Sustainable IT and Supply Chains with Niklas Sundberg

CXO Bytes

Host Sanjay Podder is joined by a guest who embodies what it means to lead with purpose in the digital age. Niklas Sundberg is the Senior Vice President and Chief Information Officer at Kuehne+Nagel, one of the world’s leading logistics companies, with a mission to drive sustainable change across the supply chain industry.

Niklas is a trailblazer in sustainable IT, author of Sustainable IT Playbook for Technology Leaders, and a respected voice on the role technology plays in building a sustainable future. His work goes beyond the logistics sector to shape the conversation on how technology leaders can achieve climate goals and navigate the challenges of data and energy efficiency.

They explore how Kuehne+Nagel’s Vision 2030 aligns with sustainability initiatives and the Green Software Foundation’s Climate Commitments. From data storage practices to carbon-aware computing, they uncover what it takes to create a truly sustainable digital ecosystem.

Learn more about our people:

• Sanjay Podder: LinkedIn
• Niklas Sundberg: LinkedIn | Book | Website

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• The Green Software Foundation Website
• Sign up to the Green Software Foundation Newsletter

Resources:

• Tackling AI’s Climate Change Problem | MIT Sloan Management Review [16:00]
• E-waste challenges of generative artificial intelligence | Nature [23:40]

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TRANSCRIPT BELOW:
Sanjay Podder: Hello and welcome to CXO Bytes, a podcast brought to you by the Green Software Foundation and dedicated to supporting chiefs of information, technology, sustainability, and AI as they aim to shape a sustainable future through green software. We will uncover the strategies and a big green move that's helped drive results for business and for the planet.

I am your host, Sanjay Podder.

Hello, welcome to another episode of CXO Bytes, where we bring you unique insights into the world of sustainable software development from the view of the C suite. I am your host, Sanjay Podder.

Today, we are joined by a guest who embodies what it means to lead with purpose in the digital age. Niklas Sundberg is the Senior Vice President and Chief Digital Officer at Kuehne+Nagel, one of the world's leading logistics company with a mission to drive sustainable change across the supply chain industry.

Niklas is a trailblazer in sustainable IT, author of Sustainable IT Playbook for Technology Leaders and a respected voice on the role of technology in building a sustainable future. His work goes beyond the logistic sector to shape the conversation on how technology leaders can achieve climate goals and navigate the challenges of data and energy efficiency.

Today we will dive into how Kuehne+Nagel's Vision 2030 aligns with sustainability initiatives and the Green Software Foundation's climate commitments. From data storage practices to carbon aware computing, we'll uncover what it takes to create a truly sustainable digital ecosystem. Niklas, thank you for joining us on CXO Bytes.

Welcome to the show. Please can you introduce yourself?

Niklas Sundberg: Thank you, Sanjay. Very happy to be here. Yes. I'm Niklas Sundberg. I'm the Senior Vice President and Chief Digital Officer at Kuehne+Nagel and I'm very looking forward to our conversation here today. I'm also a member of the board of SustainableIT.org, which is a sister organization to Green Software Foundation and we do some work together as well to advance the field of sustainability

within technology. So really looking forward to our conversation to hear and also share your journey into this.

Sanjay Podder: Thanks Niklas. So my first question Niklas, you have just come off the back of Kuehne+Nagel's first ever Tech Summit, Beyond Boundaries; where a lot of focus was on the role of AI and innovation in logistics. Can you share some of the AI driven solutions Kuehne+Nagel is implementing and how they are transforming the logistics landscape?

Niklas Sundberg: Sure, happy to, it was a great event, internal where we discussed not only about AI, but also, how we unlock data and traceability, asset tracking and so forth, real time, ETAs and so forth. So if I could just share some examples that we are working on that, I can talk publicly about it would be, how we work with customer service, for example, to be able to use an agent to respond to customer inquiries, both internally and externally, for example, and here we have scaled that out to a number of agents, but now we're looking to actually take the next step and scale it out to about 10-11, 000 people of the population.

So really a mass adoption at scale, which I think is quite tremendous. And this type of use case can also be scaled across other types of functions like HR, finance, and other types of business units. Another one, which is maybe not that obvious, but extremely powerful in our business, where data is extremely important.

The data quality is paramount when you speak to our customers because everybody wants to automate the whole supply chain flow as much as possible. What we talk about is e-touch, where we want to make the processes as streamlined as possible, run without human intervention, and so forth. And here we actually see that we can use gen AI to clean up our data and also staying clean.

And we see that we actually get better results than a human would get where maybe we get about 70 percent quality with a human correcting, cleaning data and so forth. But with a gen AI agent, we get up to north of 95 percent data quality and also helps us to stay clean. And obviously this is very cost efficient as well.

So we see a cost improvement of 95 percent on this use case. Another one I think is quite exciting is estimated time of arrival. So, together with our customers that they share data with us so that we can give them better ETAs when things will be arriving at port, arriving at a warehouse, and so forth.

This leads to that the customers will have better staff planning, for example, they don't have to pay for excessive overtime, they get a better flow of goods into their warehouses, for example. So this is something that really benefits our customers, so to say.

A fourth one, which is not that related to AI, would also be, how we do asset tracking, across the world, because I think this is extremely important. Where is my goods? Has it arrived at the airport? Has it passed customs? So to say, so not only looking at it from a wide perspective and looking at it from it has arrived at the airport, but also looking at the opportunity of geofencing, for example, so really very precise identity of where the goods are, so to say.

So, really excited about what we're doing about our digital ecosystem. And a lot of our customers are also quite excited about this. And just to put this a little bit into perspective, when I looked at the numbers last year, we were roughly trading at one and a half billion messages per year with our customers and partners.

So that's an extreme number, but we're actually continuously growing by 30%. So, the power of the digital ecosystem is extremely powerful where we can really integrate seamlessly into our customers, and make their operations run more smoothly.

Sanjay Podder: Excellent, and I think the last point you made about how the number, you're scaling up your whole digital ecosystem, right? And it, it makes me wonder. about the sustainability implication, because I know, Kuehne+Nagel's vision 2030 to build a, you know, trusted and sustainable supply chain. My, my, the question that pops up in my mind, Niklas, is when you try to use all these wonderful technologies, generative AI, you spoke about customer support, accuracy of information;

some of the challenges of technologies like gen AI is, for example, hallucination. you know, how do you make it bias free explainable when you have to exactly say where is the, you know, the good in the supply chain? So a lot of this risk that comes with gen AI. What we also talk about responsible AI risk. I would like to hear a little bit more from you on you know, how are you making this wonderful new transformation responsible so that, you know, there is less bias, there is more accuracy? You know, you spoke about the data, is the data free of bias? So yeah, can you just educate the audience and me a little bit more on what, how you're thinking about this dimension?

Niklas Sundberg: Yeah, for sure. So I think it's important, regardless of any technology that you work with, that you're not trying to go out and find a problem to, with the technology, so to say. It's important to identify what is the problem that you're trying to solve. So what we have adopted internally, And we, within our responsible AI policy, we have nine principles that we are, or are, are really sort of targeting and communicating wide across.

It's all obviously about data privacy, it's to make sure that we put a human in the loop, it's that we build AI in a sustainable way, that we are conscious about energy consumptions, water, and so forth. The key thing to adopt this technology is, is really to think about, the problem. What problem are we trying to solve?

And then, secondly, the people. We always need to make sure that we have a people, a person in the loop regarding the technology when we buy. Because I think we are also in a nascent state with gen AI. We talked about hallucination. We also need to make sure that we continue to build trust in this. And I think this will take some time.

So we really enforce a strong force that point that we also need to have a people aspect into this. And then the third thing is that we need to be principle driven. So coming back to the nine principles that we have, derived as part of our responsible AI policy. So to really sum up, it's three P's, which is quite easy to, remember.

Problem, people, and principle.

Sanjay Podder: Wonderful. Easy to remember the three Ps and I will probably put the S outside the P, which is about the next question, which you are so passionate about. I love the Amazon bestseller that you have written; the Sustainable it Playbook. The environmental impact, because very often when we talk about responsible AI, we forget the environmental impact, and that's something both SustainableIT.org, Green Software Foundation, we champion a lot right? What is the demand on energy, demand on water resources, emission, which is obviously going to snowball with the widespread adoption of AI as we see, but we all believe that there are steps one can take to bring this, you know, issues under control.

So any thoughts on going back again to your book, as well as the big problems that you are, the first of the three P, the problems you are trying to solve, right? You know, how are you bringing the sustainability dimension and putting it in the center, right? You know, the environmental impact, also, given you're in Europe, the EU AI Act, a lot of new regulations coming up, would really like to see how this is translating in into practice, the perspective from a practitioner right from the top?

Niklas Sundberg: Yeah, I think when I wrote the book, a couple of years back, that was sort of in the nascent state of gen AI. At that point, I think that the narrative around sustainable IT was a bit easier because if you're, you can run your code more efficient, use your hardware more efficient, use it for longer time, data centers powered by renewable energy and so forth, then that's also a positive case on IT cost. So, if you are efficient to reduce IT cost, then you can also be quite efficient to improve the sustainability parameters, if you are aware of the different levers, so to say. I think the challenge now that we have, if you fast forward a couple of years, and we see that the gen AI, Race is really powered by, you know, three, four powerhouses, so to say, into the space.

And that forces everyone really to put more pressure on these larger organizations, like Microsoft, Google, and Amazon of this world. Unfortunately, what we see, obviously, is that we have, if you look at Google, they have increased their emissions by 48%. Microsoft have increased their emissions by 40%.

So the promise that they made back in, 2020 when Microsoft, for example, said that by 2030 we're gonna be net positive, and by 2050 we're gonna give back all of the CO2 that we have. expanded since the inauguration of the company in the early 1970s. I think they are really struggling to meet this commitment now, which is becoming a bit of a problem.

And also, if you take another example with water, for example, we also see that Microsoft, in the last two years, with the build out of OpenAI infrastructure, they have increased water usage by 14 million cubic meters of water. And just to put that into perspective into something that's tangible, 14 million cubic meters is the same amount that Reykjavik, the capital of Iceland, with 300,000 people in population uses in one year. So obviously, the water is becoming a big issue as well. And we already see that in the U.S in Iowa, for example, where Microsoft has put a lot of their data centers. So it's a competition between, do we build out the agriculture and the farming, versus building data centers? So, I do think we have, Some major challenges ahead of us as well, but then on the positive side, I think we also seen some black swan events like the energy crisis in Europe that wasn't really planned, so to say, but it came because of the evil of the war in Ukraine and everybody had to rethink their energy security, so to say. So within a couple of years, you really saw the build out of a lot of renewable energy sources. A lot of companies was rethinking in terms of the energy security, and then we're going more towards renewable energy sources. And I think that needs to continue to happen because otherwise we're really going to have a massive problem on our hands.

When I wrote the book two years ago, nobody in the U. S., was not really talking about the energy consumption in, in the U. S., but now there are some numbers stipulating that if we're not careful, also in the U. S., by 2030, 25 percent of the energy, is going to go to data centers.

So I think we are starting to build this massive problem and we really need to find, you know, cross industry solutions to start building these things out, so to say. And to find a good way in terms of how we build this harmony because I think the genie is out of the bottle when it comes AI, you're not gonna be able to stop it.

But I think we need to find more sustainable ways to build sustainable infrastructure around this. I do think we also, unfortunately, need some legislation. I think we need to bring some more awareness. last year I wrote an article on MIT Sloan Management Review, where we also, put out a number where

that one chat GPT call is equal to 100 Google searches, for example. So obviously it's massively consuming, not only when you train the model, but also when you're actually consuming the model, so to say. So, I think also we need to bring the awareness and I think you, we need to. have some more legislation around how we can build out sustainable infrastructure and not only sell the promise of what we can do with AI and build these sustainable solutions, but I think we have a very great responsibility to make sure that we build sustainable digital infrastructure.

Sanjay Podder: Absolutely. It looks like a big reason for you to write the next version of your book. You know, you can have a whole chapter dedicated to sustainable AI, sustainable AI training, inferencing, fine tuning, and this is indeed a big challenge, you know, without any doubt, gen AI is going to transform our business in a very positive way, but we have to manage this risk at the same time.

Going back to your book, Nicholas, you spoke at that time about three pillars when you spoke in the context of the IT strategy, sustainability in tech, by tech, and sustainability in IT, by IT, and IT for society, right? Do you want to talk a little bit more, especially given some of the recent challenges that you spoke about?

You know, how do organizations, how do the chief information officers, and chief digital officers, look across these pillars as they craft these sustainable IT strategies for their organization. Any thoughts?

Niklas Sundberg: Sure, so I think, you know, what I also mentioned in my book is the, the EU CSRD. Which now also, comes into life, so by 2025, you need to start reporting on your scope one, your scope two, and also your scope three, and for example, for a company like Kuehne+Nagel, 98 percent of our, scope is in scope three, which also means that we are reliant on our providers, our vendors to provide us with reliable data. And I think here it also needs to mature within the IT realm, to advance this sort of say. I think, I don't think that reporting will be perfect, but I think it's a good starting point to, to really start putting the headlights on these topics. but I think that what I still would recommend to do is that you at least establish a baseline within the context of sustainability in IT, in terms of your own footprint, to look at, okay, what are the bigger levers that, that you can leverage to become more sustainable? Is it in your hardware? Is it how you develop your software? Is it how you leverage cloud versus data centers? Can you leverage more automation? Is there an opportunity to relocate, your workload to, renewable data centers or renewable cloud providers, locations where they have renewable cloud?

So I think it's important to not get overwhelmed because you can easily find 15 different great initiatives, so to say, but I think, you know, pick the three to four based on your baseline that really makes a difference. And then you will probably see that this can probably make 70-80 percent impact on the total scope of your emissions, so to say.

Sanjay Podder: In your present role as well as earlier as a CIO of Assa Abloy, what are those top three levers you found very helpful, you know, where people should start with? It may, it may vary by organizations, but any particular ones you would like to highlight that we, like the low hanging fruits, we miss out often?

Niklas Sundberg: I think, you know, it's important to also understand that every company has different starting points, so to say. But if you work with the large companies like Assa Abloy or Kuehne+Nagel of this world, I think you're always in a mix of having cloud, being on premise. So I think that's a great opportunity to look at your landscape and say, okay, how can we optimize this, for example, what makes sense to put in the cloud?

Where can we put this more into containers? Where can we re-architect in terms of function as a service? And so forth, where the code is only, consumed in terms of energy expenditure when it's run, for example, rather than having a, a monolith application that just, it's idling for a very long period of time, but it's still consuming energy, so to say.

So, I would really recommend to look into your data centers versus your cloud, where the opportunities are there. I would start measuring if you have a lot of internal software development. I would look to measure, your internal product teams, and make it a little bit of gamification here to really show how efficient your code is running, how can you optimize it and really bring that awareness to really put the power at the hands of the software engineers. I think that's a very important message. And then the third thing is, is obviously the e-waste, because I think any company that of a larger size, a company of 30,000 people with 30,000 assets and then a refresh cycle of three years. Only that hardware for laptops is 50,000 ton of CO2 over a 10 year period. So here, obviously there's a lot to do as well in terms of working more in a circular way, work with reputable partners that can help you to refurbish, upgrade, then either you can sell that hardware or you can actually donate it.

So also to, to instill that third principle, IT for society or, or tech for good. So at the moment, for example, we are instilling one of those programs in Portugal where we see a huge need for teenagers, that go to school that don't have access to computers at home, for example. So we're, I think it's also important to think about the democratization of technology.

So that, the ChatGPT, the technology that we are developing, it's not only for the privileged few, but we also need to make sure that we bring it in a democratized way. I think also that the IT for society piece is also important to think about to see if we can donate hardware, for example, because if we keep the hardware alive for another year, if we calculate on a three to four year life cycle, it's another 25 percent reduction in CO2 spent per hardware asset.

So we really have a great benefit of keeping the hardware alive because this is also a massive, massive challenge, with 60 million ton of electronic waste every year. So it's comparable to the same amount as the Great Chinese Wall, when we talk about 60 million ton of electronic waste. And it's the fastest growing, e-waste stream in the world.

So we really need to curb this. And since we're talking about AI, I recently saw a study as well from Nature, where they suggest that by the end of this decade, by 2030, the hardware, just from AI, could contribute to 5 percent of that, electronic waste by the end of this decade. So I think also we also need to make sure that we think not only about the energy, the water, but also, the circularity in terms of how we manage the hardware and the life cycle.

Sanjay Podder: Excellent. And I'm glad you brought out the whole point of, you know, gamification and building a culture amongst developers, for example, for, because, you know, this is not just about writing efficient code or using less hardware. This is about organizations embracing a culture of sustainability IT of green software practices and that needs to come right from the top.

And that's the purpose of this podcast as well. I also like the fact that you highlighted on e waste because very often we lose sight of embodied carbon. We are all thinking about operational carbon emission and the embodied in some cases may be larger than even the operational emissions. and therefore everyone needs to take care of how long you use that hardware and, you know, how do you do your procurement practices, which are much more sustainable and stuff like that. So these are all great, great insights. So finally, thank you, Nicholas. You know, this was, I'm sure for all practitioners, this is going to be very good insights to get started on this journey or even fine tune the journey.

I'm looking forward to the next version of your book. I was very delighted to write a small piece in your earlier book, but would love to contribute on the sustainable AI part of the next version of your book. And thanks for everything you're doing to, accelerate the adoption of sustainable IT, with the playbook that you wrote, which for me is one of the finest books I have read on the topic.

Thanks for joining us today. And I hope to see more progress in this area with your thought leadership, and SustainableIT.org, which is again a very fine organization that Green Software Foundation we love to work with. thank you so much. So, until the next time, this is the end of this episode, but I look forward to meeting you all in the next episode of CXO Bytes.

And, just as a reminder, everything that we discussed, it will be linked in the show description below the episode. So see you again in the next episode of CXO Bytes.

Niklas Sundberg: Thank you.

Sanjay Podder: Hey, everyone. Thanks for listening. Just a reminder to follow CXO Bytes on Spotify, Apple, YouTube, or wherever you get your podcasts. And please do leave a rating and review if you like what we're doing. It helps other people discover the show. And of course, we want more listeners. To find out more about the Green Software Foundation, please visit greensoftware.foundation. Thanks again, and see you in the next episode.