For many businesses information communication technology (ICT) infrastructure is now one of the largest contributors to their carbon footprint. Driven by investor and consumer environmental concerns, organisations are implementing environmental policies across their operations and making green considerations an important factor in ICT purchasing decisions.
Up until very recently the 'green' spotlight has generally focussed most on heavy industries including mining, petrochemicals and utilities. These industries have made attempts to develop robust environmental management policies and have been concerned to establish their green credentials. While not always seen as shining beacons for the environment they have made significant efforts to address environmental concerns raised by their business practices.
That spotlight has altered and it is the IT industry which is under increased scrutiny. Now more than ever before the green credentials of ICT providers are under the microscope and are seen as critical to their standing in the marketplace. As climate change, carbon emissions and energy consumption have become issues of mainstream concern, customers are now assessing providers on the environmental impact of their technology offerings rather than focussing only on more traditional criteria such as performance and value for money.
Impact of ICT industry on the environment
Businesses in Australia generate more carbon dioxide emissions from their use of ICT than the entire civil aviation sector. In the United States, servers alone account for 1.5% of all energy consumption (a figure expected to double in the next few years). Organisations are beginning to factor carbon emission costs into their pricing structures, as they recognise that use of environmentally friendly ICT is a market necessity.
Rising energy costs too provide a further financial incentive to pursue green ICT solutions. Electricity used for operations and cooling accounts for 60% of the day-to-day running costs of a typical data centre and due to decreasing server prices. It is estimated that it will soon cost more to power and cool servers over their lifespan than to purchase them.
Businesses and industry response
So what response have we seen from industry? Both consumer businesses and the ICT industry have reacted to global environmental concerns, and have introduced strategies to reduce their carbon footprints and power bills.
The Australia and New Zealand Banking Group estimates that 40-50% of its power consumption is directly related to its ICT infrastructure. By simply banning the use of screensavers in the office, ANZ was able to reduce its energy consumption by 4% and save A$500,000 in electricity costs.
Macquarie Telecom recently awarded a major ICT contract to Sun Microsystems, passing over its incumbent supplier on the basis that Sun had better environmental credentials and would therefore help Macquarie to reduce its carbon emissions and power usage.
Many ICT providers have become involved in consortiums such as 'Green Grid' and the 'Climate Savers Computer Initiative' which aim to develop energy efficiency standards and metrics for the industry. At an operational level, a number of ICT vendors including Dell, HP, IBM and Sun Microsystems have all developed more energy efficient ICT products and services, and are branding their organisations as environmentally friendly. These vendors are focussing on enhancements to their product offerings in relation to cooling techniques, energy efficiency, recycling and green manufacturing.
New eco friendly technologies are diverse, and include:
- server virtualisation and thin client technologies
- power management applications
- more efficient server configurations and hardware
- improved cooling systems for servers (especially in data centres)
- the replacement of traditional telephone systems with IP phones.
The Australian Federal Government, one of Australia's largest ICT consumers, has indicated that it may introduce government grants of up to A$1 million for secondary schools to invest in thin client technology. Thin clients were singled out as the preferred technology for their reduced cost and improved energy consumption when compared to the usual desktop environment. As the government rolls out its National Secondary School Computer Fund, providing computers to every student in years 9-12, ICT vendors with strong green technologies appear likely to be well placed to profit from this A$1 billion initiative.
Environmentally friendly ICT purchasing and procurement
The shift in the ICT market towards environmentally friendly products and services is already having a significant impact on customer ICT procurement behaviour. Vendors who can demonstrate eco-friendly ICT solutions that respond to customer environmental concerns will win the business.
Middletons has extensive experience advising both suppliers and customers on ICT procurement transactions. We are seeing more and more tenders requiring vendors to demonstrate their 'green' credentials in both their technology offerings and approach to the market. The requirement to demonstrate compliance with robust corporate social responsibility policies and dedicated environment policies is becoming commonplace in larger transactions. Customers too need to be aware of which suppliers offer green ICT products and services.
There is no avoiding the green spotlight. As eco-friendly contracting becomes the norm, customers will vote with their feet. Are you confident that you have the expertise to maximise your organisation's ability to take advantage of an environmentally aware ICT market? Make sure you are not left behind!
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