Concern for the environment is gaining traction among the business community and will become even more prevalent in the next year as sustainability becomes a political hot potato.
Pundits predict the 2008 general election will be fought on the environment, so don’t expect this to be a flash-in-the-pan trend. Already a pilot group of government departments is required to be carbon neutral by 2012. Additionally the government is developing a single procurement policy, requiring sustainably produced goods and services to be used wherever possible.
To fully understand why this is important (and relevant) we need to take a closer look at the Kyoto Protocol, an agreement made under the United Nations Framework Convention on Climate Change.
By signing the Kyoto Protocol, New Zealand committed to reducing greenhouse gas emissions back to 1990 levels over the period 2008 to 2012 or take responsibility if it can’t meet this target.
The reality is that New Zealand emissions continue to increase and soon enough we’re going to have to start paying, in the form of carbon credits.
The Kyoto Protocol set quotas on the amount of gases a country can produce; in turn each country set quotas on the emissions of businesses. A carbon credit gives the owner the right to emit one tonne of carbon dioxide. Businesses who run over their quota need to purchase carbon credits for their excess emissions and those that run under can sell their credits.
Research firm Gartner says that IT’s environmental impact continues to rise. It says two factors are highly visible to policymakers; the direct pollution of electronic waste and the indirect global warming from the electricity computers consume.
While Gartner says the sky isn’t falling it does say a tipping point is close and calls for ‘green it’ action from governments, regulators, customers, consumers and investors will get steadily louder.
It recommends confronting the trend, investigating the issues, tracking the effects and designing control actions now.
Gartner predicts that by 2009, one-third of IT organisation will have ‘improved environmental sustainability’ as a top IT management issue and included as a priority item in the list of buying criteria.
Gartner warns that IT vendors must review their policies and practices to reflect changing views and focus on environmental sustainability or risk being branded as part of the environmental problems.
It says there is a small window of opportunity – particularly for IT vendors – to grab some of the moral high ground and differentiate by moving the debate (as well as product and service design) beyond simply ‘green IT’ and power consumption to tackle the more challenging issue of environmentally sustainable IT.
So where does IT fit into the picture?
Peter Neilson, chief executive of the New Zealand Business Council for Sustainable Development, says there is significant opportunity for IT to help businesses meet environmental compliance.
“Given the way the world is going, polluters will pay,. They’ll pay a price for emissions and pay increased costs for resources such as water. Technology that helps businesses actively manage and monitor their usage will be a great asset,” he says.
Neilson says there has been a dramatic shift in the consumer market, with an increase in demand for products that show respect for the environment.
He also notes there is increasing sensitivity in the business world around the cost and environmental impact of travel and suggests virtual meetings have real business value.
“One of the biggest inhibitors is the quality of the technology. We’ve all tried to interview someone by video and had that awful delay - it needs to be real time and high speed. If technology can provide the equivalent of passing a colleague a note under the table to tell them to shut the hell up, or if you could organise a company-wide conference call in under three hours it would drastically change how people do business.”
Neilson points out that if conferencing technology were ubiquitous users would soon question the value of travelling to attend a meeting.
Auckland-based Nick Jones and Associates provides research and consultancy services to businesses in the area of social responsibility and sustainability.
Nick Jones, company founder and director, believes there is a very real opportunity for companies to take the lead through corporate social responsibility and sustainability programmes.
Research that Jones’ company conducted with AC Neilson shows that almost half of New Zealanders will buy from companies that act responsibly towards the environment and society.
Jones says businesses that actively seek to address these issues will enjoy increased consumer and employee support.
Can you make money out of it?
Well yes, especially when you can put a dollar value on the savings.
On average says Paul Harapin, Vmware ANZ managing director, around 50% of an organisation’s power usage goes on IT.
“It now costs more to cool down a server than it does to run the box itself. In New Zealand it currently costs $2,000 a year per server to cool,” he says.
Regardless of why environmental responsibility has become front of mind, Harapin says it now has the backing of business leaders.
“A year ago it was a nice thing that a customer talked about, now it’s a primary question in every conversation. If you think about it, the value proposition over the last twenty years has centered on time and cost savings. Now carbon savings is just as important.”
Harapin is in discussions with government ministers in Australia about how virtualisation can help reduce carbon emissions and plans to do the same here.
He points to Californian power company Pacific Gas and Electric (PG&E) offering financial incentives to customers who pursue energy efficiency projects in data centres.
PG&E pays customers up to 50% of the costs of a server consolidation project – including software, hardware and consulting.
Harapin says this works out at around $200 per server and is capped at $4 million per customer.
When it comes to environmentalism Kevin Mackin, director of web conferencing specialist WebEx, says customers get it.
“I think people understand that we have to do something for the environment. If that happens to be good for a CFO at the same time then it’s a win-win,” he says.
While corporate players have staff in place to deal with social responsibility, Mackin can see a groundswell from the bottom up.
“It used to be that environmental decisions were made in the boardroom but now that’s beginning to move onto the desktop and knowledge workers can make real changes.”
Mackin says he has tried out three or four value propositions around WebEx to see what message best resonates with customers.
“A year ago the environment wasn’t a big deal to people but now around 30% of customers respond to the message. People are looking for the best solution to leverage knowledge in the smartest way across an organisation and it has to be environmentally sound.”
Regardless of whether the IT industry starts selling on an environmental basis Mackin says customers are demanding it.
“You don’t have to be a tree-hugger to talk about the environment. If it makes good dollar sense and is socially responsible why wouldn’t you go for it?
Is it applicable in reseller-land?
John Harrop, sales director at SoftSource, says he’s noticed a growing trend among mid and large corporate customers to look beyond the box.
“They’re now considering not only the cost of the hardware but also the soft costs, such as energy use and the cost of dealing with heat output. This is especially noticeable in companies whose traditional computer room environments are nearing capacity,” he says.
To put it in perspective, Harrop says one of his customer’s recently moved to a virtualised environment and has already reduced their footprint considerably.
“Three weeks ago they had a power cut – and the generator failed to start – the network administrators started running around because, before virtualisation, they would get 15-20 minutes out of their UPSs. The ops manager sent one of them down to the computer room to see how much time they actually had left before things would start shutting down. The administrator came back laughing and said they’d be good for another two and a half hours – that’s got to be better for the environment.”
Another key trend Harrop has noticed is customers asking him to ensure proposed equipment is Restriction of Hazardous Substances (ROHS) compliant.
“Even though this is a European standard it does present challenges as some manufacturers seem to be producing the same model in two factories – one ROHS compliant and one not – and shipping the non ROHS equipment to this part of the world.”
Harrop says he hopes this is just a temporary issue and manufacturers will work on cleaning up their processes and practices.
ROHS restricts the use of certain hazardous substances, including mercury and lead, in electrical and electronic equipment.
Practice what you preach
Not only are its products environmentally friendly but, as a company, 3M is a world leader in practicing sustainable business.
Terry Roper, 3M corporate marketing and IT manager, says sustainability is part of the company culture.
“As a company it’s the way we think. Sustainability is something you have to believe in, it has to be part of your essence rather than a means to sell product,” he says.
In fact one of the first projects Roper was involved with was the 3P – pollution prevention pays – programme that aims to prevent pollution at the source rather than removing it after it’s been created.
Roper says 3P is a key element of the company’s environmental strategy.
He says 10% of a 3M employee’s time is allowed for them to take on a projects which could include further reducing environmental impact.
Roper points to internal policies to reduce paper consumption by moving purchase requisitions online. While he admits this alone isn’t going to save the planet Roper says the small things soon add up.
So far 3M employees worldwide have completed over 6,000 3P projects. To qualify a project must eliminate or reduce a pollutant, benefit the environment through reduced energy use or promote more efficient use of manufacturing materials and resources and save money through avoidance or deferral of pollution control equipment costs.
Roper says there has been a general shift in the market with customers now wanting to deal with environmentally sustainable companies.