SUSTAINABILITY! Everyone talks about it but very less work towards it. Lately, it has been a hot discussion and rightly so. The way environment is today, it’s quite doubtful that the Earth the will be a liveable place for our future generations.
According to the 2022 World Economic Forum Global Risk Report “climate action failure” is the number one long-term threat to the world and the risk with potentially the most severe impacts over the next decade.
As a result of this distressing situation, even India has pledged to reach net zero emissions by 2070 and announced a target of 50% renewable energy by 2030.
To give a glimpse, a United Nations Institute for Training and Research report said that in 2019, 53.6 million tons of e-waste was generated globally – an increase of 21% in five years. In a recent Capgemini report, 89% of the 1,000 executives surveyed said their organizations recycle less than 10% of the IT hardware.
Interestingly, technology is caught in the crosshairs. On one side tech, in its current form and consumption model, is found unsustainable. On the other hand, it’s only the technology that can help solve this grave issue of sustainability. Therefore, CIO, as always, is again in the center of this discussion.
Until now, the CIO’s position on it was that they have done enough for sustainability by adopting virtualization and reducing datacenter footprints. No point in pursuing it or make it a priority. This notion of “I have done enough” seems unsustainable now! Cut to 2022, and there is a renewed argument on sustainability. Since there is no way one can quantify, it remains altruistic and thus very low on priority.
Why would one even bother about a larger sustainability goal?
Harvard Business School professor Rebecca Henderson, in a blogpost says, “Doing well and doing good are intertwined, and successful business strategies include both.”
What does this mean?
Simple: While profiteering is a key objective of businesses, it cannot be at the cost of sustainability. Henderson also refers to a 2019 study that reported that 73% of global consumers were willing to change their consumption habits to lessen their negative impact on the environment.
For a while, let’s go back to the fact that tech consumption, in its current form, is unsustainable and is demanding more of sustainability than just virtual servers and lesser DC footprint. For example in the US alone, Datacenters account for about 1.8% or total electricity consumption and they account for around 0.5 percent of total US greenhouse emissions. If we believe in reports, by 2030, they could consume as much as 8% of total electricity. A few modern DC operators would argue that they are increasingly using solar or renewable energy. Though praiseworthy, but these are very cosmetic and minuscule efforts.
Deloitte recently published a survey and found that 98% of consumers strongly back brands that have a responsibility to make the world better. 4/10 consumers said they prefer to buy sustainable goods. The survey also indicates that 35% of consumer product executives believe that consumer attitudes do more to drive their companies toward sustainability than demands from investors, boards, or other stakeholders.
United Nations Global Compact and Accenture, through a research found that between 2013-2019, companies with consistently high environmental, social and governance (ESG) performance enjoyed 4.7x higher operating margins and lower volatility than low ESG performers over the same period.
Even Google Cloud has released a new survey exploring the challenges and opportunities of business leaders around sustainability. In the survey, 63% of executives said they believe that sustainability is viewed as a growth center in their organisation, while 74% say that sustainability can drive powerful business transformations.
While this data could sound overwhelmingly good and give us an illusion that we are on course to achieving our sustainability goals, however there is always room for skepticism. Aiming to be carbon-zero and being actually carbon-zero are two very different things. Aren’t they? While a vague measurement is possible but not an absolute one. It’s all about how happy we feel with those cosmetic and superficial changes.
Referring to the same Google Cloud survey: Only 36% admit their organizations have measurement tools in place to quantify their sustainability efforts, and a meagrely 17% use those tools to optimize their sustainability efforts. 58% even feel that their organisation is guilty of greenwashing — conveying a false impression or giving misleading information that says a company’s products or practices are more environmentally friendly than they actually are.
Strange, as it may sound, but this whole debate on sustainability was non-existing a decade or so ago. Climate change talks were limited to academic discussions. And this is proved by the fact that in the year 2011, just 20% S&P 500 companies published sustainability or CSR reports. I repeat: it was all very cosmetic and unreal!
While the 1997 Kyoto Protocol for greenhouse gas emission was embraced by certain countries, it was the Paris Agreement of 2015 that brought Sustainability debate back. As a result, the number of S&P 500 companies publishing a sustainability or CSR report more than tripled to 72 percent.
However, the key question that remain largely unanswered is whether or not sustainability is one of the core agenda items for organisations, CIOs, and Tech leaders.
Are CIOs in a position to make an impact? The answer is a sure yes!
According to Gartner, cloud sustainability, carbon footprint measurement and advanced grid management software are the three emerging environmental sustainability technologies that will reach early mainstream adoption within one to three years.
Again, it’s too early to comment whether these sustainable technologies will get past the CFO’s office or will largely remain aspirational. In Indian context, the Datacenter players, with their enterprise tenants and hyper scalers, have a huge responsibility to lead from the front.
451 Research published a study and according to that almost 1/3rd of multi-tenant data center (MTDC) representatives said all their customers wanted contractually binding commitments to efficiency and sustainability. Companies with sustainability commitments can simply no longer afford to use MTDC providers that don’t prioritise carbon free, sustainable solutions.
What are the areas where CIOs, with emerging tech, can make a significant contribution to the sustainability agenda?
BLOCKCHAIN: CIOs can look at Blockchain technologies to help view sustainability across the enterprise. For example: blockchain-based sustainability reporting. Through a detailed, transparent reporting, organisations can better track their carbon footprint and also help in reducing emissions and transform the supply chain. A research done by McKinsey says that as much as 90% of the carbon footprint of a consumer packaged goods company originates from its supply chain. That’s where blockchain technology can be of immense help. It can bring partners, suppliers, and vendors on one platform and help share data thus reducing the digital footprint.
As published on LeaderInsights, “the U.S. oil and gas industry has long been cutting emissions reduction estimates by as much as 50% to avoid over-reporting. What’s more, they’ve been using manual data gathering approaches and multiple sources of information with no real way to trace the path of data. However, Blockchain is gaining serious traction as a solution to the emissions data problem, as well as getting a true path to Net Zero.
METAVERSE: While Metaverse is making waves, it also means generating massive volumes of data. This data needs to be stored, which means more energy consuming datacenters. CIOs and IT leaders, while riding the metaverse wave shall also think of moving their data into the cloud thus minimising the need for physical datacenters. Further, large cloud service providers/hyper-scalers (CSPs) should invest heavily in sustainable energy sources. Google, for example, aims to run datacenters on completely carbon-free energy by 2030. Similarly, Microsoft has also pledged to do the same by 2025. If metaverse has to be made sustainable, CIOs have to consider more cloud storage, and reduce the electronic waste. Using Metaverse, organisations can also contribute to many other aspects of environment such as human need for travel. Advance AR/VR-based trainings can be a boon too.
SUSTAINABLE SOFTWARE: A slightly dated but interesting research (2019) by University of Cambridge revealed that the energy needed to maintain the Bitcoin network surpassed that of the entire Switzerland. As reported in a Forbes Report, by 2040, IT is expected to account for 14% of the world’s carbon footprint, software emission being the topmost of it.
In December 2021, Daimler Trucks inaugurated the Daimler Truck Innovation Center India (DTICI) which will be spearhead the innovation activities of the group in terms of software-led development, technology and connectivity. Its software capabilities will be geared towards zero emission and connectivity. SAP Cloud for Sustainable Enterprises solution together with BearingPoint’s long-standing experience with emission calculations are resolved to develop innovative solutions to address customer concerns about environmental foot-printing across their value chain.
Against a backdrop of growing concerns for environmental, social and governance (ESG) issues, a group of CIOs and other top tech leaders in the US recently launched a nonprofit known as SustainableIT.org. One of the key goals of this nonprofit is to help clarify what benchmarks tech leaders should follow when it comes to gauging progress on various ESG dimensions.
According to the 2021 EY Global Institutional Investor Survey, 90% of investors attach a greater importance to a company’s ESG performance when it comes to investment strategy and decision-making. There is also tangible business value to be found in ESG initiatives, as companies craft new revenue streams from circular economies and reduce costs along with carbon emissions.
Are are a few areas of opportunity for the CIO to explore and emerge as the connoisseur of the sustainability agenda within their organisations:
CIOs can look at implementing a holistic program to measure and drive environmental sustainability using many technology pieces. Leveraging a sustainability-driven technology strategy CIOs and tech leaders can take a lead in making their organisational sustainability agenda more realistic, transparent, and accountable. CIOs are also part of senior strategic leadership and therefore they need to be part of the conversation on how the organisation is going to incorporate environmental focus into the overall strategy.
CIOs and the IT organisations in enterprises – of all sizes – should understand and take the mandate seriously. Only then one can think of making the sustainability programs real and reduce energy consumption, decreasing electronic waste, and achieving carbon neutrality.