IFS Q&A: Using AI to Drive Value & Sustainability

Michael Batstone is the Global Climate Strategy Manager at IFS, a role he has held since 2023.

Throughout his career, Michael has acquired expertise in data analytics, management consulting and sustainability advisory. He is enthusiastic about utilising technology and driving climate impact to propel the path to global net zero.

At Sustainability LIVE Net Zero, Michael featured on the Global ESG Strategies panel alongside Joe Murphy, Executive Lead of the Ellen Macarthur Foundation, Olivia Ruggles-Brise, Vice President of Sustainability at BDC Travel and Kuram Gwakyaa, Head of Sustainability at Mitie.

This panel discussion explored how organisations can develop robust global ESG strategies to address environmental, social and governance challenges while propelling accountability and transparency.

How was your panel discussion?

It was really interesting – the topic was global ESG strategies. There's been a lot of different directions in which speakers yesterday and today have spoken and that tapped into a lot of them. 

What's IFS’ relationship with ESG and ESG strategies?

IFS is a global enterprise software business. So that means we work with a lot of customers in heavy asset industries, and we have great potential to help them. For example, on the carbon front, decarbonisation of those industries can play a massive part. So we had a recent study by a third party that showed that if we have 100% market penetration in our top three industries, we could potentially support a reduction of 2.6% of global emissions – or put another way the entire global aviation sector. So we can really have quite a big outsize impact as a business. 

Our sustainability strategy has a few different three pillars really: 

• First of all, excellence in our own business. How can we talk the talk, lead the way and demonstrate that to our customers in the wider world.
• Secondly, it's about supporting our customers particularly looking at climate and carbon. 
• The third piece is having a broader impact, we call it. So working with organisations like our partner charity in Sri Lanka, the IFS Foundation to help break the poverty cycle.

Recently in the news we've heard a little bit of criticism for ESG. Have you been aware of any of that sort of discourse happening around ESG?

Yeah, absolutely.

I feel like ESG and sustainability has been on a real journey over the past decade or more. We had a sort of voluntary corporate responsibility or CSR initiative to deliver voluntary benefits. We've had marketing around environmental claims for a long time. We now see regulation and compliance as a driver in some parts of the world. 

But what we're seeing more and more particularly recently is a streamlining slimming down of what is really important about ESG and sustainability. Places like North America have seen some backlashes against ESG as a concept. But what we've really seen – something that's been reflected at the conference over the past two days – is that the things that will really stick and will last and weather the storm, so to speak, are initiatives and strategies that are really tied to tangible value for businesses.

For example, if you have a marketing scheme that is based on a claim that is not substantiated, you could open yourself up to a lot of reputational risk. And that's the sort of thing that's been in the headlights recently for worse. 

On the other side, in terms of real tangible value from sustainability initiatives we're seeing with our customers and more broadly in the market, things like operational efficiency, which is one of the main things our software can deliver for customers. 

Delivering win-win situations where you increase operational efficiency, you are cutting costs at the same time you are cutting emissions or energy or resource use. So those sort of use cases are the ones that are going to stick and ride through the storm. I think it's also just important to recognise and remember that whilst there is a short-term focus and scrutiny backlash in the background, the climate continues, climate change continues. The recent LA wildfires cost an estimated US$165bn in terms of loss and damage.

It is not a case of if businesses and organisations are going to have to take this seriously. It's a question of when and more importantly, how.

How does IFS work with clients and customers in terms of sustainability?

Sustainability is not a new concept for IFS and our customers.

What we ultimately provide to customers is software that helps them run their businesses effectively, minimise costs and drive value. 

We have a concept of sustainability embedded.

The idea is that sustainability is not in a silo – it's not an add-on to your business that you either need to do as a tick box exercise or compliance. It is something that's core to your operations. 

For example, we have software which is called PS OPSO. It's planning, scheduling, optimisation. Many of our customers use this to deliver massive benefits in terms of not only cost reductions, reduce fuel usage, reduce time spent out on the road.

It can be used for both the people and vehicles, and the benefits can be significant. 

On the other side, outside of planning of resources, we also see big improvements from customers who are using our software intelligently to manage their maintenance of their assets. 

We have predictive maintenance solutions, and a lot of these incorporate AI to deliver additional gains. 

If you can predictively understand when your assets may fail, you can then maintain them early, extend their lifetime, reduce the emissions associated with managing that infrastructure whilst optimising the costs. 

So we're really looking for win-win situations for our clients, and we're starting to see this really become something they're asking us more and more about – and it's something that's already there in the product.

How do you see AI not only changing how things work at IFS, but the broader pursuit of sustainability?

AI has been around for decades. I think it's really grown in popularity and in recent years it has become something we are passionate about. 

At IFS, we think it's something that has a real potential to transform industries, individual lives and the whole way that we do work and our customers work. 

At the same time, we need to recognise that today the benefits of AI are not fully realised. There's a lot of hype. I've heard talks today in the procurement sustainability conference about how it's very important to separate the hype from the reality and proven value. I think we are in that situation now where there is a lot of investment hype. 

There hasn't been enough time or focus generally on delivering tangible value, which as I talked about earlier, is so essential. 

The way we're thinking about it at IFS, we have industrial AI, which is very much focused around use cases that are proven and things that our customers need support with and that will deliver value. And we apply AI to those use cases. So it's not a case of let's just invest in the technology and hope for the best. It's where can we deliver value and where can AI support that?

And let's not use AI just for everything – there'll be times when it makes more sense to use a different form of technology. 

It's going to be a very interesting year ahead and a few years ahead with all the hype around AI.

If you had to give one piece of sustainability advice, what would yours be?

Well, I'd like to link it to one of our core business values. Not to speak too much more about IFS, but grit is something that we really value at IFS internally.

It's about resilience in the face of adversity. It's about progressing forward even when things aren't easy. 

I think that's so applicable to the world of sustainability with the current focus in some parts of the world. It's really important to collaborate with others and really grit.

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