Monday, May 20, 2024

How IT Can Support the Sustainability Crusades

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Have you had a sustainability report fire drill yet? If not, you will soon.

It may start with a discussion at a board meeting, or a request from the CFO based on a new regulatory mandate. All of a sudden your company needs to track energy use, its carbon footprint and other metrics of how it is helping the sustainability of the planet’s resources.

These green initiatives usually trickle down into the IT department and make it see red. As in a late-night scramble to generate data about those metrics. And management sees red after you explain that either the data don’t exist because there isn’t a good way of tracking it, or it will take weeks to find and consolidate the data.

Into the data gap and applications vacuum come your friends at the ERP vendors as well as a bunch of start-ups. More than a dozen vendors of various tools to help IT monitor and track energy/sustainability in new product development, distribution, production and other corporate functions, as well as the IT department as well.

If you doubt the interest of your company – and I don’t blame you – think again. Surveys by Harvard Business Review Analytic Services and Pricewaterhouse Coopers last year paint a picture of substantial and rising interest in sustainability among senior executives. More than six out of 10 CEOs polled by PwC say environmentally friendly products and services are an important part of their overall innovation strategy.

A recent report by PwC includes striking examples of the bottom line impact of corporate sustainability programs:

• Dow Chemical increased its sales of sustainable chemistry products to 4.3 percent of all revenue between 2009 and 2010, rising from 3.4 percent. By 2015, it expects such sales to be 10 percent of revenue.

• Dow also saved $9.8 billion since 1994 from energy-efficiency efforts that required an investment of less than $2 billion.

• SAP claims to have saved $250 million between 2008 and 2010 in energy costs. It expects absolute energy consumption to remain at 2000 levels through 2020, despite continuing global expansion.

• Intel saved $136 million in 2010 from 11 employee environmental projects.

While the revenue opportunities and savings seem substantial, the HBR AS survey shows a troubling disparity: even though the vast majority of the individuals polled said they personally viewed reduced energy consumption and sustainability as important, only around half said their companies were acting in the same way:

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Source: Harvard Business Review Analytic Services

Other data showed that individuals were much more likely to have changed energy consumption behaviors than their employers.

Note that the corporate and personal interest in sustainability varies by region. Europeans, due to their historically higher costs of crude oil, have always been more focused on energy costs. Indeed, survey respondents said that Germany was the most advanced country when it comes to sustainability initiatives and expertise.

The HBR AS survey had 1,748 respondents, with half from North America, 25% from Europe and 18% from Asia. For more information about the survey as well as a tremendous amount of information about energy conservation and innovation, check out the research report and related materials.

To avoid the fire drill chaos next time sustainability metrics become the subject of a heated discussion in your organization, keep in mind that the ERP vendors Oracle and SAP have already introduced software modules to help monitor and manage the consumption of raw materials.

As PwC report authors Vinod Baya and Galen Grumman note, “as organizations embed sustainable practices in operations, they move along the continuum from compliance to obligation to efficiency to leadership. Information technology is an enabler of this journey.”

PwC’s Alan McGill, a partner in its Sustainability & Climate Change practice in the U.K., added that “technology is accelerating the use of sustainability as a driver of growth, particularly information technology, as it allows greater monitoring, independent verification, transparency, and accuracy of resource usage and its impact.”

The PwC report includes a sampler of 10 software vendors offering tools to help IT and other departments track sustainability initiatives. In addition to modules from Oracle and SAP, the list includes technology from legacy controls companies like Honeywell and Johnson Controls along with a variety of start ups.

The report also includes a snapshot of applications that help organizations monitor the sustainability of new product and supply chain operations. These tools will be especially important in the future, because a substantial number of companies are working on new products and services that support energy efficiency and other customer demands. The HBR AS survey found that 32% of the respondents’ employers are developing such new products. In addition, 32% reported that their employers had already added energy efficient features to existing products. Smaller but still sizeable percentages of the respondents indicated a growing number of initiatives to change manufacturing processes, packaging and distribution to respond to energy concerns as well.

The bottom line of all of this is that IT shops had better get familiar with the tools to support sustainability efforts. You can’t rely on the excuse that there aren’t any tools to track corporate efforts to support energy efficiency.

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