The CIO’s call to action: Driving an environmentally sustainable tech agenda to accelerate organisational change
This CIO Insider examines how technology can help organisations accelerate their climate and sustainability commitments to investors and customers and how CIOs can lead the transformation
Companies are being held more accountable for their environmental, social and governance (ESG) initiatives by customers, employees, shareholders, governments and regulators. Rising consumer demand for sustainability is driving a change in corporate attitudes across many sectors.
Environmental sustainability, in particular, continues to drive boardroom agendas and consumer focus on climate change. A recent Deloitte survey found that 98% of consumers believe that brands have a responsibility to make the world better. Four in 10 say they prefer to buy sustainable goods and a recent Deloitte survey found 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.1
Three types of greenhouse gas emissions
Greenhouse gas emissions fall into three categories, or “scopes,” as defined by the Greenhouse Gas (GHG) Corporate Protocol, the most widely used international accounting tool.2
Scope 1: Emissions are direct GHG releases from sources that an organisation owns or controls, such as burning fuel from boilers, furnaces, or vehicles.
Scope 2: Emissions are indirect, such as those associated with the purchase of electricity, steam, heat, or cooling. Scope 2 emissions typically are generated off-site, but they are included in an organisation’s GHG inventory because they are attributed to the organisation’s energy use.
Scope 3: Emissions come from assets beyond an organisation’s control or ownership but that are indirectly affected by its value chain. Scope 3 emissions are everything not included in an organisation’s Scope 1 or 2 emissions, including partners, vendors, or suppliers. Scope 3 often represents as much as 80% of an organisation’s total GHG emissions.3 This is a clear opportunity for CIOs to pave the path in determining data sources and collection processes for Scope 3 emissions.
As this change sweeps over the business landscape, CIOs face increasing opportunities—and responsibilities—to lead transformation, particularly in achieving net-zero—or carbon negative—climate sustainability objectives. They are increasingly called upon to ensure technology related to environmental sustainability is deployed aggressively,
while playing an active role in minimising the environmental impact of their existing and new infrastructure and technology. Three areas of opportunity for the CIO to emerge as a key leader of the sustainability agenda:
- implementing a holistic, integrated data and insights programme to measure and drive environmental sustainability
- leveraging a sustainability-driven tech strategy and
- driving transparency and accountability in the value chain.
However, when it comes to addressing environmental concerns, technology can be a double-edged sword. Technology and digital capabilities such as connected IoT (Internet of Things) sensors, AI and advanced analytics and blockchain-enabled technologies can be used in aggregating real-time data and optimising processes to reduce environmental impact. At the same time, many argue some of technology innovations have a cost of use as they boost demand on the power grid; CIOs need to balance those costs against the benefits of these technologies (figure 1).
While chief sustainability officers and other leaders have spearheaded environmental sustainability efforts in the past, CIOs are now essential in meeting those goals. CIOs recognise that embracing the two-tiered challenge can be a differentiator for themselves and their organisation, creating a competitive advantage. Therefore, they are looking at how to deploy technology more holistically and help business partners understand the environmental impact of each new solution by involving more voices and perspectives throughout the organisation.
“Most people think of sustainability as somebody else’s problem to solve. The CIO has a great responsibility and incredible opportunity to combine the power of technology and leadership to impact not just sustainability but all three pillars of ESG,” said Jedidiah Yueh, CEO of Delphix and founder of SustainableIT.org, a nonprofit organisation led by technology executives who are committed to advance sustainability through technology leadership.
“CIOs generally focus on the CIO domain and on technology’s impact on the environment, but we’re encouraging them to think about how to use technology to advance sustainability for their entire company and their entire industry.”
Paving the way through data and insights
Investors, regulators, customers and supply chain partners are demanding greater transparency into climate and sustainability reporting and results. So, too, are business leaders. They are looking for data quality and accuracy to measure carbon footprint, supply chain optimisation and green revenue in real time. Nearly a third of 2,000 C-suite executives in 21 countries said the difficulty of measuring their organisations’ environmental impact was a significant barrier.4
Rashmi Kumar, senior vice president and CIO for Hewlett Packard Enterprise, feels CIOs can support the process of improving data quality, accessibility and traceability. “As CIOs, we play an important role in enabling that [by] positioning our organisations to provide that data, that insight, to our business partners so that they can run their departments more sustainably.”
Gathering and releasing this information, however, may require collecting data from multiple systems managed by different departments or individuals, which can create challenges in sourcing, collecting, validating, analysing and reporting sustainability information. What’s more, in many organisations, sustainability-related information is not subject to the same internal controls as other types of financial information and sources of risk.
As regulators increase disclosure requirements as part of an overall approach toward “net-zero” emissions—releasing no more carbon into the atmosphere than is removed—by 2050, CIOs should evaluate internal processes to bring sustainability data in line with other risk-and-control systems.
Developing an integrated platform for sustainability reporting may help organisations improve their data sourcing, collection and validation and accelerate the process of preparing—and even drafting—reports. Setting up these sustainability data management systems may require CIOs to develop new processes for automating sustainability data collection, aggregation, analysis, reporting and collaboration with partners.
Once adopted, these streamlined reporting systems can enhance the information that board members and senior leaders use to monitor, develop and adapt an organisation’s sustainability strategy. As sustainability reporting standards and frameworks become more uniform, companies can rely on technology to enhance transparency and more clearly communicate nonfinancial information to stakeholders.5 Further, technology can expedite the data collection required to meet sustainability objectives.
Leveraging technology to drive decision-making
Delivering on compliance and regulatory requirements is only half of the data equation. Companies increasingly face demands from consumers for data on the sustainability and other ESG properties of what they buy. For example, the Gemological Institute of America (GIA), which sets global standards for evaluating diamond quality, is adopting blockchain technology to collect data on diamond sourcing—a critical step in giving consumers the information they want about the origins of their diamonds and the social and economic impact their purchase has in source countries.
“We collect a lot of information related to the social [and] environmental impact in Botswana, South Africa, Namibia, or [other] countries,” said Pritesh Patel, GIA’s senior vice president and chief operating officer. “We started a pilot programme on a blockchain platform to trace provenance.”
Blockchain creates a verifiable tracer across the entire value chain—from the mining operation, through diamond exchanges, jewelry makers and retailers—all the way to the consumer. The more diamonds that have origin data that follows them through the supply chain, the more informed decisions consumers can make.
Finally, while many organisations have some level of insight into their current environmental impact, a significant area of opportunity for CIOs could be optimising and creating integrated systems—both internally and externally—to effectively measure, monitor and uncover areas for reducing waste and the organisation’s carbon footprint.
“That’s really the bigger view of it. If you think about how companies manage their supply chains or their finances or their personnel, all of that is mediated through enterprise applications. Companies are going to need to manage sustainability through technology, just like they do all major processes and functions,” Yueh explained.
Many existing measurements for carbon emissions aren’t precise enough to assess changes for specific technology. CIOs may want to consider using carbon proxies, which make it easier to connect carbon to whatever is being measured. Electricity, for example, is a carbon proxy for the fossil fuel used to generate it. Therefore, reducing electricity demand reduces the carbon it is responsible for emitting.
Partnering with the business through data and insights to help them to make environmental sustainability decisions is critical. This can vary by industry and organisation. In some cases, it may be necessary to train business partners or offer training across the organisation to ensure that sustainability goals are being monitored and met. In one example of a CIO driving climate motivated transformation, HPE identified opportunities to procure sustainable materials and components, reducing material waste in their supply chain. Kumar noted that HPE examined more than 3 million assets in its supply chain and was able to remarket or reuse 90% of them.
Similarly, Western Digital has historically had a substantial carbon footprint from shipping products worldwide. Its supply chains, like those of many global organisations, were disrupted by the pandemic. Now, as the company rebuilds its supply networks, it’s also adding technology to make them more environmentally sustainable.
“How we manage shipments and our products, the form of transportation we use, all plays into our role of sustainability,” CIO Jahid Khandaker said. “We’ve implemented a risk management tool, [and] a lot of planning and analytics can be layered on top of that. Those predictive analytics are improving supply chain predictability, reducing disruptions and identifying the best and most fuel-efficient routes.”
Looking across industries
Climate impacts as a catalyst for change cuts across industries and provides CIOs with an opportunity to look beyond their walls and think creatively about what other companies are doing that might benefit their businesses. By learning from one another and using technologies and solutions that are working in industries other than their own, technology leaders have an opportunity to become leaders in their fields, helping their organisations transform to meet new consumer and regulatory demands.
Because sustainability is so cross-cutting there’s more opportunity than usual to look across industries and be more of a leader in your field. “In every industry there are opportunities to drive out inefficiencies in both cost and environmental impact,” shared Yueh. Integrated systems take collected data, aggregate and analyse them and identify areas in which companies can reduce waste of energy, food, water and materials. This can have far-reaching applications for industries such as:
- Agriculture & food retail:
- Leveraging satellite data and IoT sensors to help agriculture growers monitor and optimise crops and water resources, reducing waste in their fields.
- Identifying expired inventory or spoiled food for retail grocers. Rather than throwing away food that is still edible, grocers can use data capabilities to identify expired products and direct them to food banks to extend product life.
- Financial services:
- Digitising check processing and paper trails to reduce travel to branch offices, while also improving efficiency.
- Health care:
- Telemedicine is changing the industry and technology is making care more accessible through at-home monitoring, integrated data and shared records.
- Manufacturing:
- Data analysis can highlight inefficiencies or points of disruption, identify the most direct transportation routes and identify or enable consolidation that can streamline operations.
- Identifying materials for recycling, decreasing waste from production and optimising routes for the least amount of traffic, reducing emissions.
- Cross-industry:
- Calculating and reporting (transparently) the carbon footprint. In most cases, this can be done using existing data inputs and infrastructure inventory that is already being collected for financial analysis. Review the power usage of your organisation’s on-site data centres by analysing power usage effectiveness, floor area, cooling devices and the carbon intensity of energy sources. Identify the critical load specifications, such as power ratings, number of devices and percentage of use, for your IT.
- Understanding the sustainability implications in shifting to hybrid work. Many organisations are not expected to return to full-time, in-office work requirements. This creates a potential opportunity to reduce carbon footprints.
Looking to the cloud
In addition to managing data, CIOs have other challenges to meet, including one of the biggest areas of technology investment many organisations are making—the cloud. While researchers with Huawei Technologies Sweden found that with the rapid growth of cloud computing, data centres could consume 8% of global electricity by 2030, the benefits outweigh the costs.6 It is estimated that if organisations continue to remain in fragmented, legacy, tier 1–3 data centres, the power consumption would be much higher at an estimated 20%.
At an enterprise level, this is evident, companies that move from on-site data centres to the cloud report energy savings of 80%.7 Moving to the cloud, picking a provider that is committed to zero/carbon neutral footprint and adopting efficient migration approaches can be critical for CIOs to consider in to meeting environmental sustainability goals.
Western Digital’s adoption of a cloud-first strategy is an example of how CIOs are looking to improve the sustainability of their tech organisation. If a cloud option isn’t feasible, it looks for a co-location site. On-site centres are typically viewed only as a third choice. The company hopes to make the approach part of its formal decision-making process as it builds its environmental sustainability organisation at the corporate level, said CIO Khandaker.
Organisations that keep their data centres on-site should consider locations with natural cooling mechanisms, invest in cocooning designers to keep storage and warehouses cold and use green coding to increase efficiency.
They should develop a targeted approach for deploying innovative technology with a specific goal of reducing environmental impact.
A first step is examining the technology portfolio and identifying methods to reduce its energy and electricity demands. By making sustainability an integral part of technology investment decisions on things such as cloud migration, green coding, 5G, blockchain, virtual reality and the IoT, CIOs can lead their organisations’ efforts to reduce carbon emissions and waste and accelerate sustainability strategies.
Another opportunity for CIOs is to help business counterparts understand technologies and strategies that advance sustainability objectives, such as digitising processes. What’s more, most of today’s technologies—big data analytics, advanced AI, IoT, edge computing, blockchain and distributed ledgers, cloud and more—have applications for migrating to low-carbon systems. How CIOs apply those technologies in collaboration with other C-suite leaders can be fundamental in advancing an organisation’s sustainability agenda.8
A case in point: A group of organisations has built an immersive learning environment in Wichita, Kansas, known as the Smart Factory.9 The facility incorporates net-zero building techniques, smart grid technology and other sustainability practices so that users can experiment with different methods for accelerating their digital transformation and develop sustainable solutions. The Smart Factory also enables participating organisations to partner with customers in developing low-carbon technologies for data centres, smart grids and services such as digital payment systems.
Moving beyond your four walls to create an accountable value chain
The impact of a CIO’s decisions to reduce and measure emissions that their organisation directly contributes to or produces (typically Scope 1 and Scope 2 emissions) is only one part of the equation. Fifty-seven per cent of CxOs state their organisation is already using climate-friendly technology (figure 2). To make a significant impact on the sustainability agenda, CIOs should tackle indirect Scope 3 emissions that occur through the value chain.
This will likely require CIOs to further look at their data exchange standards and practices. They should reconsider not only who they partner with but also how they hold partners accountable for sustainability measures. For instance, CIOs looking to invest in cloud services should consider the type of energy and power usage of their providers’ data centres. In choosing a cloud provider, enterprises should favour vendors who are signing purchase agreements for renewable energy and those who have added renewable energy capacity to the grid. More vendors are adding modules to the services they offer to address customer concerns about the environmental impact of their services.
Many organisations are looking for opportunities to push their environmental sustainability initiatives outside their own four walls. Nearly half—46%—of CxOs say they are requiring suppliers and business partners to meet specific sustainability criterion (figure 2). For CIOs this includes thinking about their own tech sourcing and procurement strategies since as much as 80% of a company’s total emissions emanate from the supply chain.10
In addition to working with suppliers to reduce Scope 3 emotions, CIOs should think beyond implementation and take a more strategic role in this space, thinking about precompetitive opportunities to work with other companies in their industries to standardise the information requested from shared suppliers. New partnerships and behaviours led by CIOs could not only enable more seamless information-sharing, but provide transparency that stakeholders are asking for and facilitate better outcomes across the ecosystem.
While there is certainly the ability to influence partners through KPIs and reporting criterion, CIOs have an opportunity to really transform the mode of operating across the supply chain. “If you really want to make a difference it won’t be through pressuring suppliers to agree to sustainability terms and agreements, it’s to get companies to transparently track and share their sustainability metrics quarter by quarter. As more companies begin to share metrics, it will be important to achieve standardised metrics and accounting. That’s when we will really begin to see progress,” Yueh argues.
For example, the GIA pushed to require environment-related data from their value chain partners. “We collaborate and collect [a] lot of information from our various value chain stakeholders across the industry about diamond origin and sustainability,” said COO Patel. “We use our proprietary scientific process to match polished diamonds to their original rough. This information is then shared via our cloud platform with retailers and consumers during their purchase. Technology platforms connect with GIA through API services to receive authenticated diamond origin data—in turn allowing GIA to fulfill its mission to provide accurate and trusted sustainability data to the consumers.”
Accelerating the sustainability agenda through the tech agenda: A call to action
Undoubtedly, the CIO is well-positioned to map data for sustainability metrics and reporting—but their own technology strategy and leadership can make an even greater difference. Climate change experts warn that the growing output and reliance on technology is expanding the sector’s carbon footprint. Information and communications technology alone will account for almost 14% of the world’s carbon emissions by 2040, up from 1.5% in 2007, according to a study by researchers at Ontario’s McMaster University.11 And CIOs can use this warning to deliver on the sustainability agenda by demonstrating the impact of their own technology and transformation programmes on environment and climate—and cascade organisationwide responsibility.
To drive change within their organisations, CIOs can consider asking themselves the following:
- How can I get the most accurate assessment of carbon footprints and what changes will have the biggest impact in addressing them?
- What tools does my organisation need to trade carbon credits effectively and help reduce our carbon footprint?
- How can I improve data collection and analysis to improve environmental sustainability transparency? How can these systems be implemented most effectively?
- How can I coordinate with other C-suite executives to improve our organisation’s focus on environmental sustainability?
- How can we most effectively get employees to understand the environmental impact of their work habits, especially in the use of technology and encourage them to make changes?
- What technology will help us achieve our environmental sustainability goals and how can we best determine if the outcomes are worth the cost?
- What partnerships can I form among our suppliers and other industry participants to ensure a seamless commitment to improving environmental sustainability?
Technology leaders who can help answer these questions for their organisations, can emerge as clear champions for the sustainability agenda by driving digital transformation, enhancing data platforms, integrating reporting technology and providing innovative solutions to tackle sustainability issues. By using the organisation’s sustainability priorities as a lens for making strategic choices for data, infrastructure and emerging technologies, they have a clear opportunity to step up to drive transformation and impact their organisation’s carbon footprint.
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