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Saved by Kevin Moss
on February 18, 2009 at 2:43:17 pm
 

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White Paper –Draft

 

Possible titles

 

Environmental Sustainability - A Framework for Material and Comprehensive Corporate Action

 

Note: define taxonomy as “IT vs ICT” up-front

 

Introduction

 

Reducing impact on climate change is a challenge many companies are trying to tackle.  There is a broad and diverse array of possible activities a company can take…..measuring  the lifecycle emissions of  products,  developing a carbon calculator, reducing carbon emissions, build a web site,  making a public statement,  redesigning products,  joining a voluntary group like US CAP [1]. And this is just a small subset of the possible actions.   How should a corporation know whether they are, or even should be, covering all the sustainability bases and where their priorities should be for taking material action?  How can a potential customer, an employee or a shareholder identify the difference between a long list of ‘stuff’ (and big companies have long lists !) and consistent and material action.

 

This paper defines a framework that can be employed across sustainability initiatives to evaluate current actions, and identify and recommend other potential actions.  It lays out four broad categories where a corporation could  be taking action. (1) direct, (2) products in life, (3) enabled impact and (4) inform and influence

 

The framework can be used by companies developing their sustainability approach. It can also be used to provides a structure for a critical analysis and comparison of the existing sustainability strategies of companies.

 

The paper concludes that different types of company can have more material impact in different categories of the framework and that effective sustainability impact comes from taking a consistent approach across all the material categories for that company.   The corollary being that taking conflicting positions on sustainability in different material categories can be a strong  indicator of what has become known as greenwash.

 

Sustainability refers to the economic, social and environmental sustainability of the communities in which companies operate.  The framework developed in this paper can be applied to all of them. However, for consistency,  in this paper illustrative examples are drawn from environmental sustainability. And particularly, from carbon emissions reduction.

 

 

Figure 1: The Framework

 

Direct Impact

 

At the bullseye of the framework depicted in figure 1  is the direct impact of a company, i.e. carbon emissions resulting from electricity consumption, fuel usage, travel fleet operations and other activities that are directly carried out by the corporation or on its behalf. 

 

Probably the best known of the components of the framework, direct emissions are most commonly considered to be those captured  by the  greenhouse gas emissions (GHG) guidelines. The  positions of many companies on direct footprint are available through the Carbon Disclosure Project.  Objectives are easily (relatively) measurable with a growing number of consultancies and software packages that specialize in this.  Measurable objectives can be set with intensity or absolute targets with many organizations now aiming to be carbon neutral by a certain date.  

 

Partly because of these available structural approaches, direct emissions are where companies often focus their initial attention.

 

For example, at BT, using UK reporting guidelines, direct  carbon footprint was reduced from 1.6M tonnes to 0.6M tonnes between 1996 and 2008.  This was achieved through a combination of business process change, energy efficiency measures and renewables. The company has recently (June 08) set a Carbon Stabilization Intensity target for 2020.

 

A significant proportion of that reduction has been enabled by vendors.   For example, as part of the company’s 21CN (21st Century Network) design work with vendors enabled an increase in the operating temperature of network data centers and so a reduction in the energy consumed.  [see sidebar ‘Thinking Out of the box’]  

 

Thinking Out of the Box

It may seem counter-intuitive, but raising the operating temperature of the equipment in a data center reduces the energy consumed.  Data center servers, like any other computer hardware, have specified operating temperature ranges to ensure  effective operation,  minimize downtime and optimize life.  Operating outside of these  ranges compromises  these variables and invalidates warranties.  But these ranges have changed little since the early days of  large main frame computers when data center standards were established and became the norm.  As BT worked with vendors to specify 21st Century Network design,  these operating temperature ranges were questioned.  Many of the selected vendors responded positively, allowing the flexibility to raise the  operating tolerances of the equipment by a few degrees  without  affecting  performance. One of the most significant components of data center energy consumption is providing air conditioning to ensure ambient temperatures within the ranges specified by the equipment manufacturers.    In increasing the upper end of those temperature ranges by only a few degrees, significant reduction in air conditioning is enabled,  significantly reducing energy costs and carbon emissions.  The new  network also consolidated many of our smaller switch sites in  a  fewer number of larger locations, also greatly reducing energy needs.  We are now working with IT industry sustainability organizations like Green Grid to achieve broader changes in accepted standards.

 

Information technology companies  tend to have smaller direct footprints than those in transport, manufacturing and energy, so why focus so much attention on this area?   Direct emissions reductions are important for their direct impact, but they also  provide the experience and  mandate for a company to  actively  work with its customers and other stakeholders on other ways to reduce emissions.

 

Indirect Impact

 

Indirect impact comprises  the emissions a  company’s products and services have in the hands of the consumer, or end-user. .  .  The fuel or electricity used to power the product is paid for by the consumer  and so is their  direct footprint. At companies like BT, HP and Xerox, it is the energy consumption of our routers, hubs, laptops, document centers and phones once they are in the hands of the customer and plugged in; for Ford and other car companies, it is the gasoline consumption of a vehicle; while for some industry sectors, there is little or no direct impact on  carbon emissions.

 

For those situations where there is an indirect impact, the end user has control over  consumption; leaving the device on standby or switching it off, speed and acceleration in the car, using rechargeable or disposable batteries, etc..  Although the consumption is indirect, the manufacturer is very much complicit in the emissions (or other environmental impact) through  the availability of the product, the way it  is designed and the guidance provided for  its use.

 

For many businesses, indirect emissions can be far greater than direct emissions.  Looking at the 2006/07  corporate social responsibility report from Ford shows that their direct emissions  in 2005 was about 8M tons CO2.  In contrast, indirect emissions  - through the fuel usage of their on road fleet across the world -was about 407M tons.  For a telecommunications company selling routers and phones, direct and indirect emissions are of a similar order of comparative magnitude . For a clothing company, whose product does not consume energy in life??, direct emissions may be zero.

 

Where indirect emissions are significant, actions can be taken by businesses to reduce them. .   Ford’s sustainability report identifies the actions they are taking, and all enlightened computer companies and software companies are working to reduce the consumption of their products in life?? and give the end user more control in reducing consumption though such things as standby modes.

 

 

 

 

 

As with direct impact, vendors can also play  a significant role  in reducing  indirect impact . While many companies  outsource their product manufacturing,  this does not  diminish their responsibility  for specifying the product characteristics.  For example, early in 2008 BT started a six month program to replace all of our DECT[2]  Note: spell out vs. footnote. phones with a new line  of phones that consume about half the energy of their predecessors. .  This resulted from working with vendors in the prior year on product redesign. . Hence, in the chart, the ‘vendor’ wedge resides in both the direct and indirect categories.

 

For sectors with little or no indirect impact, focus should remain on direct emissions and the most significant action taken on product lifecycle analysis.

 

Enabled Impact

 

Enabled Impact is the third concentric circle.    In contrast to indirect impact, which addresses the energy consumption of the device or service itself, enabled impact focuses on the impact that a product or service  has on other aspects of the energy consumption and emissions of the individual, company or community that utilize it.

 

 

 

 

 

BT completed a study with the Forum for the Future in 2004, Note: footnote reference   which showed that the rollout of broadband services  increased the propensity of  customers to buy and to use a range of other electronic equipment, all of which required power.  While that equipment included computers and peripherals  not purchased from BT --iso not truly indirect impact --  their usage was enabled or even encouraged by our rollout of broadband, hence the term ‘enabled impact’.

 

Fortunately, this increased  energy usage is  offset by a beneficial impact of the IT  industry as a whole.   Many papers have been written on the positive enabled impact of IT  services. The most compelling example is using teleconferencing instead of traveling for meetings. The teleconferencing service requires electricity to power it and so has an associated emissions burden. .  But, compared to the emissions reduction resulting from not  travelling, that burden is small.  The side bar X describes some of the many other examples of leveraged benefit in the IT  industry.   Estimates of the enabled impact of the  industry (the benefit compared to the burden) range from five times to 15 times the burden of the industry. This is therefore  seen as one of the most material ways in which the IT  industry can impact global emissions   

 

Sidebar

There are many ways in which IT services  help reduce emissions  and have potential to do so much more in the future.  Curtailed travel substitution is one of the best known, i.e., replacing in-person meetings with teleconferences and enabling teleworking to avoid commuting.  More sophisticated travel reduction opportunities also come   from installing wireless devices in vending machines to reduce required visits from stocking fleets, GPS to improve vehicle routing,. congestion control in cities to improve traffic flow, using the Internet to provide real- time traffic advice to commuters, etc.

 

Effective IT infrastructures in buildings have enabled reductions in real estate of up to 30% through creating  more flexible workspaces that allow the same space to serve more employees.  Such ‘smart buildings’ save energy partly though including a range of ICT services such as monitoring and control of building environment to enhance use of natural daylight and external climate, and better monitoring and control of  building use without relying on individuals to switch of the lights or close the windows.

 

The Internet and similar private networks have  greatly reduced  quantity of paper used for commercial transactions such as billing and information provision.

Smart Grid describes a concept through which user demand, power station supply and pricing are all connected on a more granular,  real- time basis to allow great  improvements in grid efficiency.

The potential benefits due to these and many other examples can be quantified and compared to the carbon burden of the ICT industry (considered to be 2-3% of global emissions).    In fact, the recent report from Climate Group and GeSi SMART 2020  concluded that a five- fold benefit  could be realized by the industry as a whole by 2020.

 

 

 

 

 

Most examples of leveraged impact in the environmental space come under one of three categories (1) efficiency improvement of an existing service (2) substitution for a more energy intensive service and (3) environmental services.

Note: this graph doesn’t seem to follow from that which precedes it?

Inform and Influence

 

The outer ring of our framework is the opportunity to inform or influence the actions of others for the purpose of reducing negative impact on the environment.  There is a fine line between informing for longer- term improvement in  sustainability  and marketing for short- term sales benefit.    There is similarly a fine line between lobbying for longer- term improvement in  sustainability  versus doing so simply  to protect the company’s bottom-line. While the two mandates need not conflict,  they often can.

 

Informing and influencing   targets  the following five audiences; general public, customers, employees, government and shareholders.

 

General Public

 

Opportunity to  shape public opinion is readily exercised  by  media and communications companies  and those with a well- known brand .  NewsCorp is probably one of the best examples of a media company taking a public stance on this with a commitment (http://www.newscorp.com/energy/index.html) to

 

·  Reduce our energy consumption and switch to renewable sources of power when economically feasible

·  Become carbon- neutral by 2010

·  Engage our employees, our business partners and our audiences on the issues of energy use and climate change

 

Engaging key audiences is clearly the most material impact NewsCorp can have,  but reducing their own impact is a prerequisite that gives them the license to actively include the topic  in their programming.  

 

In addition, BT uses its brand in the UK to engage the general public through a range of tools including calculators, games and competitions. (http://www.btplc.com/climatechange/.)

Note: Better segue/setup here? 

 

Customers  Many companies have developed tools to allow  customers to calculate the energy efficiency (or other environmental impact) of their products.   Some are designed to show that the impact is lower for one product than for another  for which it is substituting,  some to give the customer advice on action to reduce emissions and some are directly competitive – specifically distinguishing the company from a competitor whose product or service has a worse environmental impact. 

 

 

 

 

Xerox  provides a calculator designed to document the impact of the services provided by the company.at (http://www.consulting.xerox.com/flash/thoughtleaders/index.html) that allows customers to make a quick, Web-based assessment  of how-to  advice on smart ways to make offices greener.  Similarly, Nortel’s energy calculator at (http://www33.nortel.com/energycalculator/registration.html) is a more explicit  demonstration of energy savings for competitive differentiation.

 

Employees – Representative employee engagement.  efforts include grass roots programs, websites and competitions, among others.  What are the more engaged companies doing?  They are educating their people not only on the actions they can take in the workplace, but about those  they can also take at home and in other aspects of their personal lives. . At BT, for example, we encourage staff  to take action outside of the workplace through our Living Lightly program. 

Note: more detail here

Government – Traditionally, most companies have focused their government interactions on activities that are deemed core to their immediate business.  With climate change and other areas of sustainability becoming more top-of-mind, we are seeing that focus shift.   In the UK, for example, a group of prominent companies, including X, Y, Z, formed a Climate Change Task Force under the auspices of the Confederation of British Industry to present  the  corporate perspective on climate change to government leaders.

According to their report: “The best question for the business community is whether we can be certain that climate change presents a substantial risk; a risk that will have a profound impact on society and the economy? To this the answer is clearly 'yes'. And so, as with all substantial risks, it is vital to mitigate the danger……..Any response to the threat of climate change requires three components for success. Politicians must give much greater priority to the subject, and not just on an ad hoc basis. Consumers have to be empowered to make the right decisions and need to be given the facts to make informed judgments. And business must become green to grow.”

This initiative represents a compelling  example of the role of business in informing and influencing government in this area.

Shareholders – Informing shareholders is vital to ensure their understanding and support for key actions.  For companies that are active in this area, this objective is  accomplished by means of  their annual sustainability report

 

Other Areas of Sustainability

While the real-world examples cited thusfar focus on carbon emissions,  the proposed framework  can be used in a much broader context. Here are some examples;

 

 

Economic Sustainability

Food and Beverage Sector

Direct Impact

Consideration of the direct impact of the company’s operations in terms of the money spent with suppliers, the salaries paid to employees and taxes paid. At a macro level, consider the economic impact of a global company on a country in which it invests by comparing the wealth it creates in the country with the value it extracts.

Include also in this category the impact of corporate charitable giving.

What are the health repercussions of the company’s operations?.  For example,  the health of workers, or people living near a plant, on the water consumption of the operation and resultant impact on local levels of safe drinking water.

Products In-Life

How do lifecycle costs of the company’s products or services impact the users’ economic well-being?.  Does it create a poverty trap or accentuate a wealth gap or does it create an opportunity for reducing cost burdens?.

How do the company’s products impact the health of the consumer?. Are there healthier alternatives, smaller packaging, perhaps even a strategy to change the overall impact of the product range with health in mind.

Enabled Impact

How could the product or service create wealth ? Micro-loans and the Internet create opportunities for small businesses to access global markets. A BT/ Cisco joint venture in India uses a voicemail platform to allow farmers to access valuable advice from experts previously inaccessible to them and so improve their businesses

A food product that encourages people to ‘eat on the go’ may be packed full of valuable nutrition but enables, or even encourages, unhealthy eating habits. 

Inform and Influence

Companies have scope to take a leadership role in educating their stakeholders on poverty issues.  Many companies do this as part of setting the scene for philanthropic giving, by articulating to stakeholders the needs of the charities to which they give.  Companies with an especially well known brand can have a big impact on raising public awareness and fund raising – this is often a sweet spot for relationships between large charities and large brands.  An example is sponsorship by Citi, Allstate and E-Trade of the money pages of The Beehive [3]???

Obligation to inform and educate the consumer accurately on the ingredients and nutritional impact of the product, take a leadership position in informing government not towards protective measures but towards measures that will improve transparency while ensuring an even playing field.

Sector Contrasts

Different sectors have different material impacts. In  carbon emissions,  the biggest impact of a food manufacturing company is  direct  – and the vast majority of that night be due to their supplier.  A car company, in contrast, has its biggest impact  indirectly .  A telecommunications company like BT has the greatest enabled impact and a media company like NewsCorp, in turn, through its ability to inform and educate the public.

For other sustainability areas, the degree of main impact will vary. A sophisticated company will be able to map its area of impact against each of its main sustainability criteria, as in the  following example  from BT.

 

Note: Another graphic intended for the following box?

 

 

Conclusion

 

We now have a viable framework for ensuring that we are taking appropriate action in all the right sustainability areas, i.e.,. what could we be doing and what are we doing in each space, and where are the gaps and how can they be filled?

 

We also have a tool for testing whether a company is truly committed to sustainability. While action is not required in every category on a specific issue, any inconsistent action across the model needs to be carefully considered.  In most cases, we can expect a company to start its activities in the middle category, and work outwards from there.  Skipping a step in the process may be because there is no impact in that space, but it may also indicate lack of commitment.

 

Action in the outer ring of ‘inform and educate,’ without action in the critical inner rings,  effectively defines ‘greenwash’ in the environmental sustainability arena.  Companies

guilty of this form of misrepresentation present a green façade to their stakeholders, while operating in a manner that pays little or no heed to the actual impact of their actions. 

 

While the marketplace has become more sensitive to greenwash, it is nonetheless equally sensitive to its equivalent in the social and economic sustainability arenas.   Donating to charity to solve health issues, while manufacturing only products of low nutritional value, is a case in point. .  For many companies, there is far greater potential for positive or negative impact on issues of sustainability through the indirect and enabled impact of their products, services, pricing  and marketing than there is through charitable giving. 

 

Or, conversely, are your marketplace offerings undoing all the good you are doing through your philanthropic programs?  Perhaps, inadvertently, the social sustainability equivalent of greenwash?.

 

We should look closely at the purported motives of companies that appear to be taking significant action in components of the chart where their impact is small, but where there is little or no action in the areas where their impact is greater. 

 

A sophisticated sustainability company is one which has truly considered its impact in each sector of the grid, is taking action across the spectrum and, lastly, is mindful of where that action can be most impactful.

Note: need a stronger summary close here, including positive BT context, if possible.

 



[1] United States Climate Action Partnership - http://www.us-cap.org/.  A group of businesses and leading environmental organizations that have come together to call on the federal government to quickly enact strong national legislation to require significant reductions of greenhouse gas emissions.

[2] DECT stands for Digital Enhanced Cordless Telecommunications and is an industry standard that described the cordless phones we are all accustomed to  now in  our homes where there is no cable required to connect the receiver to the base and that allows for satellite phones to be placed all around the home

[3] The Beehive is a website managed by One Economy, a global nonprofit organization dedicated to digital inclusion  that uses innovative approaches to deliver the power of technology and information to low-income people, giving them valuable tools for building better lives

 

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