IT is driving new enterprise sustainability efforts

From an energy efficiency perspective, sustainability has always been a “no brainer” for IT, says Lee Green, chief architect at Blue Cross Blue Shield of Massachusetts (BCBSMA). The business imperative to streamline business processes and optimize IT operations was driving efficiency improvements well before the healthcare insurer developed its corporate sustainability framework.

Now, however, investors, customers, and employees are increasingly pushing businesses toward more sustainable operations — “meeting the needs of the present without compromising the ability of future generations to meet their own needs,” as the United Nations phrases it. More than half of all enterprises now have a formal sustainability framework, up from just 18% a few years ago, according to Sheila Patel, vice president and sustainability agenda lead at Capgemini Global Invent. And IT is increasingly playing a key role in advancing that agenda, Green says.

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Today BCBSMA has a broad environmental, social, and governance (ESG) framework into which the IT organization fits. But expectations go beyond reducing the carbon footprint of IT operations. IT plays a role in attaining overall business sustainability objectives, educating all stakeholders on sustainability best practices, and helping to advance the company’s health justice goals.

“We’re introducing technology to drive further sustainability goals beyond the walls of IT,” Green says.

And BCBSMA’s IT organization derives another key benefit from supporting the organization’s overall enterprise sustainability framework, Green says: “Having goals around the environment and social justice are key to attracting IT talent,” as sustainability is something new generations of workers care about deeply.

Sustainable IT starting points: Optimize infrastructure, applications, and end devices

The impact IT operations can have on sustainability falls into three areas: infrastructure, applications, and end devices, says Patel.

For most IT organizations, says Bjoern Stengel, global sustainability research lead at IDC, “the low-hanging fruit is increasing infrastructure performance with equipment that has a lower carbon footprint and is more energy efficient.”

In many cases, that means moving to cloud-based infrastructure and application management tools to gain greater visibility and control over energy consumption. “Data centers are one of the most energy consuming types of facilities to go after in energy management,” says Denise Lee, vice president for Cisco’s Engineering Sustainability Office.

That’s one reason why Choice Hotels International is closing its last data center this year as part of its migration to the cloud. “Moving our data centers over to AWS has saved over 500 metric tons of carbon emissions just last year,” says chief information officer Brian Kirkland — an estimate he calculated by comparing overall data center energy use with information provided by Amazon for its more efficient, cloud-based data centers, which are powered in part by renewable energy. (Amazon claims its data centers are 3.6 times more efficient than the median US enterprise data center and can lower the carbon footprint for workloads by nearly 80%.)

“The good news is that all of the cloud providers care about ESG and have initiatives in place,” Kirkland says.

And BCBSMA is doing what was once unthinkable: “Our goal is to sunset one of our mainframes very soon and reduce the consumption of the other to a fraction of its current footprint,” Green says. “Mainframes are power hungry,” he adds, and much of the code that runs on BCBSMA’s mainframe systems is outdated, inefficient, and not well matched to current business needs — so IT is moving many of those applications to the cloud and modernizing and refactoring them to run there.

There’s an additional sustainability benefit to modernizing applications, says Patel at Capgemini. “Certain applications are written in a way that consumes more energy.” Digital assessments can help measure the carbon footprint of internally developed apps, she says.

Modern application design is key to using the cloud efficiently. At Choice Hotels, many components now run as services that can be configured to automatically shut down during off hours. “Some run as micro processes when called. We’re using serverless technologies and spot instances in the AWS world, which are more efficient, and we’re building systems that can handle it when those disappear,” Kirkland says.

“Every digital interaction has a carbon price, so figure out how to streamline that,” advises Patel. This includes business process reengineering, as well as addressing data storage and retention policies. For example, Capgemini engages employees in sustainable IT by holding regular “digital cleaning days” that include deleting or archiving email messages and cleaning up collaborative workspaces.

Finally, IT organizations should rethink whether individual users need multiple computing devices, including desktops, laptops, tablets, smartphones, and associated peripherals. “Ask yourself, ‘Do you really need them all, or is there an opportunity to combine certain assets?’” Patel says.

It’s also worth looking for opportunities to get more out of employee devices. Choice Hotels is considering extending its laptop refresh cycle to four years. “We’re making sure we’re getting the full life out of the technology,” Kirkland says.

Track the IT equipment life cycle from procurement to final disposition

“We’re starting to see companies rethink the policies and procedures around procurement to make sure it’s in line with sustainability plans and goals,” says Patel at Capgemini. For example, buyers are asking questions about the manufacturer’s use of recycled materials, manufacturing labor conditions, recyclability of the components, and whether the vendor has a take-back recycling program.

“We ask questions about sustainability right in our RFP [request for proposal] process,” says Green. While that’s a factor in the buying process, BCBSMA is “still in the early days” of deciding how much weight those answers should have in purchase decisions versus other factors such as price or security features.

Unfortunately, vendors sometimes put forth claims that can’t be easily verified, says IDC’s Stengel. But proposed US Securities and Exchange Commission regulations requiring all “registrant” companies (those that file reports with the SEC) to report their carbon footprints may give IT a new way to validate those claims. The proposed rules would require companies to include “climate-related disclosures” in registration statements and reports, including “information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition.”

Companies operating outside of the US may face other disclosure rules. For example, the European Union’s Non-Financial Reporting Directive for “public interest companies” with 500 or more employees requires reporting “current and foreseeable impacts of the undertaking’s operations on the environment, and, as appropriate, on health and safety, the use of renewable and/or non-renewable energy, greenhouse gas emissions, water use and air pollution.”

And the European Commission’s European Sustainability Reporting Standards (ESRS) and associated Corporate Sustainability Reporting Disclosure (CSRD) go into effect in 2024. They require more extensive sustainability reporting requirements for large public companies starting with their 2025 annual reports, with phase-ins for other large companies, listed small to midsize enterprises (SMEs), and non-EU parent companies starting in 2026, 2027, and 2029, respectively.

Having visibility into the final disposition of IT assets is also critical to sustainable IT best practices — especially as government regulation increases. Choice Hotels works with third-party e-waste recyclers such as CircleIT, which refurbishes, repairs, resells, and harvests parts from end-of-life IT equipment.

“Our contract does not yet provide the entire life cycle data back to us for all types of dispositions, but we do get it for the data destruction and teardown,” says Kirkland. Specifically, he doesn’t yet have transparency into a chain of custody that verifies the ultimate disposition of all materials that can’t be reused or recycled. But, he added, “They have the ability to do it, and per our contract, they are required to be performing these activities.”

A complete chain of custody through final disposition for all components is rare, says Patel at Capgemini. “There’s more transparency around how e-waste is disposed of, but the problem is not solved.” The key, she says, is to have a good relationship with a partner who handles disposal in a transparent way.

For its part, CircleIT president Will Cohen says his company provides transfer of liability, serialized reconciliation, audit reports, and certificates of disposal. For most equipment, he says, “We either process the recycling in our facilities or send it to one of our vetted downstream recycling partners who specialize in the sustainable dismantling and smelting of these commodities.”

Drive broader sustainability goals

“We’re taking sustainability beyond just the technologies we use at BCBSMA and applying it to the rest of the organization,” Green says. For example, the IT organization recently helped to introduce “plasticless” virtual member insurance ID cards that appear in BCBSMA’s mobile app. And it has been collaborating with building operations and smart building systems, where IT “creates the data integration and collection pipelines.”

In the grand scheme of things, IT is a small part of most organizations’ total IT emissions, says Sanjay Srivastava, chief digital strategist at Genpact, a global professional services firm. (At Cisco, for example, emissions from operations represent just 1% of its total, with the rest coming from its manufacturing, supply chain, and other indirect sources, says Cisco’s Lee.)

“The real opportunity for IT is to help the company have a better carbon footprint,” and the way to do that is by focusing on data and analytics, Srivastava says. That means aggregating data from different parts of the organization, cleaning it, and creating analytics that produce actionable recommendations for the business.

The problem, he says, is that the data is siloed and messy. “If you want to understand the carbon footprint, that’s difficult to do if you don’t have your master data right.” For example, a typical medical device may comprise 16,000 components, each with its own carbon footprint. “To come up with a green score, which customers are asking for, you need to be able to sum up the carbon footprint.” And that requires having your master data in order.

This is a big opportunity for CIOs, who tend to have excellent program management offices, Srivastava says. “CIOs have the ability and the tools to harvest that data and run the analytics. That same program management can be put into play to drive the sustainability agenda and decision making.” IT executives can then take those modeled insights showing how to reduce carbon emissions.

“It’s one thing to say, ‘Here’s how to do something.’ But if you go to them and say, ‘I’ve run the modeling for the last three months of data,’ that’s a very different scenario,” he says.

ESG software: The right tool for the job?

Green is looking for ESG management tools that can help aggregate data and generate reports in near real time, but also help make recommendations for reducing BCBSMA’s carbon footprint — something his existing tools can’t deliver. “We want an actionable framework, one technology that can aggregate and measure carbon consumption and creation in real time,” he says.

Ten years ago, when BCBSMA hosted its own data centers, it used to gather data from the power grid and the data center. Unfortunately, “that data was a year old at best — when we could get it,” Green says. Rather than changing numerous financial and operational business processes focused on traditional invoicing/payment operations and cost management, the company collected and aggregated power and water consumption data on an annual basis.

In the late 2000s, the company gained efficiencies by moving to managed data center facilities, but “the data in terms of how you manage the footprint wasn’t always there.” Today, he says, “we run multiple virtual clouds, and we need that information to be more actionable and insightful. Unfortunately, aggregating that data can be overwhelming.”

With the new ESG tools, BCBSMA is hoping to introduce capabilities that can inform its stakeholders in the company’s Facilities and Real Estate group in near real time about the energy consumption of buildings. “ESG technologies allow us to access that data directly, without having to change those existing processes through modern integration and open APIs that utility, cloud and managed data centers have made available,” Green says.

Now, he continues, “we can report our progress with confidence back to our customer accounts looking to improve their own carbon footprints and that of their supply chains, as well as begin to offer insights to our social and environmental justice areas looking to improve health factors and access across New England.”

But is purchasing another enterprise software tool necessary? That’s a matter of debate. Stengel at IDC thinks so. He sees ESG tools as a “critical enabler for enterprises to climb the sustainability curve” due to the scale of the problem. “The complexity of corporate sustainability has increased so much that I can’t see how you can do a good job on this without the use of a sophisticated ESG software solution. Excel spreadsheets are not going to work at enterprise scale,” he says.

Patel at Capgemini is more equivocal. “ESG tools can measure how things are sourced, as well as calculated throughout the life cycle. You really need some version of it, whether it’s a homegrown system or dedicated tool,” says Patel.

But Genpact’s Srivastava thinks enterprises should make use of the tools they already have. “The world doesn’t need another piece of software,” he says. Instead, he recommends leveraging existing workflow, ERP, and data lake software. “You can do it with Microsoft Dynamics, ServiceNow, and Salesforce,” he says.

The choice of whether to use an ESG reporting tool or leverage existing enterprise software is complicated by the fact that the current crop of ESG tools, and the reporting metrics for ESG, aren’t yet fully mature, says Patel. “When the SEC finally mandates what reporting must be in place, you’ll see a maturation of the landscape.”

Enterprises shouldn’t wait for that to happen, however. Many organizations aren’t collecting and reporting out ESG data, which remains tucked away in many different silos. Whether you use an ESG tool or other software, data aggregation, analytics, and actionable reporting are essential to meet ESG goals.

Next steps

Sustainability is not a passing fad, says Srivastava. “Consumers care about sustainability in deep ways,” so every IT organization should be moving forward.

“[CIOs] and other IT leaders need a seat at the table earlier in the planning and design process,” says Cisco’s Lee. “Data is key. Much of an organization’s carbon footprint is attributed to energy use, which can be made more efficient through IT.”

But, she adds, IT plays a critical role to drive change. “A recent study from Accenture showed that of those global organizations making goals and commitments, 93% are on track to fail because they’re not moving fast enough.”

Kirkland at Choice Hotels advises, “Start with data center energy management and emissions reporting, hold your vendors accountable,” and focus on how you circulate and recycle hardware.

“First, get the reporting right to stay compliant – that’s the bare minimum,” says IDC’s Stengel. “Next, figure out operational efficiencies and optimize processes, [then] fully drive business value through sustainability, enabled by IT. Get the reporting right and find processes that can be optimized so there’s a link between sustainability measures and the financial benefits. That’s what it’s all about.”

And get the support you need, says Kirkland. It’s hard for CIOs to know where to begin with sustainability, so he joined SustainableIT.org, which he describes as “a community of tech leaders with the same goals. It’s an IT-specific ecosystem to support us — a place to share ideas and advocacy.”

Ultimately the measures that matter are external to IT, says Srivastava. “Are you able to grow revenue through more sustainable product launches? Can you improve customer satisfaction scores by showing you’re progressing as a more sustainable company? And what carbon footprint numbers did you achieve? Because IT leaders have access to the data and latest AI and modeling techniques, it falls on them to take the bull by the horns and drive that.”