Already a Bloomberg.com user?
Sign in with the same account.
Recent reports from Gartner, Forrester, and McKinsey highlight the costs of and savings from implementing green-tech corporate strategies
At the recent World Economic Forum's annual meeting in Davos, Switzerland, 20 sessions focused on environmental issues. On Jan. 24 a group of top guns at leading technology companies, including Microsoft (MSFT) co-founder Bill Gates, Dell (DELL) founder and CEO Michael Dell, Cisco Systems (CSCO) CEO John Chambers, and Intel (INTC) Chairman Craig Barrett, met to talk about the possibility of coordinating their efforts to pursue more sustainable practices. Then, on Feb. 5, Hewlett-Packard (HPQ) announced it had surpassed its goals for recycling e-waste: Globally, it recycled nearly 250 million pounds of hardware and print cartridges in 2007—a 50% increase over the previous year. And it announced a new goal: to reuse 2 billion pounds of products by the end of 2010.
These recent examples of public steps by major corporations—surely in part marketing moves to seem committed to taking action in terms of 'green' practices and policies—align with some of the key points in three recent reports, published by leading research and management consulting firms Forrester Research, Gartner, and McKinsey. [See also The Real Costs of Saving the Planet, (BusinessWeek.com, 12/4/07).]
The reports highlight the costs and savings possible from implementing green strategies— and ultimately reducing greenhouse gas emissions. Containing a blend of ideas, warnings, and analyses, the reports are aimed at technology companies (and, in the case of the McKinsey report, governmental, private, and other groups) looking to develop more environmentally friendly policies—both within their own organizations and for their customers. Each document has its merits.
What Is Green IT?
The Gartner report, "Green IT: The New Industry Shock Wave," by analyst Simon Mingay, doesn't provide hard data but instead offers definitions and prescriptions that might prove helpful for companies looking to create a green IT strategy.
First, the report attempts to articulate just what "green IT" means. Mingay acknowledges there is no precise definition, before continuing with the jargon-rich, "optimal use of information and communication technology (ICT) for managing the environmental sustainability of enterprise operations and the supply chain, as well as that of its products, services, and resources, throughout their life cycles."
The report goes on to define the key words in Gartner's definition, from "optimal" to "life cycle." While long-winded, the details—too long to go into here—could aid executives looking to understand some of the buzzwords of the eco-friendly movement.
Finding Appropriate and Practical Actions
Gartner's attention to detail, while helpful, can also get head-spinningly complex. The real value of the 10-page report is its list of practical tactics for greening a company's IT program. These include the development of environmental metrics, which Gartner recommends should focus on more than measuring a corporation's carbon footprint or making PR statements about ambitions to go carbon-neutral by a certain date, à la Google (GOOG) or Dell.
Instead, Gartner advises devising metrics to assess energy use, material selection, supply chain compliance, and staff engagement—as well as carbon footprints. The report doesn't say what a company should do with these measurements, but the guidelines could prove helpful for those starting from scratch in terms of creating greener IT practices. And the lack of a "one-size-fit-all" prescription indicates companies should find sustainable actions that are appropriate and practical. There are also simple, take-action-now suggestions, such as purchasing devices with eco-labels including the new Energy Star 4 label.
"Green Progress in Enterprise IT" was published by Forrester in December, 2007. The report features data from an October, 2007, survey of 130 executives in charge of IT operations and procurement at a variety of unnamed U.S., Canadian, and European companies.
Marked Differences Over Six Months
The report is short—only seven pages—and its value is found primarily in comparison with data from a similar survey of 124 respondents conducted just six months before. While the earlier report did indicate that participants included large corporations such as Advanced Micro Devices (AMD), Cisco Systems (CSCO), Dell (DELL), IBM (IBM), Intel (INTC), and Hewlett-Packard (HPQ), the more recent report did not disclose details on the types of corporations surveyed. The companies were not the same group approached in April, according to a Forrester spokesman, so readers should be aware that the later report's portrayal of a direct comparison between the data is not entirely accurate.
But all companies were from the technology industry, and in the six months between the two surveys, there were marked differences between the executives' assessment of green IT activities. For example, 38% of those surveyed by Forrester in October said their companies were following "environmental criteria" when evaluating and purchasing IT equipment. That's up 13 percentage points since the April, 2007, survey. And 29% of respondents said they had "high awareness" of whether their potential IT purchases were designed or marketed as environmentally friendly, up 14 points from April's survey (57% of respondents in both reports said they had "limited awareness" on this issue).
Still, in the December report, only 15% of the respondents said their companies had a specific strategy for buying and using greener IT devices or engaging in other environmentally friendly activities relating to IT. And only 25% said their companies were actively creating a plan to do so. While 22% said their corporations had absolutely no intention of buying greener IT, 39% said even though there was no environmental policy in place, their companies would consider implementing one. On this point, Forrester doesn't provide comparative data for the April survey, which would have been helpful to further gauge how corporations are altering their behavior and policies regarding green IT.
A Broader View
The most complex, and more general, of the three recent reports, is McKinsey's 107-page document, Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?. The report is based on two years of research and is the product of the management consulting firm's U.S. Greenhouse Gas Abatement Mapping Initiative. The project was completed in conjunction with companies such as Shell and Honeywell (HON), as well as various nongovernmental organizations.
Whereas Forrester and Gartner's reports concentrated on green IT, the McKinsey report focuses on a broader sense of energy efficiency, to include office buildings as well as devices and products. The authors argue that implementing such energy efficiencies could offset 85% of projected energy demands by 2030. That's considerably more impact than increasing fuel efficiency in vehicles, replacing industrial equipment and industrial processes that are not energy efficient, planting forests and improving soil, or shifting toward renewable energy sources. Citing projections from the Energy Dept., the report's authors state that overall energy use in commercial environments is predicted to rise at 1.6% each year for the next 22 years. The energy used in offices full of PCs and power-guzzling devices is expected to grow at twice that rate.
What each of the three reports share is statistics that make it clear reducing expenses is the leading reason corporations are seeking more eco-friendly practices. Forrester's report, for instance, states that 55% of those surveyed see reducing their energy-related operating expenses as the main reason for pursuing more sustainable IT operations—above "doing the right thing for the environment," the top motivator for 50% of those polled. In the Gartner report the authors estimate that "potential power cost and CO2 emission reductions of 50% are available" by better managing the power usage of PCs, monitors, and printers—for instance, simply encouraging employees to turn them off.
Going Green Can Mean Dollars Saved
And the McKinsey document, helpful as a macro-view of how the U.S. can adopt more environmentally friendly practices, concludes that corporations, governments, and individuals alike can slash greenhouse emissions 50% from projected levels in 2030 by using technologies that already exist—as well as those in the pipeline. The report also says 40% of the recommended practices would save companies and organizations money too.
In other words, going green can mean dollars saved—clearly a motivating factor for the tech companies already pushing for more earth-saving IT policies, not to mention for those corporations outside the realm of tech that look at such reports to gauge how policies are evolving—and how to emulate them.