Hugh Jones, Managing Director at Carbon Trust Advisory, explores how CIOs can use sustainability to help the business cut costs and improve efficiency
Hugh Jones, Managing Director at Carbon Trust Advisory, explores how CIOs can use sustainability to help the business cut costs and improve efficiency.
CIOs must be aware that the British government’s decision to set a legally binding target on greenhouse gas emissions beyond 2020 is a clear indicator that the UK intends to be a global leader in the low carbon economy.
But there is a significant catch: just 59% of the blue-chip companies have robust targets to cut carbon emissions, according to analysis by Carbon Trust advisory.
Many organisations are, therefore, failing to grasp the opportunity presented through the low carbon economy and are not protecting the future value of the business. That failure could turn out to be a crucial mistake. “if you don’t have targets in this area then, in five or ten years’ time, your business is going to be in pretty poor shape,” states a unilever representative in a recent Carbon Trust report.
Pressure for change comes from multiple directions. Take consumers, where CarbonnTrust research suggests 61% of consumers are more likely to buy from companies that have a good reputation for reducing carbon emissions. Such consumer preferences are beginning to impact the bottom line.
WPP and Millward Brown research suggests about 20% of sales are influenced by corporate reputation, of which about 10% are directly related to perceived environmental behaviour. Kingfisher Group, meanwhile, is the only bluechip company to set a public target for driving revenue from the sale of sustainable products. The strategy has already allowed Kingfisher to increase its sales of independently verified eco products to £1.1bn, accounting for 10.5% of total retail sales across the group.
Pressure for change is not just restricted to consumers and a failure to deal with the regulatory bind could actually lead to another missed opportunity. Major businesses are wasting at least £1.6bn annually by not implementing energy efficiency measures, according to Carbon Trust Advisory research.
The good news is that technology offers a real opportunity for CIOs to make a major impact on their organisation’s environmental strategy. In fact, just changing the underlying configuration and design of distributed devices could lead to substantial savings of up to 20%.
Great success stories often revolve around companies that combine technology prowess with the core business proposition. McLaren is actively exploiting its engineering expertise to develop low emission technologies for a potential mass-market crossover.
Whitbread, on the other hand, is harnessing innovative and sustainable low-carbon technologies to build new green Premier Inn hotels. The new sites use 70 to 80% less energy and Whitbread has so far saved £2m by working with the Carbon Trust to cut costs.
CIOs are now expected to play an active par in managing the carbon footprint. The reasons are simple: Gartner has found that, for an average business, IT accounts for a significant proportion of total energy bills, reaching up to 40% in some cases.
IT leaders are uniquely placed to provide technical solutions that reduce the environmental impact and improve the bottom line. Virtualisation, for example, can help the business share computing resources and address issues of hardware under-utilisation and energy consumption.
Cloud computing, meanwhile, provides a further step forwards and potentially extends the utility approach across a company’s IT real estate. On-demand technology, however, should not be seen as a panacea and the CIO must seek assurances that service providers have taken steps to optimise their data centres. Guidance comes in the form of the EU Code of Conduct and a series of standards that can be used to demonstrate how a supplier is acting responsibly.
BT for example, spends £12 billion a year on products and services, and has pioneered a scheme which elevates environmental protection and energy efficiency as key factors across 80% of its purchasing decisions.
Working with the Carbon Trust, BT has developed a supplier engagement programme and run a series workshops to help suppliers understand the benefits of increased energy efficiency and reduced carbon emissions.
Pressure through the supply chain is also beginning to exert a wider influence on procurement opportunities. Diageo reports that its customers, such as Tesco and Walmart, are driving the sustainability agenda. And TNT recently attributed a lucrative contract to Staples because of the firm’s environmental performance. Such moves are timely, as assistance will also soon be available to IT businesses measuring the carbon impact of the products and services they purchase and produce. A wide collaboration of stakeholders, including BT and the Carbon Trust, has come together to develop common methodologies to calculate the carbon footprints of technology.
Better carbon reporting means CIOs will, in conjunction with procurement departments, be empowered to make better decisions when they buy IT products and services. But a sustained reduction in carbon requires company-wide engagement and is not solely confined to IT.
The UK government will shortly start a consultation to revise the Climate Change Agreements (CCAs) and make the existing scheme more effective. CIOs can help the business meet targets by illustrating the benefits of innovative technology, such as web conferencing, and showing how sustainable procurement practices for suppliers can work for the business.
The CIO is ideally placed to create a green strategy by facilitating conversations across the business and determining where technology can address energy-related concerns. With so many companies still to define clear targets for the cutting of carbon emissions, IT leaders have a real opportunity to shape the agenda and deliver tangible benefits for the business.