hey, something has basically to stop. And so maybe, Trista, on the first part of what I understood of what you described with Japan, what are, according to you, the cultural roots and maybe historical roots that explain that Japan is so open to the sustainability idea?
Trista Bridges 09:54
Yeah. So I think that there's a few things that are really important part of this story. So, first of all, I'll come back to the recycling point in a moment and kind of use of resources and limited natural resources. But there's a general understanding in Japan of the concept of a stakeholder. Right. And, you know, that kind of comes from Japan's history. You probably know a lot about, you know, the Japanese desire to have collaboration for different parties to kind of come at the table. And there's a concept called “Sanpo Yoshi”, which is kind of what's good for the company is good for all. So they've always had this stakeholder oriented approach. And the fact is, with sustainability, if you want to be a sustainable society, if you care about that, then you have to care about stakeholders as opposed to just shareholders. Right. So I think that's actually a really important part of Japanese society that helps. Right. People are very concerned in Japan about how their actions affect another person in a way that they are not, you know, in kind of other countries. Right. The countries that we come from, maybe we used to be a little bit that way, but we've gotten a bit less that way over time. Okay. So I think that's an important point.
The second point is, you know, absolutely, with natural resources, when you don't actually produce certain things you have to figure out how to repurpose and reuse those things or perhaps use less of them in some way. Right. And there are also, as you know, the history of Japan. I am not a Japanese historian. I don't know Japan's history kind of an extensive way. But one thing that many of us know is that for periods of time, Japan was completely closed. Right. Nobody came in, nobody came out. Right. And that's why probably during the COVID period, it was so easy for the country in some ways to shut itself down because it had done this before. Right. So when you shut yourself down like that, you have to figure out how do we make use of what we have. And I would say that Japan has gotten pretty good at that. That being said, however, since the war, since World War II, which kind of really transformed Japanese society in many ways. It became a very much a consumerist place. So with that comes consumption, with that comes waste and plastic usage and buying stuff and throwing it away. So Japan is, and I don't have the figures, I apologize. But Japan is probably within Asia, probably one of the biggest producers of trash that has been shipped elsewhere. Right. Not all of it is perfectly recycled.
Paul Beddie 12:27
We also have a lot of municipal power generation here that's a lot of meticulously separated trash into different components. All goes into the same furnace.
Trista Bridges 12:41
Very good point. And I think in all of our societies, we have elements of them that make sustainability possible, right? But it's like a puzzle. They don't have all the pieces, clearly. Right. And Paul and I, we'll talk about this a little bit, but we talk about. We'll come back to the IT pieces. I know we come back to it, but one of the other parts of this is really important is this kind of hardware versus software dynamic in Japan. And Japan is not great at software. Right. And part of sustainability management is data, is having good analytics is all that type of thing. And we can talk about that later. But that's something, for example, that Japan never really kind of got on the train with. It caused a lot of issues.
Paul Beddie 13:24
Very challenging for Japan on the analytic side and on any type of business software to identify the data and get to the data. It's definitely, Japan, is definitely a laggard from that perspective, certainly compared to what's happening in Europe, although there's certainly a lot of startups in Japan now that are trying to build software solutions. But it's definitely an area where they're going to have to look outside more and more to find solutions that the homegrown solutions, from a software perspective, just are having difficulty getting to where they need to be from an efficacy perspective, as well as from just getting market share and getting an understanding from users on what's the value of doing it.
Gael Duez 14:10
And how do you explain this, Paul? Because this is an engineering country, because this is a hardware country, as you stated?
Paul Beddie 14:18
I think, so just today, I got to go visit a brand new ship brought out by Maersk. It was built in South Korea. It's on its maiden voyage. It's in Yokohama. It's the world's second green methanol-powered transportation ship supply chain component. It's a huge ship. And this is the type of thing that Japan's really excited about because it's a big ship and it's got a lot of engineering, and it has a ginormous engine in it, and it uses tens of thousands of tons of methanol. But they don't really know anything about the software. But I was talking to some of the representatives of the company, and back at headquarters in Europe, of course, they have all this great tracking software that they can provide to the car companies in Japan and to the various manufacturers of things in Japan so they can track their Scope 1 when it comes to supply chain. But I think a lot of Japanese companies are still struggling to understand, well, why would I do that? What's the point? You know, how does software actually help me reduce my environmental footprint? So that is something a lot of big organizations in Japan struggle with, for sure. I mean, the Mitsubishi’s, the Nissan’s, the Toyota’s, I mean, there's certain areas where they do, and certainly overseas, those big companies, their European operations are very much plugged into what's happening in Europe and very much aware. But when I talk to headquarters in Osaka or Tokyo of these same companies, they're absolutely blind to what their colleagues in Düsseldorfor in Paris or in London are doing to comply. It's just not on their radar.
Trista Bridges 15:57
Can I say one thing, too, just quickly, about the software piece? Just very quickly. And in digital technology, I think most people would, you know, you have to kind of look at what happened to China over the last 30 years, you know, after the bubble burst. It was kind of traumatic, frankly, for the company country. Sorry. And it kind of missed, like, there's some Internet companies here, right? There's Rakuten, there's some other Yahoo. Kind of branched off. You have Yahoo Japan. But in many ways, it kind of missed, like the biggest technological revolution that the world has known over the last 35 years. Right. First that being software, second being the Internet and digital technology and everything that came out of that. So, now Japan is really investing much more in the last few years to try to catch up with that. Right.
So we have two trends here which you hear people talk about. One is DX, and that's very much in Paul's wheel. Paul's wheelhouse is probably both of these things, but definitely that DX digital transformation that people like, you know, these kind of terms kind of helps people understand. And the other is GX, the green transformation. And these two things kind of fit together, if you will. You can't really do one. It's hard definitely do the GX without DX. It's almost, I would argue it's probably impossible, you know, and then maybe it's starting to get hard to do DX without GX too. Right. Without kind of thinking about sustainability as well. So that's just to give a little bit of historical context. And I think it's a fascinating story, right? If you look at Japan over the last 35 years, it's really interesting, actually, what's happened in this country and its challenges around this.
Gael Duez 17:37
And thanks a lot, because just before deep diving into more the tech side of things, I might try some kind of very sociology, ground level or sociology for dummies question. But do you think that this lagging when it comes to software, which is mostly powered by data and data is somehow power? Do you think it is connected to the fact that Japanese culture is very hierarchical and you don't share power that easily, and actually data and handling data is poor, and you don't share data that easily and you don't manage or handle data that easily. Do you see a connection or is it me just going completely wild?
Paul Beddie 18:20
In Japan, I've been on so many big projects where the IT department is driving the big transformation project, and they tell the business, you know, a year later, oh, by the way, we've changed everything. They don't necessarily get the businesses’ buy in before they do it. And so, the IT guys kind of sit back in their cubicles and think, well, how should we do this? And they start building it without asking the business. And for that reason, you get IT that doesn't necessarily give the business what they want, but because the IT budget is completely owned by it and they don't need sign off from the business, you end up with spending tons of money building IT systems that don't necessarily deliver what the business is actually hoping to achieve. And so, I see that's being one of the reasons why the digital transformation here has been slow is because they're not necessarily looking at it from a business perspective. They tend to look at it more from a hardware and an engineering perspective. Change is hard everywhere, but change is particularly difficult in Japan. Most organizations around the world do a big IT transformation project. They use IT as the special sauce to drive transformation. Japan still uses IT to spend a lot of money and buy more hardware. It's interesting. Half the world's remaining mainframes actually are in Japan. So there's still a long, long way to go in terms of how to digitize the country in a way that makes sense. And it's also that makes it the whole concept of this kind of idea of green IT, is also difficult because the Japanese are very slow to move things to the cloud. And as you move things to the cloud, you get more control over. So, what's the power source that's running all those servers? And so it's still very slow to uptake on some of these things. Now, having said that, from a data center perspective, they're building all kinds of new data centers in Hokkaido because it's so cold that they realize they don't have to heat as much. So there's certain components of sustainability that they're thinking about. But are they really thinking about it because of sustainability, or is there some other factor as to why they're doing what they're doing?
Gael Duez 20:49
And now, going back more specifically to the IT/Tech sector, you seem to say, Paul, that you gave the example of the data centers that things are moving forward, but that the concept of green IT has been slow to take off because actually the concept of digitization has been slow to take off. And let's put aside my awkward question on the connection between data and power and stay way more pragmatic. How do you see, both of you I would say, the state of green IT in Japan?
Trista Bridges 21:22
So, I know my kind of wheelhouse is more the kind of startup world, right. And technologies that are kind of coming online to kind of tackle this problem, new companies, right? And I think one of the most interesting things that I've seen is first of all, how long it took just pretty basic carbon accounting software to come to Japan, right. You know, we have in Europe, in the US, even other countries, Australia, South America, et cetera, just hundreds of these things now, right, where we can basically just, you know, enter our information and we could track it. And it's basically a kind of a SaaS type tool, right. And everybody can access it. And I ask other people for information and we share information back and forth. And it took a really, really, really long time for that to come here. And it started in the last couple years and actually it's accelerating. And I would say that, you know, if you can kind of crack the Japanese market, you do really well, right. Because it was just kind of a completely open space. And for me, that's very kind of rudimentary technology, right? That's not anything super, super sophisticated, right? It'd be something better than I could build because I'm not a trusted technologist. But, it's kind of like the bare minimum you need, I think, to be able to manage this issue of, you know, every element of sustainability. So we're starting to see more startups doing that kind of stuff, and that's really software. And so we're starting to see innovation around that. Japanese companies, not just EcoVadis which you mentioned earlier. EcoVadis, which I have some affiliation with, is doing really well in Japan, recently came to Japan and it's a really strong market for them. And it's great, but it's also a market that didn't really have much, right? So, and there's just thousands of companies here. Like, I think that's another thing people forget is, you know, in the west, we really have kind of like hollowed out a lot of our companies in a lot of ways. We have these kind of, you know, matriarchal organizations. We've, you know, really kind of downsized them quite extensively. In Japan, you know, companies don't really die here in the same way that they die in the west. So you have just tons of companies. Right? So if you have a good product and these companies feel that they have to do it, you can absolutely do extremely well here. And so the first movers to the market, especially on the software side, are doing well. There's some more sophisticated technologies that you just don't really find here yet dealing with sustainability that you find much more abroad, like carbon capture. I have seen some more battery production technology here recently, which is kind of exciting. But yeah, I think the kind of early stuff is starting to happen. The latter stuff, even though you would think because it is very kind of industrialized country, that you would have more of that if they're kind of late to the game with that. But that stuff is starting to happen. But we don't have, for example, even in the investment sector, the size of the investment sector that we have in Europe and particularly in the US, we don't really have tons of, for example, green venture capital funds, right? They invest in carbon technology only. So there's a lot of work. But at least in kind of the startup space, things are starting to happen. But oh, my goodness, there's so much opportunity and room to improve and innovate here.
Paul Beddie 24:45
You're right, there's so much opportunity. And on the investment side, you know, it made me think of Japan's pension system is one of the biggest pensions in the world. I forget how many trillions, tens of trillions of dollars they have under management in the system. They have a mandate to allocate a certain point of that part of that to sustainability projects. And my understanding is 90 some odd percent of what they invest in for sustainability is outside of Japan because they can't find bankable projects to invest in in Japan, so they have to go outside. You know, I, in my role, I work with Japan's top 100 companies. So these are really, these are the household name companies everybody in the world's heard of. And a number of them are my customers. When I work with their operations in Europe or North America, there's a high awareness and high desire to do something with, you know, how do we make our IT more green? What are we, what are the solutions? What are your credentials to us as Capgemini? What are your credentials to provide green IT solutions? We don't get those questions in Japan. And in fact, we find it quite difficult to sell some of the solutions to Japan. The customers generally just aren't aware of them. But interestingly, what we're doing right now is we're kind of reverse engineering our way into helping customers identify. So here's some sustainability benefits of the project that you've just done. You didn't ask for this to be done, but we're doing it because we're a French-headquartered company. We have lots of stuff we've committed to in France as a global company as to how we're going to help our customers decarbonize and whatnot. And we have to actually do the work here and reverse engineer. Okay, so we took you from an on prem solution to a cloud solution. All right? We're going to help you calculate what the difference is in the carbon impact of that. We're taking you off a mainframe. We're putting you on to other types of software. So we're trying to push the needle. And I know most of the big consulting companies are doing the same. This is not unique to our company. All the big, famous consulting companies that operate in Japan, all of them are trying to build a sustainability practice. But I think everyone is still struggling to get the big companies to say, “Yes, we will spend the money to reduce our carbon footprint.” They're still not thinking that way. They'll spend the money to do the projects. But you said, well, if you add on a little bit more, we can track everything and we can go green and like, no, I don't want to do that.
Gael Duez 27:16
How come that the level of awareness is so low when it comes to the environmental impact of IT and electronic equipment in general?
Paul Beddie 27:25
I'd say it comes back to what we were saying earlier on the hardware versus software. The mentality here is engineering. I want to engineer big physical goods that generally can't see that, or they haven't been exposed to it. And again, it's also the hierarchical situation in Japan. Until you're about 45, you don't get any decision making power in a big company here. So that means these people, they're all still analog. The digital natives have yet to come into positions of power in any of these big companies. So there's a generation, it will come eventually, but it's still not there yet.
Trista Bridges 28:04
Absolutely. If you kind of look at the kind of the things that the Japanese have built, and they're very proud of having built. Cars, automobiles. I remember growing up when Toyota came to the US, that is kind of giving my age away a little bit, but incredible. Getting a car with that kind of low gas mileage that doesn't break down regularly, that's very fuel efficient. It's like a marketing marvel. The Sony Walkman. I think probably the best thing that's close to software they ever built is gaming. Right? The gaming sector, right. Which they're incredible in. My sister works for Nintendo. What a company, you know? But this is kind of like when you've done these wonderful things and also even electronics, right? All the electronic devices, television sets, you know, all these things for years that the Japanese used to make. So if you make stuff, right, you make stuff like that, how can you even really conceive that the idea of this stuff might be a problem? You know, if you're even just talking about the physical, those physical items, right. That, like, maybe people don't need these things and maybe we need to repurpose them, and they're actually kind of good at that. So if there's an area called Akihabara, I don't know if you had a chance to go when you were here, which, you know, they take devices, they repurpose them, they resell them just because people like to tinkle, tinker with things. And like I said before, right. People kind of have this history of reusing what they have and that, you know, that's something they should own, right? They should absolutely own that. They built the stuff. They should know how to kind of repurpose it and use it and that should be their first instinct. But unfortunately, and that's on the consumer side, right. That's not necessarily on the corporate side, but I think that that's kind of, it's kind of hard to let go, right. It's hard to let go of what you did so well, right. And then of course to do all that you need the energy. You needed energy to be able to do that.
We didn't talk about the great earthquake here in 2011, which was pretty pivotal in this story too, which you should say, you know, this was a nuclear powered country for a long time. You had this absolute tragedy in 2011 and the nuclear reactors were shut off. So, what's the response? Coal. So you need the energy, right. So, the only way that I think they could have gotten out that differently was if they completely changed their lifestyle and that wasn't going to happen.
Paul Beddie 30:23
For 12 to 18 months, they were providing incredible feed in tariffs for anyone who was willing to put a solar panel out in their field. And there are definitely a number of people that won the lottery by putting up very quickly some solar farms in Japan that caught huge feed in tariffs but it didn't last very long and they pivoted away and said no, no, it's really hard for Mitsubishi or Mitsui or Sumitomo, these ginormous Japanese companies to keep making big money. If you've got all these cottage people building little small one two megawatt solar farms, we don't want that to happen. Let's go get another 20 year supply contract for 10 billion gas from Qatar.
Gael Duez 31:07
Yeah, well actually that connects pretty well with the question I wanted to ask. Where do you believe the change will come from? Is it more civil society, a general rise in the level of awareness? Because I also know that NGOs are very active and powerful in Japan. There are not only big corporations. Or do you believe that it will more come from the stick side, I would say. And that some legislation one way or the other will have to be rolled out for things to start moving, starting with just measuring things and then being able to act on them.
Trista Bridges 31:44
So, the regulation side which is actually super interesting, because the Financial Services Agency, the FSA, has actually been quite ambitious on this, I would say. So, they rolled out about 18 months ago sustainability reporting criteria and they're going to be adopting what's called ISSB, which is kind of the International Sustainability Standards Board, which is the standards that we're trying to develop is principally around climate-related type things, and they believe that that should be the standard. That's another cultural thing that's actually really important in Japan, which is consensus, which is agreeing to do something together as the international community doing something here. Like, I talked about the SDGs and the UN and the respect for the UN. So, they're very much kind of supporters of that. And Ikeda-san is the gentleman at the FSA who kind of manages these kinds of questions and regulations around sustainability, amongst other things. And they really want to adopt that here. So, they're planning to bring that into effect. And that requires things like aligning with TCFD. That requires, you know, I think Scope 1, Scope 2 reporting, I think Scope 3 as well. So, these are things that are going to absolutely transform Japan. And I say that only because people follow the rules, right? So, if the government says you got to do this thing, you know, and so now people are starting to scramble to do it, it works in a way like, you know, that would not be the American instinct, right. The American instinct would be to, which is what's happening, right. To push back against it, to get a bunch of lobbies to use the state, right. To challenge it in Japan, they're like, oh, we have to do this thing. So you have to have here that top down kind of rule. I think the rulemaking is really important here. It's not the whole story, but it is important. And it's a bit of a stick. There is a bit of carrot in it in a way because if you do a good job at it, then you look like a better company, right. To stakeholders, to the government, to the people who matter.
Gael Duez 33:56
Trista, does it really matter to look good on sustainability in Japan?
Trista Bridges 34:01
I think that it matters to look good to the people who matter, right. So I think you want to be in the good graces of the people, you know, of the circle, right. Whatever. However, you define who's in that circle, right. The public is different, right. I don't think that's really a concern here, right. I don't think companies are overly concerned around, you know, looking great for the public per se. Right? But I do think there is kind of this concept of, you know, we want to seem like a responsible company, especially to the people who make decisions here, especially to the people who matter. We don't want to be a bad student. We don't want to be the outlier or the one who kind of screws up and then it's public that we screwed up.
Paul Beddie 34:45
But there is a tremendous amount of marketing efforts going on, initiatives by big Japanese companies touting their green credentials.
Trista Bridges 34:54
That's true.
Paul Beddie 34:55
People understand it's a problem. People want to see things done. But if Mitsubishi says they're doing it, then probably people think, “Oh, then it's all under control, I don't need to worry about it. Mitsubishi says they're taking care of it, so it's all good.” And I just used Mitsubishi as a, I mean you can place whatever Japanese company name you want to put in there. And people think because they trust these large organizations, following the rules and trust are two big things that you have in Japan. So, if they say they're doing it, then okay, then it's taken care of. I don't need to worry about it. And I think a lot of people would be probably, the Japanese people, would probably be surprised to understand some of the things that really happen on a sustainability or emissions perspective isn't necessarily going the way that they're being told it's going.
Trista Bridges 35:42
And I'd say that the public here doesn't challenge the corporate establishment in the same way that we do in our countries, right? Like we're absolutely, it's been like nothing but nonstop, like chaos probably since the financial crisis in 2008, right, in terms of people's relationship with established businesses. So, it's very different here.
Gael Duez 36:03
Paul, how do you believe the big corporate world where you, which you're pretty familiar with, will react to this new regulation? So there is, as Trista says, the good student effect but will they embrace it as a new business opportunity or just as, okay, some new rules to follow? That's how it should be and that's it.
Paul Beddie 36:27
I think if the legislation comes down, then they will do it. The other thing that, you know, it's still, it's not nearly as an export-oriented economy as it used to be, say 20 years ago, but exports are still a big component of what happens in Japan. And I think the external influence, particularly from Europe, on some of the regulations around supply chain, around certification, on what is green, what is the footprint of the products you're importing. I forget now that the timelines went up, but it's something like any company that has more than 200 employees or does more than $400 million a year worth of business in the EU has to comply with all the EU rules and regulations?
Trista Bridges 37:08
Yes, another few years. I think it's another few years out, but that'll come in the blanket of an eye. Right?
Paul Beddie 37:13
Cool. But as it stands right now, could Sony continue exporting whatever products they manufacture in Japan to Europe after those regulations kick in? The way things stand right now, no, they won't be able to. They won't be able to get through the new regulations simply because they can't actually get the green power to run the factory that they're manufacturing in. But those things pragmatically will make changes here, or they'll just continue shifting more of the manufacturing capacity to countries where they're actually able to get access to the green inputs.
Gael Duez 37:49
And that's something I'd like to ask you about because I had this pretty amazing interview with Professor PS Lee from Singapore. He's a data center expert, and he was explaining that no matter how hard they try, the Singapore state will not be able to go 100% renewable energy. So the way they do it is actually they're importing, as he said, green electron from neighboring countries to manage their energy transition. Because even if they cover the entire island with solar panels, which is something that they're actually doing, it won't be enough because they're so energy- intensive for many, many different reasons. The big harbor, I think they've got 10% of the entire Southeast Asia data centers just located in Singapore. So, it's a bit crazy over there. And it's very linked to the comment you made, Paul, about, hey, if I cannot manufacture using renewable energy, in that manufacturing things, using renewable energy has become more and more a standard around part of the world where I've got a lot of consumers, how will I deal with it? And so you suggested one solution, which is outsourcing the production in low carbon country or more environmental friendly standard country, which could be option one. But option two, is there any attempt to truly go full speed on renewable, maybe also coming from abroad?
Paul Beddie 39:20
I think the answer to that is yes. There's definitely some companies, big companies in Japan, that are basically trying to buy credits because they can't get off the thermal power generation or the fossil fuel-based energy production in Japan fast enough. So, instead they're investing massively in renewable energy in other markets around the world. In Europe, in China, in the United States, partly as a way to try to offset what they are unable to do in Japan. And the whole renewable energy discussion in Japan is quite a tricky one because there's a lot of factions that wouldn't seem to have a lot of political power, but that in reality, have huge amounts of political power in the countryside. Fishermen's associations, Onsen associations, businesses that would seem to be not necessarily the juggernauts of the economy, have a way to actually stop progress and innovation from happening because they don't, you know, it's not in my backyard. The Onsen Association is scared to death of geothermal power because they're scared that they're going to take away their hot water. They're taking hot water from a couple hundred feet down. Modern day geothermal goes 7, 12, 15,000 ft down to look for its heat. So, there should be no issue with the onsen being able to keep pumping up their wonderful hot water. But they don't see it that way, and they continue to block those things. And the whole discussion around wind turbines here, it's very, you know. Europe is blessed, from a wind turbine perspective, and that you've got a lot of shallow, big bodies of water right close to Europe. You know, the North Sea is not very deep. The Mediterranean is not that deep. You go not too far off the coast of Japan, and, you know, it drops 3 miles to the bottom of the ocean. So, there's all kinds of new technology for floating turbines and whatnot that are required. There's all kinds of new infrastructure that needs to be put in on the ports that want to handle something besides fish. There's challenges here to Japan having the political will to disrupt its harmony that it's got with some very long traditional components of the society in order to become more green while still maintaining modern 21st century economy.
Trista Bridges 41:53
Yeah, I think there's two things there. Topography is not always on Japan's side, I'd say, in terms of it's a huge challenge. And then also it's like the flip side of what I was saying before about the stakeholder management. Sometimes, it can be to the point where it's almost paralyzing, right. If you have all these different blocks that you're trying to kind of respond to. And, you know, again, our kind of response in the west would just be to sue them or to do basically try to stamp them out or move them out of the way, right. But that in Japan, you know, that can happen, and it's good that that doesn't always happen, right. But it can be something that's tricky to manage.
Gael Duez 42:29
And I would go for a final question. If you walk into main Tokyo streets, you will be literally surrounded by gigantic screens promoting Muslim mass consumption. Do you see, and Japan is deeply rooted in what we call Global North, highly emitting countries with a high standard of living and taking a huge toll on the global carbon budget of the entire planet and entire humankind. Do you see any discussions, any move toward some sort of sobriety or reducing these consumptions or not at all at the moment?
Trista Bridges 43:09
I think you see some very small kinds of movements, right? So, you have like Hippie movement. Yeah, yeah, yeah. And I mean, there are some things like, you know, there's some really important kinds of initiatives and innovations that have happened here that might seem very kind of simple to other people, but actually kind of a big deal. So, there's one called Mymizu, which is, you know, basically a social innovation organization who got restaurants to allow people to refill water bottles, right? And the water bottles are kind of reusable bottles of water. And you would think this is, well, that seems like normal, right? In Europe, you go to a restaurant, somebody fills up water from the tap and puts it on your table. Perfectly normal. But in Japan, there's a vending machine every 2 ft, right? So you said to think about, there's something about consumption here which is a huge problem, which is convenience. It is unbelievable. There's a convenience store every 2 ft. There's literally a 7/11, a Lawson and a Mini Stop or whatever within literally inches of each other. So, this kind of feeds the machine of consumption, right, when you can just always consume. Right? So, how do we get people to still have a great quality of life and just not do that constantly, you know? And I think that that's something that's going to be very hard to change here. Perhaps in the country areas, you know, it'll be a little different, right. But in the big cities, the problem is the big cities are where people are moving and migrating to. So the rural areas are quickly hollowing out here in Japan. And urban lifestyle is just not conducive with this, right? Because there's always these stimuli to get you to consume something, right.
Paul Beddie 44:52
The other thing that's really interesting is there's been research done by different companies, smaller research companies. I'm thinking like fabric, that have found that the segment of the population that really cares about sustainability are actually what we now refer to as the boomers, the over sixty-fives. The younger people actually aren't that interested. And it's just because wages in Japan aren't that great. It's hard to make a lot of money here. And so, the young people are more concerned around, “I gotta make money so I can pay my bills, I gotta pay the rent.” And it's not top of mind to them that, oh, we gotta do something. I mean, they just think, oh, I'm from Japan. So everything here is, we're good, you know, we're sustainable. And that's just the perception that they have. The reality is quite different. But the older generation and the older generation grew up when Japan was industrializing, basically from after the second World War. And there was a lot of pollution in Japan. There were a lot o problems. Polluted rivers, you know, there's famous cases about, you know, how people got sick. But all this was in the ‘50s and ‘60s, and the young people today have no recollection or awareness of any of that. But the older people like, hey, we can see the forests are dying, we can see things aren't the way they're supposed to be and so they care about it. But the young people, for whatever reason, don't really. But as I said again, they're struggling to make ends meet and that's where their focus is. All of that said, I mean, Trista and I, we're both from the US. Trista also has connections back to Europe. Most of the long-term non-Japanese living in Japan probably don't want to live anyplace else. It's not the sustainable juggernaut that it could be. Particularly after the big earthquake in 2011, there was a real opportunity for Japan to become a renewable power, renewable energy superpower, and they kind of passed on that, unfortunately. That aside, it is a pretty amazing place to live.
Trista Bridges 46:57
So I encourage you to come visit. I encourage everybody to come visit. Plus, the yen is very weak, so that helps.
Gael Duez 47:04
And I think what a great way to conclude our podcast. Thanks a lot, both of you. It was great having this journey into the Japanese culture and into the challenges to work more sustainably with a very nuanced discussion, which is what I really enjoy. So, thanks a lot. I don't think I will see you that soon, but who knows, maybe we will organize a Green IO conference in Tokyo or Osaka at some point.
Trista Bridges 47:36
Please, we'd love to have you. That would be great.
Gael Duez 47:39
Yeah. Well, let's discuss this in 2025. I think for the moment, let's make Singapore, London, Melbourne, maybe other places in Paris as well a success. But why not? It really depends on the maturity of the ecosystem. Once again, thanks a lot for joining the show. It was great.
Trista Bridges 47:56
Thank you. Thanks so much.
Paul Beddie 47:58
Thanks so much.
Hello everyone. Welcome to Green IO, the podcast for responsible technologists building a greener digital world one byte at a time. Every two Tuesdays, our guests from across the globe share insights, tools and alternative approaches, enabling people within the tech sector and beyond to boost digital sustainability.
I must admit that this episode is a kind of a treat for me. I had such a big shock when I was a teenager and I started to discover Japanese culture. My first exposition being with the manga Akira, like many of people of my age, and that was pretty crazy back in the old days. But anyway, regarding sustainability and technology, actually, I started to realize a few years ago that I was wondering how a country which has built its reputation about being always the cutting edge innovator when it comes to high-tech, robotic, etcetera, etcetera, would be able to manage the wave or it's not necessarily a U-turn, but at least a significant change when embracing sustainability and approach things like low-carbon technology, or even sometimes low-tech or wise-tech or you name it the way you want. I'd rather prefer wise-tech as a combination of high-tech, low-tech and no-tech. So, I wanted to explore how this country is embracing sustainability and more specifically, IT sustainability. But to be honest, this won't be a very technical episode, it's more a geographical exploration.
And for this to happen, I'm delighted to have two experts on Japan on the show. The first one is Paul Beddie. He's actually one of the most vocal voices in Japan on sustainability at large. Not necessarily only IT sustainability, I think he publishes every day or every two days on LinkedIn. He's got crazy numbers of followers and he's well respected for this. But he also has an impressive track record holding executive positions in several IT companies such as Peoplesoft, Genpact, SAP, and now Capgemini, where he's now Vice President, Global Client Partner, and most importantly, Sustainability Lead.
Trista Bridges is the co-author of Leading Sustainably with Donald Eubank, and she has been in Japan for over ten years now, advising SME and startup about sustainability. She's also a member of the purpose committee of the EcoVadis, a famous ESG platform. So both guests are pretty knowledgeable in sustainability and in Japan. This is why I'm so delighted to have them today. Welcome, Trista. Welcome, Paul.
Paul Beddie 02:54
Thank you.
Trista Bridges 02:55
Hi. Thank you for having us.
Gael Duez 02:58
That's a pleasure. I think my first question for both of you will be exactly as I stated in the introduction, how is Japan embracing sustainability today? Maybe, Trista, you want to start?
Trista Bridges 03:13
It's a very interesting question because I've been looking at this topic for the last probably eight years or so. I kind of started writing the book with my co-author, Donald, about, gosh, it was about eight years ago now. And at that time, it was right after the SDGs were launched. And we kind of wrote the book because we were pretty fascinated with why we kept seeing the SDGs everywhere in Japan. But not used in a kind of, I think I would say in a serious way, but used in a very frivolous way in the beginning, right. You'd see, like, little posters and cutesy things and these types of things. But people really seemed to like the SDGs, which kind of stood in contrast to my home country, the US, where nobody really paid much attention. My adopted home country, France and Europe, where people respected it, but maybe weren't kind of living by it as kind of the code of sustainability, per se. And so at that time, you know, Japan really wasn't doing that much. Although I would say that the lifestyle of Japan in some ways incorporates a lot of elements of sustainability, right? You know, it's a chain of islands who for a long time don't have any resources, so have always had to kind of look at things like recycling, for example. There's a very kind of sophisticated recycling system, for example. But, you know, if you looked at a lot of the elements of the SDGs, whether it be climate or other things, you know, Japan was definitely not kind of at the forefront of those things. But then that started to change, and you probably remember, you may or may not remember, there was a prime minister, Prime Minister Suga. He basically committed to net-zero for Japan, 2050, I think that was in 2021, perhaps. And then we had Prime Minister Kushida, who came in and he kind of continued in that same vein. And you started to see in the last, I'd say, two or three years or so, you're seeing a lot of momentum around this topic, particularly around ESG and we can talk later about different regulations and these types of things that are kind of coming into play. But I'd say at the moment, Japan, there's a lot of momentum around this topic. But does Japan have a long way to go? Absolutely. And there's a lot of different structural and historical reasons for that that we can dig into during the discussion.
Gael Duez 05:31
Oh, and we will. Paul, you might want to bounce back on this.
Paul Beddie 05:37
Sure. I'll add a little bit more color as to what Trista just said, by the way. It's great to be on with you, Trista. I know when I came back to Japan for the third time in 2020 from China, your book, and you and Donald were some of the first people I met when I came back to Japan to plug into the sustainability community here. So, it's great to be on the call with you. Some of the things that I know, I mean, in Japan, we have the SGD train. Some of the subways are totally plastered. SDGs. SDGs. Everybody in Japan is wearing the beautiful multicolored pen. They're saying, look, we're all for the SGDs. You go to every construction site around Tokyo, they've all got a huge billboard out in front of the building that they're building, the 40-storey steel ginormous building with tons of concrete, that they're very concerned about SGDs, and they knocked down perfectly good buildings to build those. So it's a really interesting place. They give a lot of lip service but I have to say, I'm not sure that Japan really understands what it needs to do to really become sustainable. The odds of it actually hitting the goals that the government's put out by 2030, in my opinion, are very low. But it's interesting. I actually came to Japan initially in 1991, and worked for a very large Japanese engineering company. Very unusual experience. I was the only foreigner in their global sales development group, in their inaugural environmental business development company, selling scrubbers to coal fired power plants. And when it comes to hardware, and this is really typical for Japan, their hardware excels. This is a country of mechanical civil engineers. And they love products. They love making things that they can really engineer the heck out of. And so it was really interesting early on in my career to experience from a power generation. How do they actually look at technology to reduce emissions while burning coal? Here we are nearly 35 years later, and the companies here are still burning coal. A lot of it. They're the world's largest consumer and user and buyer and trader of LNG, Liquefied Natural Gas, which is a marketing coup to call methane natural gas. And in fact, one of the major utilities here, power generators, a company called JERA, just this week started the first ever ammonia co-firing of a coal-fired power plant anywhere in the world. And they've also recently just, this is obviously public information, they're in discussions with ExxonMobil to get 5,000 tons of ammonia a year out of the US, ship it to Japan so they can try to get 20% to 30% of volume for their thermal power plants from ammonia versus coal. So, from a technology perspective, and this is probably a lot more than just IT, Japan is definitely advanced in trying to go hydrogen, trying to go ammonia, and trying to do things that not necessarily the rest of the world has bought into yet. I don't think at the G7 meeting, anyone besides MHI was excited, Mitsubishi Heavy that is, was excited by the current prime minister's announcement that they were going to be going ammonia co-firing for power.
Gael Duez 09:00
Yeah, maybe we'll jump to the IT part later, because I'd like to unpack a bit what both of you say. It seems that on one hand, the Japanese way of living is pretty sustainable and it comes with cultural roots that I would actually love Trista to elaborate a bit on. But on the other hand, it also seems that they've got not a fully systemic understanding of what is going on and the need to shift, and they're more like adjusting with engineering prowess to fine tune what is going on, but not necessarily embracing the systemic vision that, hey, something has basically to stop. And so maybe, Trista, on the first part of what I understood of what you described with Japan, what are, according to you, the cultural roots and maybe historical roots that explain that Japan is so open to the sustainability idea?
Trista Bridges 09:54
Yeah. So I think that there's a few things that are really important part of this story. So, first of all, I'll come back to the recycling point in a moment and kind of use of resources and limited natural resources. But there's a general understanding in Japan of the concept of a stakeholder. Right. And, you know, that kind of comes from Japan's history. You probably know a lot about, you know, the Japanese desire to have collaboration for different parties to kind of come at the table. And there's a concept called “Sanpo Yoshi”, which is kind of what's good for the company is good for all. So they've always had this stakeholder oriented approach. And the fact is, with sustainability, if you want to be a sustainable society, if you care about that, then you have to care about stakeholders as opposed to just shareholders. Right. So I think that's actually a really important part of Japanese society that helps. Right. People are very concerned in Japan about how their actions affect another person in a way that they are not, you know, in kind of other countries. Right. The countries that we come from, maybe we used to be a little bit that way, but we've gotten a bit less that way over time. Okay. So I think that's an important point.
The second point is, you know, absolutely, with natural resources, when you don't actually produce certain things you have to figure out how to repurpose and reuse those things or perhaps use less of them in some way. Right. And there are also, as you know, the history of Japan. I am not a Japanese historian. I don't know Japan's history kind of an extensive way. But one thing that many of us know is that for periods of time, Japan was completely closed. Right. Nobody came in, nobody came out. Right. And that's why probably during the COVID period, it was so easy for the country in some ways to shut itself down because it had done this before. Right. So when you shut yourself down like that, you have to figure out how do we make use of what we have. And I would say that Japan has gotten pretty good at that. That being said, however, since the war, since World War II, which kind of really transformed Japanese society in many ways. It became a very much a consumerist place. So with that comes consumption, with that comes waste and plastic usage and buying stuff and throwing it away. So Japan is, and I don't have the figures, I apologize. But Japan is probably within Asia, probably one of the biggest producers of trash that has been shipped elsewhere. Right. Not all of it is perfectly recycled.
Paul Beddie 12:27
We also have a lot of municipal power generation here that's a lot of meticulously separated trash into different components. All goes into the same furnace.
Trista Bridges 12:41
Very good point. And I think in all of our societies, we have elements of them that make sustainability possible, right? But it's like a puzzle. They don't have all the pieces, clearly. Right. And Paul and I, we'll talk about this a little bit, but we talk about. We'll come back to the IT pieces. I know we come back to it, but one of the other parts of this is really important is this kind of hardware versus software dynamic in Japan. And Japan is not great at software. Right. And part of sustainability management is data, is having good analytics is all that type of thing. And we can talk about that later. But that's something, for example, that Japan never really kind of got on the train with. It caused a lot of issues.
Paul Beddie 13:24
Very challenging for Japan on the analytic side and on any type of business software to identify the data and get to the data. It's definitely, Japan, is definitely a laggard from that perspective, certainly compared to what's happening in Europe, although there's certainly a lot of startups in Japan now that are trying to build software solutions. But it's definitely an area where they're going to have to look outside more and more to find solutions that the homegrown solutions, from a software perspective, just are having difficulty getting to where they need to be from an efficacy perspective, as well as from just getting market share and getting an understanding from users on what's the value of doing it.
Gael Duez 14:10
And how do you explain this, Paul? Because this is an engineering country, because this is a hardware country, as you stated?
Paul Beddie 14:18
I think, so just today, I got to go visit a brand new ship brought out by Maersk. It was built in South Korea. It's on its maiden voyage. It's in Yokohama. It's the world's second green methanol-powered transportation ship supply chain component. It's a huge ship. And this is the type of thing that Japan's really excited about because it's a big ship and it's got a lot of engineering, and it has a ginormous engine in it, and it uses tens of thousands of tons of methanol. But they don't really know anything about the software. But I was talking to some of the representatives of the company, and back at headquarters in Europe, of course, they have all this great tracking software that they can provide to the car companies in Japan and to the various manufacturers of things in Japan so they can track their Scope 1 when it comes to supply chain. But I think a lot of Japanese companies are still struggling to understand, well, why would I do that? What's the point? You know, how does software actually help me reduce my environmental footprint? So that is something a lot of big organizations in Japan struggle with, for sure. I mean, the Mitsubishi’s, the Nissan’s, the Toyota’s, I mean, there's certain areas where they do, and certainly overseas, those big companies, their European operations are very much plugged into what's happening in Europe and very much aware. But when I talk to headquarters in Osaka or Tokyo of these same companies, they're absolutely blind to what their colleagues in Düsseldorfor in Paris or in London are doing to comply. It's just not on their radar.
Trista Bridges 15:57
Can I say one thing, too, just quickly, about the software piece? Just very quickly. And in digital technology, I think most people would, you know, you have to kind of look at what happened to China over the last 30 years, you know, after the bubble burst. It was kind of traumatic, frankly, for the company country. Sorry. And it kind of missed, like, there's some Internet companies here, right? There's Rakuten, there's some other Yahoo. Kind of branched off. You have Yahoo Japan. But in many ways, it kind of missed, like the biggest technological revolution that the world has known over the last 35 years. Right. First that being software, second being the Internet and digital technology and everything that came out of that. So, now Japan is really investing much more in the last few years to try to catch up with that. Right.
So we have two trends here which you hear people talk about. One is DX, and that's very much in Paul's wheel. Paul's wheelhouse is probably both of these things, but definitely that DX digital transformation that people like, you know, these kind of terms kind of helps people understand. And the other is GX, the green transformation. And these two things kind of fit together, if you will. You can't really do one. It's hard definitely do the GX without DX. It's almost, I would argue it's probably impossible, you know, and then maybe it's starting to get hard to do DX without GX too. Right. Without kind of thinking about sustainability as well. So that's just to give a little bit of historical context. And I think it's a fascinating story, right? If you look at Japan over the last 35 years, it's really interesting, actually, what's happened in this country and its challenges around this.
Gael Duez 17:37
And thanks a lot, because just before deep diving into more the tech side of things, I might try some kind of very sociology, ground level or sociology for dummies question. But do you think that this lagging when it comes to software, which is mostly powered by data and data is somehow power? Do you think it is connected to the fact that Japanese culture is very hierarchical and you don't share power that easily, and actually data and handling data is poor, and you don't share data that easily and you don't manage or handle data that easily. Do you see a connection or is it me just going completely wild?
Paul Beddie 18:20
In Japan, I've been on so many big projects where the IT department is driving the big transformation project, and they tell the business, you know, a year later, oh, by the way, we've changed everything. They don't necessarily get the businesses’ buy in before they do it. And so, the IT guys kind of sit back in their cubicles and think, well, how should we do this? And they start building it without asking the business. And for that reason, you get IT that doesn't necessarily give the business what they want, but because the IT budget is completely owned by it and they don't need sign off from the business, you end up with spending tons of money building IT systems that don't necessarily deliver what the business is actually hoping to achieve. And so, I see that's being one of the reasons why the digital transformation here has been slow is because they're not necessarily looking at it from a business perspective. They tend to look at it more from a hardware and an engineering perspective. Change is hard everywhere, but change is particularly difficult in Japan. Most organizations around the world do a big IT transformation project. They use IT as the special sauce to drive transformation. Japan still uses IT to spend a lot of money and buy more hardware. It's interesting. Half the world's remaining mainframes actually are in Japan. So there's still a long, long way to go in terms of how to digitize the country in a way that makes sense. And it's also that makes it the whole concept of this kind of idea of green IT, is also difficult because the Japanese are very slow to move things to the cloud. And as you move things to the cloud, you get more control over. So, what's the power source that's running all those servers? And so it's still very slow to uptake on some of these things. Now, having said that, from a data center perspective, they're building all kinds of new data centers in Hokkaido because it's so cold that they realize they don't have to heat as much. So there's certain components of sustainability that they're thinking about. But are they really thinking about it because of sustainability, or is there some other factor as to why they're doing what they're doing?
Gael Duez 20:49
And now, going back more specifically to the IT/Tech sector, you seem to say, Paul, that you gave the example of the data centers that things are moving forward, but that the concept of green IT has been slow to take off because actually the concept of digitization has been slow to take off. And let's put aside my awkward question on the connection between data and power and stay way more pragmatic. How do you see, both of you I would say, the state of green IT in Japan?
Trista Bridges 21:22
So, I know my kind of wheelhouse is more the kind of startup world, right. And technologies that are kind of coming online to kind of tackle this problem, new companies, right? And I think one of the most interesting things that I've seen is first of all, how long it took just pretty basic carbon accounting software to come to Japan, right. You know, we have in Europe, in the US, even other countries, Australia, South America, et cetera, just hundreds of these things now, right, where we can basically just, you know, enter our information and we could track it. And it's basically a kind of a SaaS type tool, right. And everybody can access it. And I ask other people for information and we share information back and forth. And it took a really, really, really long time for that to come here. And it started in the last couple years and actually it's accelerating. And I would say that, you know, if you can kind of crack the Japanese market, you do really well, right. Because it was just kind of a completely open space. And for me, that's very kind of rudimentary technology, right? That's not anything super, super sophisticated, right? It'd be something better than I could build because I'm not a trusted technologist. But, it's kind of like the bare minimum you need, I think, to be able to manage this issue of, you know, every element of sustainability. So we're starting to see more startups doing that kind of stuff, and that's really software. And so we're starting to see innovation around that. Japanese companies, not just EcoVadis which you mentioned earlier. EcoVadis, which I have some affiliation with, is doing really well in Japan, recently came to Japan and it's a really strong market for them. And it's great, but it's also a market that didn't really have much, right? So, and there's just thousands of companies here. Like, I think that's another thing people forget is, you know, in the west, we really have kind of like hollowed out a lot of our companies in a lot of ways. We have these kind of, you know, matriarchal organizations. We've, you know, really kind of downsized them quite extensively. In Japan, you know, companies don't really die here in the same way that they die in the west. So you have just tons of companies. Right? So if you have a good product and these companies feel that they have to do it, you can absolutely do extremely well here. And so the first movers to the market, especially on the software side, are doing well. There's some more sophisticated technologies that you just don't really find here yet dealing with sustainability that you find much more abroad, like carbon capture. I have seen some more battery production technology here recently, which is kind of exciting. But yeah, I think the kind of early stuff is starting to happen. The latter stuff, even though you would think because it is very kind of industrialized country, that you would have more of that if they're kind of late to the game with that. But that stuff is starting to happen. But we don't have, for example, even in the investment sector, the size of the investment sector that we have in Europe and particularly in the US, we don't really have tons of, for example, green venture capital funds, right? They invest in carbon technology only. So there's a lot of work. But at least in kind of the startup space, things are starting to happen. But oh, my goodness, there's so much opportunity and room to improve and innovate here.
Paul Beddie 24:45
You're right, there's so much opportunity. And on the investment side, you know, it made me think of Japan's pension system is one of the biggest pensions in the world. I forget how many trillions, tens of trillions of dollars they have under management in the system. They have a mandate to allocate a certain point of that part of that to sustainability projects. And my understanding is 90 some odd percent of what they invest in for sustainability is outside of Japan because they can't find bankable projects to invest in in Japan, so they have to go outside. You know, I, in my role, I work with Japan's top 100 companies. So these are really, these are the household name companies everybody in the world's heard of. And a number of them are my customers. When I work with their operations in Europe or North America, there's a high awareness and high desire to do something with, you know, how do we make our IT more green? What are we, what are the solutions? What are your credentials to us as Capgemini? What are your credentials to provide green IT solutions? We don't get those questions in Japan. And in fact, we find it quite difficult to sell some of the solutions to Japan. The customers generally just aren't aware of them. But interestingly, what we're doing right now is we're kind of reverse engineering our way into helping customers identify. So here's some sustainability benefits of the project that you've just done. You didn't ask for this to be done, but we're doing it because we're a French-headquartered company. We have lots of stuff we've committed to in France as a global company as to how we're going to help our customers decarbonize and whatnot. And we have to actually do the work here and reverse engineer. Okay, so we took you from an on prem solution to a cloud solution. All right? We're going to help you calculate what the difference is in the carbon impact of that. We're taking you off a mainframe. We're putting you on to other types of software. So we're trying to push the needle. And I know most of the big consulting companies are doing the same. This is not unique to our company. All the big, famous consulting companies that operate in Japan, all of them are trying to build a sustainability practice. But I think everyone is still struggling to get the big companies to say, “Yes, we will spend the money to reduce our carbon footprint.” They're still not thinking that way. They'll spend the money to do the projects. But you said, well, if you add on a little bit more, we can track everything and we can go green and like, no, I don't want to do that.
Gael Duez 27:16
How come that the level of awareness is so low when it comes to the environmental impact of IT and electronic equipment in general?
Paul Beddie 27:25
I'd say it comes back to what we were saying earlier on the hardware versus software. The mentality here is engineering. I want to engineer big physical goods that generally can't see that, or they haven't been exposed to it. And again, it's also the hierarchical situation in Japan. Until you're about 45, you don't get any decision making power in a big company here. So that means these people, they're all still analog. The digital natives have yet to come into positions of power in any of these big companies. So there's a generation, it will come eventually, but it's still not there yet.
Trista Bridges 28:04
Absolutely. If you kind of look at the kind of the things that the Japanese have built, and they're very proud of having built. Cars, automobiles. I remember growing up when Toyota came to the US, that is kind of giving my age away a little bit, but incredible. Getting a car with that kind of low gas mileage that doesn't break down regularly, that's very fuel efficient. It's like a marketing marvel. The Sony Walkman. I think probably the best thing that's close to software they ever built is gaming. Right? The gaming sector, right. Which they're incredible in. My sister works for Nintendo. What a company, you know? But this is kind of like when you've done these wonderful things and also even electronics, right? All the electronic devices, television sets, you know, all these things for years that the Japanese used to make. So if you make stuff, right, you make stuff like that, how can you even really conceive that the idea of this stuff might be a problem? You know, if you're even just talking about the physical, those physical items, right. That, like, maybe people don't need these things and maybe we need to repurpose them, and they're actually kind of good at that. So if there's an area called Akihabara, I don't know if you had a chance to go when you were here, which, you know, they take devices, they repurpose them, they resell them just because people like to tinkle, tinker with things. And like I said before, right. People kind of have this history of reusing what they have and that, you know, that's something they should own, right? They should absolutely own that. They built the stuff. They should know how to kind of repurpose it and use it and that should be their first instinct. But unfortunately, and that's on the consumer side, right. That's not necessarily on the corporate side, but I think that that's kind of, it's kind of hard to let go, right. It's hard to let go of what you did so well, right. And then of course to do all that you need the energy. You needed energy to be able to do that.
We didn't talk about the great earthquake here in 2011, which was pretty pivotal in this story too, which you should say, you know, this was a nuclear powered country for a long time. You had this absolute tragedy in 2011 and the nuclear reactors were shut off. So, what's the response? Coal. So you need the energy, right. So, the only way that I think they could have gotten out that differently was if they completely changed their lifestyle and that wasn't going to happen.
Paul Beddie 30:23
For 12 to 18 months, they were providing incredible feed in tariffs for anyone who was willing to put a solar panel out in their field. And there are definitely a number of people that won the lottery by putting up very quickly some solar farms in Japan that caught huge feed in tariffs but it didn't last very long and they pivoted away and said no, no, it's really hard for Mitsubishi or Mitsui or Sumitomo, these ginormous Japanese companies to keep making big money. If you've got all these cottage people building little small one two megawatt solar farms, we don't want that to happen. Let's go get another 20 year supply contract for 10 billion gas from Qatar.
Gael Duez 31:07
Yeah, well actually that connects pretty well with the question I wanted to ask. Where do you believe the change will come from? Is it more civil society, a general rise in the level of awareness? Because I also know that NGOs are very active and powerful in Japan. There are not only big corporations. Or do you believe that it will more come from the stick side, I would say. And that some legislation one way or the other will have to be rolled out for things to start moving, starting with just measuring things and then being able to act on them.
Trista Bridges 31:44
So, the regulation side which is actually super interesting, because the Financial Services Agency, the FSA, has actually been quite ambitious on this, I would say. So, they rolled out about 18 months ago sustainability reporting criteria and they're going to be adopting what's called ISSB, which is kind of the International Sustainability Standards Board, which is the standards that we're trying to develop is principally around climate-related type things, and they believe that that should be the standard. That's another cultural thing that's actually really important in Japan, which is consensus, which is agreeing to do something together as the international community doing something here. Like, I talked about the SDGs and the UN and the respect for the UN. So, they're very much kind of supporters of that. And Ikeda-san is the gentleman at the FSA who kind of manages these kinds of questions and regulations around sustainability, amongst other things. And they really want to adopt that here. So, they're planning to bring that into effect. And that requires things like aligning with TCFD. That requires, you know, I think Scope 1, Scope 2 reporting, I think Scope 3 as well. So, these are things that are going to absolutely transform Japan. And I say that only because people follow the rules, right? So, if the government says you got to do this thing, you know, and so now people are starting to scramble to do it, it works in a way like, you know, that would not be the American instinct, right. The American instinct would be to, which is what's happening, right. To push back against it, to get a bunch of lobbies to use the state, right. To challenge it in Japan, they're like, oh, we have to do this thing. So you have to have here that top down kind of rule. I think the rulemaking is really important here. It's not the whole story, but it is important. And it's a bit of a stick. There is a bit of carrot in it in a way because if you do a good job at it, then you look like a better company, right. To stakeholders, to the government, to the people who matter.
Gael Duez 33:56
Trista, does it really matter to look good on sustainability in Japan?
Trista Bridges 34:01
I think that it matters to look good to the people who matter, right. So I think you want to be in the good graces of the people, you know, of the circle, right. Whatever. However, you define who's in that circle, right. The public is different, right. I don't think that's really a concern here, right. I don't think companies are overly concerned around, you know, looking great for the public per se. Right? But I do think there is kind of this concept of, you know, we want to seem like a responsible company, especially to the people who make decisions here, especially to the people who matter. We don't want to be a bad student. We don't want to be the outlier or the one who kind of screws up and then it's public that we screwed up.
Paul Beddie 34:45
But there is a tremendous amount of marketing efforts going on, initiatives by big Japanese companies touting their green credentials.
Trista Bridges 34:54
That's true.
Paul Beddie 34:55
People understand it's a problem. People want to see things done. But if Mitsubishi says they're doing it, then probably people think, “Oh, then it's all under control, I don't need to worry about it. Mitsubishi says they're taking care of it, so it's all good.” And I just used Mitsubishi as a, I mean you can place whatever Japanese company name you want to put in there. And people think because they trust these large organizations, following the rules and trust are two big things that you have in Japan. So, if they say they're doing it, then okay, then it's taken care of. I don't need to worry about it. And I think a lot of people would be probably, the Japanese people, would probably be surprised to understand some of the things that really happen on a sustainability or emissions perspective isn't necessarily going the way that they're being told it's going.
Trista Bridges 35:42
And I'd say that the public here doesn't challenge the corporate establishment in the same way that we do in our countries, right? Like we're absolutely, it's been like nothing but nonstop, like chaos probably since the financial crisis in 2008, right, in terms of people's relationship with established businesses. So, it's very different here.
Gael Duez 36:03
Paul, how do you believe the big corporate world where you, which you're pretty familiar with, will react to this new regulation? So there is, as Trista says, the good student effect but will they embrace it as a new business opportunity or just as, okay, some new rules to follow? That's how it should be and that's it.
Paul Beddie 36:27
I think if the legislation comes down, then they will do it. The other thing that, you know, it's still, it's not nearly as an export-oriented economy as it used to be, say 20 years ago, but exports are still a big component of what happens in Japan. And I think the external influence, particularly from Europe, on some of the regulations around supply chain, around certification, on what is green, what is the footprint of the products you're importing. I forget now that the timelines went up, but it's something like any company that has more than 200 employees or does more than $400 million a year worth of business in the EU has to comply with all the EU rules and regulations?
Trista Bridges 37:08
Yes, another few years. I think it's another few years out, but that'll come in the blanket of an eye. Right?
Paul Beddie 37:13
Cool. But as it stands right now, could Sony continue exporting whatever products they manufacture in Japan to Europe after those regulations kick in? The way things stand right now, no, they won't be able to. They won't be able to get through the new regulations simply because they can't actually get the green power to run the factory that they're manufacturing in. But those things pragmatically will make changes here, or they'll just continue shifting more of the manufacturing capacity to countries where they're actually able to get access to the green inputs.
Gael Duez 37:49
And that's something I'd like to ask you about because I had this pretty amazing interview with Professor PS Lee from Singapore. He's a data center expert, and he was explaining that no matter how hard they try, the Singapore state will not be able to go 100% renewable energy. So the way they do it is actually they're importing, as he said, green electron from neighboring countries to manage their energy transition. Because even if they cover the entire island with solar panels, which is something that they're actually doing, it won't be enough because they're so energy- intensive for many, many different reasons. The big harbor, I think they've got 10% of the entire Southeast Asia data centers just located in Singapore. So, it's a bit crazy over there. And it's very linked to the comment you made, Paul, about, hey, if I cannot manufacture using renewable energy, in that manufacturing things, using renewable energy has become more and more a standard around part of the world where I've got a lot of consumers, how will I deal with it? And so you suggested one solution, which is outsourcing the production in low carbon country or more environmental friendly standard country, which could be option one. But option two, is there any attempt to truly go full speed on renewable, maybe also coming from abroad?
Paul Beddie 39:20
I think the answer to that is yes. There's definitely some companies, big companies in Japan, that are basically trying to buy credits because they can't get off the thermal power generation or the fossil fuel-based energy production in Japan fast enough. So, instead they're investing massively in renewable energy in other markets around the world. In Europe, in China, in the United States, partly as a way to try to offset what they are unable to do in Japan. And the whole renewable energy discussion in Japan is quite a tricky one because there's a lot of factions that wouldn't seem to have a lot of political power, but that in reality, have huge amounts of political power in the countryside. Fishermen's associations, Onsen associations, businesses that would seem to be not necessarily the juggernauts of the economy, have a way to actually stop progress and innovation from happening because they don't, you know, it's not in my backyard. The Onsen Association is scared to death of geothermal power because they're scared that they're going to take away their hot water. They're taking hot water from a couple hundred feet down. Modern day geothermal goes 7, 12, 15,000 ft down to look for its heat. So, there should be no issue with the onsen being able to keep pumping up their wonderful hot water. But they don't see it that way, and they continue to block those things. And the whole discussion around wind turbines here, it's very, you know. Europe is blessed, from a wind turbine perspective, and that you've got a lot of shallow, big bodies of water right close to Europe. You know, the North Sea is not very deep. The Mediterranean is not that deep. You go not too far off the coast of Japan, and, you know, it drops 3 miles to the bottom of the ocean. So, there's all kinds of new technology for floating turbines and whatnot that are required. There's all kinds of new infrastructure that needs to be put in on the ports that want to handle something besides fish. There's challenges here to Japan having the political will to disrupt its harmony that it's got with some very long traditional components of the society in order to become more green while still maintaining modern 21st century economy.
Trista Bridges 41:53
Yeah, I think there's two things there. Topography is not always on Japan's side, I'd say, in terms of it's a huge challenge. And then also it's like the flip side of what I was saying before about the stakeholder management. Sometimes, it can be to the point where it's almost paralyzing, right. If you have all these different blocks that you're trying to kind of respond to. And, you know, again, our kind of response in the west would just be to sue them or to do basically try to stamp them out or move them out of the way, right. But that in Japan, you know, that can happen, and it's good that that doesn't always happen, right. But it can be something that's tricky to manage.
Gael Duez 42:29
And I would go for a final question. If you walk into main Tokyo streets, you will be literally surrounded by gigantic screens promoting Muslim mass consumption. Do you see, and Japan is deeply rooted in what we call Global North, highly emitting countries with a high standard of living and taking a huge toll on the global carbon budget of the entire planet and entire humankind. Do you see any discussions, any move toward some sort of sobriety or reducing these consumptions or not at all at the moment?
Trista Bridges 43:09
I think you see some very small kinds of movements, right? So, you have like Hippie movement. Yeah, yeah, yeah. And I mean, there are some things like, you know, there's some really important kinds of initiatives and innovations that have happened here that might seem very kind of simple to other people, but actually kind of a big deal. So, there's one called Mymizu, which is, you know, basically a social innovation organization who got restaurants to allow people to refill water bottles, right? And the water bottles are kind of reusable bottles of water. And you would think this is, well, that seems like normal, right? In Europe, you go to a restaurant, somebody fills up water from the tap and puts it on your table. Perfectly normal. But in Japan, there's a vending machine every 2 ft, right? So you said to think about, there's something about consumption here which is a huge problem, which is convenience. It is unbelievable. There's a convenience store every 2 ft. There's literally a 7/11, a Lawson and a Mini Stop or whatever within literally inches of each other. So, this kind of feeds the machine of consumption, right, when you can just always consume. Right? So, how do we get people to still have a great quality of life and just not do that constantly, you know? And I think that that's something that's going to be very hard to change here. Perhaps in the country areas, you know, it'll be a little different, right. But in the big cities, the problem is the big cities are where people are moving and migrating to. So the rural areas are quickly hollowing out here in Japan. And urban lifestyle is just not conducive with this, right? Because there's always these stimuli to get you to consume something, right.
Paul Beddie 44:52
The other thing that's really interesting is there's been research done by different companies, smaller research companies. I'm thinking like fabric, that have found that the segment of the population that really cares about sustainability are actually what we now refer to as the boomers, the over sixty-fives. The younger people actually aren't that interested. And it's just because wages in Japan aren't that great. It's hard to make a lot of money here. And so, the young people are more concerned around, “I gotta make money so I can pay my bills, I gotta pay the rent.” And it's not top of mind to them that, oh, we gotta do something. I mean, they just think, oh, I'm from Japan. So everything here is, we're good, you know, we're sustainable. And that's just the perception that they have. The reality is quite different. But the older generation and the older generation grew up when Japan was industrializing, basically from after the second World War. And there was a lot of pollution in Japan. There were a lot o problems. Polluted rivers, you know, there's famous cases about, you know, how people got sick. But all this was in the ‘50s and ‘60s, and the young people today have no recollection or awareness of any of that. But the older people like, hey, we can see the forests are dying, we can see things aren't the way they're supposed to be and so they care about it. But the young people, for whatever reason, don't really. But as I said again, they're struggling to make ends meet and that's where their focus is. All of that said, I mean, Trista and I, we're both from the US. Trista also has connections back to Europe. Most of the long-term non-Japanese living in Japan probably don't want to live anyplace else. It's not the sustainable juggernaut that it could be. Particularly after the big earthquake in 2011, there was a real opportunity for Japan to become a renewable power, renewable energy superpower, and they kind of passed on that, unfortunately. That aside, it is a pretty amazing place to live.
Trista Bridges 46:57
So I encourage you to come visit. I encourage everybody to come visit. Plus, the yen is very weak, so that helps.
Gael Duez 47:04
And I think what a great way to conclude our podcast. Thanks a lot, both of you. It was great having this journey into the Japanese culture and into the challenges to work more sustainably with a very nuanced discussion, which is what I really enjoy. So, thanks a lot. I don't think I will see you that soon, but who knows, maybe we will organize a Green IO conference in Tokyo or Osaka at some point.
Trista Bridges 47:36
Please, we'd love to have you. That would be great.
Gael Duez 47:39
Yeah. Well, let's discuss this in 2025. I think for the moment, let's make Singapore, London, Melbourne, maybe other places in Paris as well a success. But why not? It really depends on the maturity of the ecosystem. Once again, thanks a lot for joining the show. It was great.
Trista Bridges 47:56
Thank you. Thanks so much.
Paul Beddie 47:58
Thanks so much.
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