Dirk K. Martin, chief executive and founder of Serviceware SE, discusses how IT cost tracking can help businesses reduce their carbon footprint, meet sustainability targets, and control costs.
- Whilst the impact of the climate crisis on our planet and our lives becomes more evident, those working in technology and innovation know that sustainability is more than a nice-to-have – it’s an urgent requirement.
- Many businesses, however, are continuing to face financial turmoil, amid a disruptive economic landscape, and chief information officers (CIOs) are finding themselves stuck between a rock and a hard place when it comes to investing in sustainability.
- To achieve a business’s green IT initiatives, the C-suite must engage the whole organization and gather details from each area of the business to ensure that data is accurate, and there is full transparency.
This year, the United Nations Climate Change Conference (COP28) will force countries all over the world to assess their progress on the climate change agenda set out in 2015 under the Paris Agreement. By doing this, any gaps in present efforts will be identified and a clear strategy will be emphasized to guarantee that the 2050 net-zero goal will be reached.
Regulators, investors, and customers are all demanding to see action as pressure mounts on businesses of all sizes and across all industries. Businesses must be able to show that they have sustainable practices in place and evidence the specific impact they are having on the net zero race. It is no longer enough to just ‘talk the talk’.
Although there is a clear knowledge of the climate threat, economic instability and the rising cost of living have made it all too common for the sustainability agenda to be sidelined in favor of more urgent and pressing problems. According to a report by Board Agenda and Mazars, 30% of leadership boards have not yet implemented an ESG framework and many are finding this difficult to enforce due to economic pressures. Despite this, the big picture is encouraging. It is clear that boards recognize the importance of implementing an ESG framework with 57% of boards having a formal structure for ESG governance.
As society continues to transform digitally, we rely on more technology platforms to conduct business operations and the associated carbon footprint continues to grow significantly. In fact, the technology and telecoms sector alone generates an estimated 5% of global CO2 emissions, twice as much as the whole of the aviation sector, and this figure is set to surge to 14% by 2040.
CIOs are therefore finding themselves stuck between a rock and a hard place, when it comes to needing to reduce their organization’s environmental footprint, but also ensuring Green IT investments remain cost-effective to meet the current and future needs of the business. Luckily, optimizing spend and driving sustainability can work hand in hand. Businesses can effectively manage their carbon footprint and increase efficiency to reduce carbon consumption by applying the concepts of IT cost monitoring and adopting a holistic approach, just as they would do with any other business costs.
Going green – it’s not exactly as it seems…
Whilst investment in Green IT has skyrocketed in recent years, it is important to explore whether it really is always greener on the other side. The adoption of sustainable IT practices is important, but there can be some unexpected carbon emissions to consider. The adoption of cloud computing, for example, which has been driven in part by its promise of improved sustainability – still contributes to 2.5-3.5% of all global greenhouse gas emissions. That’s more than commercial flights which sit at approximately 2.4%.
Telecommuting to facilitate home working also seems like a greener alternative until you factor in the new office equipment, personal heating, Wi-Fi and electricity needed by each employee. That said, effective Green IT solutions are still the way to go. Not only do they offer a more sustainable option for the environment, but additional benefits include cost savings as energy bills are reduced, increased regulatory compliance, and a competitive advantage with the environmentally conscious customer. Research suggests that there has been a 71% rise in online searches of sustainable goods globally over the last five years – a statistic that simply cannot be ignored.
The ultimate balancing act – sustainability, cost, and performance
To meet all three of these needs a holistic approach to Green IT is needed – and this begins with transparency. Business leaders need an in-depth understanding of the environmental impact of all of their services or products to ensure they not only meet energy efficiency standards but also maintain reliability and performance. By tracking usage data over time and across multiple departments and locations, CIOs can map out metrics that measure both short-term savings and long-term gains along the value chain. Having a clear insight into external vendors, energy infrastructure and end-user services is invaluable and allows for greater control over sustainability whilst ensuring value is delivered to the business.
But how exactly can businesses go about gaining this transparency? Fortunately, many external vendors already provide information about the environmental impact of their products and services. There is a huge amount of data ready and waiting to be used. Public cloud companies, for example, provide detailed data about the carbon emissions associated with their services.
Internal organizational data such as asset management and time tracking are also extremely useful and can help to ascertain how dependent the business is on each IT service. Utilizing such data businesses can begin with an 80/20 approach to assign CO2 emission accurately within the service value chain. Whilst basing this on real-time data is ideal to work to, assumptions and allocation keys can be used to bridge these gaps and provide a good start.
Act now to stay on track
To achieve a business’s green IT initiatives, the C-suite must engage the whole organization and gather details from each area of the business to ensure that data is accurate, and there is full transparency. It is also crucial that goals are set and that your organization is equipped with the tools to monitor progress alongside this. For example, if you are aiming for balance sheet CO2 neutrality by 2050, you will need to understand the progress you have made so far, what you want to achieve and the current gap that needs to be filled in order to get you there. Ensuring complete visibility of the end goal and not losing sight of it is the only path to success. This also means staying ahead of any challenges that may arise and inhibit your goal.
By implementing an effective Digital Value Model (DVM), which creates a clear path for data mapping and effective reporting, business leaders can easily ascertain information on how much carbon a particular business service or unit is using, track against a target and identify where action needs to be taken. With an in-depth understanding of the environmental footprint of the business’s IT services and products, CIOs can ensure that sustainability goals are met.
The opinions of guest authors are their own and do not necessarily represent those of SG Voice.