The EU’s Corporate Sustainability Reporting Directive (CSRD) has gained significant attention since its enactment in January, especially as interest around ESG issues continues to grow. All companies have a part to play in reaching net-zero, but the IT industry faces a dual challenge: reduce its own carbon footprint while helping other sectors achieve their sustainability goals.
From user devices to data centers and networks, the technology powering businesses today has a significantly high carbon footprint. IT leaders hold an important responsibility to lower their own department’s carbon impact and enable positive climate action initiatives across their organizations.
Leveraging its unique position, the IT industry can utilize its own systems and solutions to measure, manage, and mitigate its carbon emissions. By adopting green IT practices such as circular economy principles, energy-efficient design, and renewable power sources, the IT sector can adapt its business model to stay ahead of upcoming sustainability regulations. This includes the climate related disclosures proposed by the US Securities and Exchange Commission (SEC)1 which requests listed companies to disclose information about their direct greenhouse gas (GHG) emissions (Scope 1) and indirect emissions as early as later this year.
Circular economy: Rethinking the product lifecycle
Recycling has always been a central mechanism of decarbonization efforts for consumers and can also be key to reshaping entire business models.
The IT sector holds immense potential for adopting recycling practices, with Design-for-Recycling (DfR)2 emerging as a promising strategy. DfR products take into consideration the materials used and lifecycle of a product right from the very start. End-of-Life (EoL) solutions3 can also reduce the IT sector’s carbon footprint by repurposing used IT components and extending their lifecycle.
Through applying circular principles such as DfR and EoL into their product development processes, the IT sector can contribute to the creation of a more sustainable industry. These approaches not only reduce the environmental impact of IT products but also align with the increasing demands of eco-conscious consumers who seek ethical and sustainable choices. The advantages of a sustainable IT Service Management (ITSM) strategy extend beyond environmental considerations, encompassing significant benefits for the bottom line and enhancing customer satisfaction.
Cloud computing: Reducing IT's carbon footprint
In ITSM, another crucial step for decarbonization is to identify and retire obsolete or unnecessary IT assets and systems. Many companies have already taken the initiative to retire legacy systems, making the shift to cloud-based operations. Gartner found that 80% of companies will shut down their traditional data centers by 2025, and 92% of enterprises already have a multi-cloud strategy – where organizations use cloud computing services from at least two cloud providers to run their applications.4
So how can businesses make the most out of cloud-based platforms? One example is how the cloud can be used to enable effective monitoring and optimization of energy consumption across buildings, transport, and manufacturing.
Digital tools also facilitate seamless collaboration and communication, and foster innovation within an organization. What’s more, businesses can go further still by migrating to a cloud-based IT landscape that has a better power usage effectiveness (PUE) value which is used to determine the energy efficiency of a data center.
The transition to the cloud offers a viable way for businesses to decarbonize their IT operations and serves as a unique driver for long-term growth and improved efficiency.
Evaluating energy costs
Cloud computing and remote/hybrid work models are on the rise, providing benefits like continuity, scalability, and flexibility. However, they also raise energy consumption and carbon emissions for data centers, service providers, and IT departments. On its current path, the IT industry could use 20% of all electricity produced by 2025 – generating 5.5% of the world’s CO2 emissions.5
The demand for digital services has grown rapidly. Data centers now account for 1% of global electricity use.6 To tackle rising energy consumption, companies should evaluate their options to move data centers to countries with more renewable energy grids. The Nordics and Iceland, for example, have become hotspots for data centers due to their secure supply of renewable energy and ideal climate which reduces the need for costly cooling operations.7 ITSM leaders should take into consideration that customers care more about the delivery of an ethical and sustainable product or service than about outsourcing decisions. This means that some departments or even entire operations can be relocated to benefit from more renewable energy sources.
Forming a sustainable IT business model
Organizations need to recognize and act on the carbon cost of our digital world by accelerating the move to business models which are supported by sustainable IT capabilities. Not only will this allow businesses to stay ahead of upcoming mandatory regulations and differentiate themselves from competitors, but sustainable practices will also improve the bottom line. Measures such as optimizing resource use, reducing waste, and improving energy efficiency can lead to significant cost savings over time.
To accomplish this, businesses need the necessary diagnostic tools, strategies, and a well-defined roadmap to speed up their efforts in achieving decarbonization goals. Our research found that while half of firms have defined an enterprise-wide sustainability approach, less than one in five (18%) have a comprehensive sustainable IT strategy.8 Moreover, most organizations lack the required expertise for sustainable IT implementations.
The solution? Consider implementing a three-stage roadmap in sustainable IT service management that:
- Assesses the environmental impact and define key performance indicators, targets, and frameworks with set carbon cost estimations of IT operations in terms of carbon emissions and carbon footprints
- Creates an effective governance plan with a dedicated team to ensure business models are aligned with sustainable IT initiatives.
- Operationalizes sustainable IT services by identifying the environmental impact within IT supply chains and develops a sustainability culture amongst teams.
Overall, achieving sustainability ambitions in ITSM is within reach for IT leaders. There are straightforward and practical steps which can ensure their sustainability journey aligns with the wider organizational sustainability strategy, which in turn will enable leaders to measure and optimize the environmental impact of their IT assets.
Greg Bentham is Global Head of Corporate Social Responsibility, Cloud Infrastructure Services, and Danuta Stojko is Head of Enterprise Service Management Portfolio, Cloud Infrastructure Services at Capgemini
Footnotes:
1 https://www.thomsonreuters.com/en-us/posts/esg/sec-climate-rules/
2 Design for Recycling (DfR) refers to the sustainable creation of products, systems, or materials with the aim of maximizing their potential for easy disassembly, separation, and reuse of components or materials at the end of their lifecycle. This approach minimizes waste, energy consumption, and environmental impact by enabling efficient recycling processes and promoting circular economy principles.
3 Design for End of Life (EoL) solutions aims to reduce landfill waste through the implementation of closed-loop product life cycles.
4 https://www.gartner.com/smarterwithgartner/the-data-center-is-almost-dead
5 https://www.capgemini.com/insights/research-library/cracking-the-code-from-within/
6 https://www.iea.org/energy-system/buildings/data-centres-and-data-transmission-networks
7 https://www.infrastructureinvestor.com/the-rise-and-rise-of-the-nordic-data-centre-industry/
