IT and the environment: A new item on the CIO's agenda

IT and the environmentA new item on the CIO’s agenda?A report from the Economist Intelligence UnitSponsored by IBM

© The Economist Intelligence Unit 2007 1

IT and the environment A new item on the CIO’s agenda?

IT and the environment: a new item on the CIO’s agenda? investigates the efforts being made by organisations to measure and reduce the environmental impact of the IT function. The report assesses how these changes are affecting the purchasing, operation and disposal of technology assets within businesses today. The report was commissioned by IBM.

The Economist Intelligence Unit bears sole responsibility for the content of this report. The Economist Intelligence Unit’s editorial team executed the online survey, conducted the interviews and wrote the report. The findings and views expressed in this report do not necessarily reflect the views of the sponsor.

The research drew on two main initiatives:● The Economist Intelligence Unit conducted a major

online survey of chief information officers and other senior IT executives from around the world during June and July 2007. In total, 213 executives took part in the survey.

● To supplement the survey results, the Economist Intelligence Unit also conducted in-depth interviews with ten senior IT executives and other experts from a range of industries and regions.

Clint Witchalls was the author of the report and James Watson was the editor. Mark Samuels, Dan Ilett, Richard Handford and Phil Davis also contributed to the research. We would like to thank all the executives who participated in the survey and interviews for their time and insights.

August 2007

Preface

2 © The Economist Intelligence Unit 2007


A green agenda has never been more important for organisations, yet it would appear that there is much more talk than action. A recent study by the US Environmental Protection Agency (EPA)1 found that US servers and data centres alone accounted for 1.5% of the country’s total electricity consumption in 2006—more than double what was consumed in 2000. This is similar to the energy consumed by about 5.8m average US households, and accounted for some US$4.5bn worth of electricity. Under current efficiency trends, consumption could nearly double again by 2011—delivering a $7.4bn energy bill to firms and potentially accounting for some 2.5% of total energy consumption.

All this has a great environmental impact. In 2005, the total power demand by servers and data centres was equivalent to fourteen 1000MW power plants2—and these figures exclude PCs, laptops and other IT infrastructure. As concerns over climate change grow, this rising energy usage will come under greater scrutiny, putting organisations under increasing pressure to account for their IT policies and practices.

The key findings of this study are highlighted below.

● Relatively few organisations have any plans in place to reduce their carbon footprint. Although two-thirds of executives polled say that their organisation has a board-level executive responsible for energy and the environment, less than half (45%) of firms have a programme in place to reduce their carbon footprint. And those that do have a carbon reduction strategy, the majority (52%) have no specific targets for it, although a small hard core (9%) aim to be carbon neutral by 2012.

● Many people are aware of the impact of IT on the environment, yet few firms are doing anything about it. The majority of respondents (59%) polled for this report believe that IT has either a significant or moderate environmental impact. Just 15% think it has no impact. But in spite of this, more than one-half of respondents (54%) strongly agree or somewhat agree that their organisation does not measure the impact of their IT systems and policies on the environment—compared with 32% who believe that their organisation does.

Who took the survey?

A total of 213 executives took part in this survey. All respondents occupied senior management positions: of these, 47% were CIOs or CTOs, and 44% were SVPs/VPs of IT and heads of IT.

Executives were only accepted from organisations with at least 1,000 employees, to ensure that the businesses

being polled had significant IT assets. The majority (58%) hailed from firms with at least 5,000 people. The survey focused on Western Europe (59%), but included Asia-Pacific (19%) and North America (19%).

By sector, the largest number of respondents came from manufacturing (17%), followed by financial services (14%) and healthcare, pharmaceuticals and biotechnology (11%). A full breakdown of all respondent demographics is given in the appendix.

Executive summary

1. US Environmental Protection Agency, Report to Congress on Server and Data Center Energy Efficiency, August 2007.

2. Jonathan G. Koomey, Estimating total power consumption by servers in the US and the world, February 2007.



● Although IT consumes an enormous amount of power, few IT bosses measure their department’s contribution to the energy bill. Most IT executives say that their firm does not monitor its IT-related energy spending (and a further 9% don’t know). Of those that do monitor their IT-related energy consumption, about one in four (24%) have seen their energy consumption increase over the past two years. However, measuring the cost clearly provides an incentive to change: 15% of respondents noted that their energy use had actually declined.

● When it comes to IT procurement, power consumption is not a significant criterion right now. Reliability is the main deciding factor when buying IT equipment, according to 63% of respondents. This is followed by price (32%) and then after-sales support (30%). Despite rising energy costs, dwindling reserves and ongoing geopolitical tensions in areas of oil and gas supply, only 12% of respondents believe that the energy efficiency of IT equipment is a critical purchasing criterion. In comparison, 13% of executives rate delivery times as being a critical factor.

● Promisingly, IT holds much scope for improvement. Despite the current sense of little progress being made, the IT function is well placed when it comes to reducing its environmental impact. By adopting existing energy efficiency methodologies and technologies—a “best practice” scenario, as defined by the EPA3—corporate servers and data centres could cut power use from current efficiency trends by 56% by 2011. For the US alone, this would reduce projected cumulative (2007-11) electricity costs from some US$31bn to US$17bn, providing an obvious cost saving incentive—and also delivering a huge reduction in future CO2 emissions. Beyond the data centre, simple initiatives, such as switching off PCs when not in use and minimising unnecessary printing, can improve an organisation’s green credentials and save money at the same time.

One encouraging sign from this survey is that the green campaigns of yesteryear—reminding people to recycle their paper and toner cartridges, or print more sparingly—are now widely in use. This suggests that current initiatives, largely focused on promoting better energy usage, will become more commonplace over time. Rising energy costs, increased legislation and greater public awareness will all help to drive these initiatives.




Barely a day goes by without a headline about the impact of greenhouse gases on the environment: melting glaciers, vanishing coral reefs, floods and freak weather. The Intergovernmental Panel on Climate Change—a network of 2,000 scientists—has warned4 that if the world continues with business-as-usual, the global average temperature could rise by up to 6.4ºC by the end of this century.

Climate change science was initially met with scepticism in some quarters, but few today would deny that it is a man-made phenomenon. The debate is now centred on what to do about it, rather than whether it is really happening.

As the world moved from disbelief to acceptance, fingers began to be pointed at the industries assumed to be most guilty of despoiling the environment. The oil and automotive industries came under attack, as did the airline industry. But less attention has been paid to the millions of servers humming, unseen, in data centres around the globe. “The carbon impact of the IT sector seems to have sneaked in under the radar,” says Trewin Restorick, director of environmental charity at UK-based Global Action Plan.

However, it is becoming clearer that this impact is significant. A study5 by the EPA estimates that carbon dioxide emissions in 2007 from servers and data centres in the US alone would be some 42.8 million metric tons. On current efficiency trends, this figure would rise to 67.9 million metric tons by 2011. And these figures exclude the impact of the distributed IT infrastructure beyond the data centre, including the millions of PCs, laptops, networking equipment and so on.

So what are chief information officers (CIOs) and other IT leaders doing about it? Not a whole lot, according to the results of this survey.

Who’s leading the way?

At first glance, the situation appears to be quite good. Nearly two-thirds of the organisations polled for this report have someone at board level with responsibility for energy and environmental issues. At a regional level Western Europe fares better, with 70% of organisations having someone at board level with this responsibility, compared with 65% in the US and 56% in Asia-Pacific. Lloyds of London, a global insurance provider, is one example where the issue is being monitored at the highest levels. “We’ve actually set up a working committee that now sits regularly and reports at board level,” confirms Peter Hambling, the firm’s CIO. “We’re monitoring and reporting on all of our [environmental] initiatives, not just the ones in this office.”

For one in ten organisations globally, the CIO assumes this role. And in Western Europe, this rises to one in five.

These figures may sound impressive but, on closer inspection, only one-half (49%) of the firms surveyed

Introduction

No

Yes, we have a director with a role specifically focused on energy and/or environmental issues

Yes, this role is handled by our CIO / IT director

Yes, this role is handled by another director

No, but we plan to appoint someone within three years

Don’t know

34

17

10

29

6

5

Does your company have someone at the board level responsible for energy and environmental issues? (% respondents)

Source: Economist Intelligence Unit survey, July 2007.

4. Intergovernmental Panel on Climate Change, Climate Change 2007, Fourth Assessment Report, Paris, 2007.




have a carbon reduction programme in place. Overall, however, large organisations with more than 10,000 staff are more likely to have a carbon reduction programme in place (55%) than smaller ones (46%). In fact, IT and telecommunications companies perform worse than average in this category. Just one in three of these firms say they have a programme in place to reduce their carbon footprint.

Drill down further, and of those organisations that do have a carbon reduction programme in place, more than one-half (52%) have set no specific targets for it. Over the next five years, 15% of businesses aim to reduce their carbon emissions by up to 10%. Just 12% of firms aim to reduce their carbon footprint by more than 40%, including a small hard core of 9% that aim to be carbon neutral.

For the majority of firms, there is little action that appears particularly ambitious. While there is a high level of awareness of climate change issues, when it comes to firm commitments to reducing their carbon impact, it would appear that businesses are in need of a fillip. For the IT function, this could come from a number of quarters.

We do not have precise reduction targets

Cuts of 1-10%

Cuts of 11-20%

Cuts of 21-30%

Cuts of 31-40%

Cuts of more than 40%

We plan to be entirely carbon neutral by 2012

52

15

11

10

0

3

9

If your company does have a carbon reduction programme, what cuts does it intend to make by 2012? (% respondents; excludes respondents selected ‘Not applicable’ and ’Don’t know’)




Energy costs, changing employee and consumer attitudes and increased regulation will all serve to push carbon reduction issues further up the corporate agenda.

Energy issuesOne of the biggest drivers for change is the rising cost of energy. In 2006 research by IDC, an analyst firm, showed that 17% of IT’s total operational expenditure can be attributed to energy. “The proportion of energy expenditure continues to rise and is expected to cross 20% in the short-term”, says Thomas Meyer, an analyst at IDC, “hence, companies face significant

pressure to reduce operational expenditure to which energy and power are major contributors...Previously, the main constraint to data centre growth was floor space: how many servers can I physically fit into a room. Today, the constraints are biased towards energy cost, energy availability and energy emissions.”

Already, the pinch on power is being felt. In late July 2007, San Francisco suffered a huge power outage caused by growing demands on the electricity grid6. And there will be more to follow. Various executives interviewed for this report suggested that a number of major cities, such as London, are operating at the upper limits of their power supply.

A recent report7 by the US National Petroleum Council said that the global supply of oil and natural gas is unlikely to meet the projected 50-60% growth in demand over the next 25 years. As supply has become constrained in some markets, prices have soared (see table: Soaring energy prices, 1997-2007).

A good start for CIOs is to know their portion of the energy bill. Our survey found that, in spite of rising energy prices, 42% of organisations polled still do not monitor their IT-related energy spend. “I don’t have an accurate reflection of what our actual consumption is, but I can say that my bill is going up year on year,” says Mr Hambling of Lloyds of London.

This is not an uncommon scenario. “Most IT departments don’t pay—or have any ownership of—the energy bills,” explains Mr Restorick of Global Action Plan. “So, for an IT manager, if they’ve got a problem their solution tends to be to buy some more hardware.”

Derek Liggins, data centre services manager at TNT, a logistics firm, believes that IT has to grow with the business. “Growth is something that’s good for

Why change is on its way

6. Charles Arthur, The problem of powering our virtual worlds, Guardian Unlimited, July 27th 2007.

7. National Petroleum Council, Facing the hard truths about energy, July 2007.

Soaring energy prices, 1997-2007

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: Economist Intelligence Unit.

Coal Oil Natural gasAustralia Dated Brent Europe (US$/tonne) (US$/barrel) (US$/mmBtu)

0

10

20

30

40

50

60

70

80



business, so we have to evolve our systems. Gradually, we get rid of old equipment that uses significantly more power.”

However, this survey found that energy efficiency is far from being the most important factor taken into consideration when organisations procure new technology. Reliability is at the top of the pile, selected by 63% of respondents. This is followed by price (32%) and then after-sales support (30%). In fact, just 12% of respondents selected energy efficiency as a critical purchasing criterion—behind even delivery times as a concern, which was selected by 13% of executives.

“The reliability and the availability of systems is still king,” says Bob Culver, senior vice-president of the technology information group at Wells Fargo, a financial services firm. “I’m going to look at the performance of a device and the secondary consideration will be power consumption.” However,

although it is unlikely that the power consumption of hardware will ever be a primary consideration, the operational costs of hardware are surely more important than delivery times.

Part of the problem is that computer equipment is generally compared on performance criteria: processor speed, memory size and so on. Environmental attributes, such as energy efficiency, ease of recycling or the use of toxic chemicals in the manufacturing process, are far harder to compare.

However, various initiatives are working to make this easier. For example, the Electronic Product Environmental Assessment Tool (EPEAT) in the US—managed by Green Electronics Council, a non-profit organisation—helps businesses to compare the environmental credentials of desktops, laptops and monitors. A global bank, HSBC, is one of a growing number of firms using the system to help make its purchasing decisions.

Critical factor Important factor

Reliability

Price

After-sales support

Use of toxic materials within equipment (eg, lead, PVC)

Vendor’s financial strength/ reputation

Current vendor relationship

Delivery times

Equipment’s energy efficiency

Vendor’s equipment disposal/ recycling services

Vendor’s environmental credentials

Vendor’s offsetting scheme, to account for carbon impact of IT equipment’s operational lifecycle

When tendering for new IT equipment (eg, PCs, servers), how much of a factor does each of the following factors play in your purchasing decision?(% of respondents, selecting ‘Critical factor’ and ‘Important factor’ only)


63 29

32 57

30 51

22 24

18 49

16 56

13 36

12 34

10 24

7 25

6 13



Other schemes, such as Energy Star, allow technology vendors to add their certification to any equipment that falls within a certain energy efficiency standard. As these practices become more common, relevant comparisons between equipment will become far easier to make. And the majority of executives (63%) polled agree that such schemes would cause them to change their procurement policies.

Increased regulation Regulation and legislation will also be a strong driver for change. The EU has already imposed tough regulation on how firms dispose of obsolete equipment. In February 2003, it agreed on the Waste Electrical and Electronic Equipment Directive (WEEE), which dictates how firms should dispose of obsolete electronic equipment, such as computers.

After years of deliberating, the UK implemented this directive in July 2007. And in the US, the Environmental Protection Agency (EPA) is looking into carbon emission legislation. “I think regulations are going to get tighter and tighter over the next five years,” says Mr Restorick. Mr Culver at Wells Fargo agrees: “The Environmental Protection Agency (EPA) has been charged, since Congress recently enacted HR 5646, to improve energy efficiency in computing hardware and the design and operations of data centres. We work directly with the EPA to continually improve, and we’re pleased that many of our practices exceed requirements.”

Changing attitudes

But there is more than just energy prices driving the need for change. Various stakeholders, including employees, are demanding more from organisations. A study by Ernst & Young, a professional services organisation, in 2004 showed that 89% of graduates considered high ethical standards to be “imperative” when deciding whether to join a company. As IT’s importance in the debate grows, expectations of the need to change will intensify.

Shareholders are also making themselves heard, filing record numbers of resolutions8 on climate change, demanding that firms disclose plans for reducing greenhouse gas emissions. While many of these resolutions have been defeated by management, it speaks of a groundswell of opinion that is likely to grow as the impact of climate change becomes more apparent. Increasingly, stakeholders of all stripes will be demanding more visibility and accountability on green issues.

Finally, there is another, often overlooked reason organisations are adopting a socially responsible stance. “There are a number of companies for whom this has become a strong moral issue,” says Mr Restorick. In fact, he believes that companies are leading consumers in many instances when it comes to changing behaviour. “There is an expectation that consumers will shift over the next two or three years, but it’s not really that strong at the moment.”

0 10 20 30 40 50 60 70

Significant impact Moderate impact

An industry standard on energy efficiency on IT equipment would cause us to change our procurement policies

To what extent do you agree or disagree with the following statements, in terms of how they apply within your organisation?(% of respondents, selecting ‘Significant impact’ and ‘Moderate impact’ only)

8. A recommendation by a shareholder with at least 1% of a company’s voting shares. Companies are legally bound to present the issue for a vote by other shareholders at the AGM.



Not since Rachel Carson wrote Silent Spring in the 1960s, a book credited with having launched the global environmental movement, has green awareness been such a publicly discussed issue. Yet there is still a surprising lack of knowledge about the subject. Only 16% of respondents polled for this report believe that flights and other (non-commute) business travel have a significant impact on the environment. An astonishing 26% believe that business travel has no environmental impact—and 15% believe the same of IT.

Another surprising find was that more people believe that their commute to work (29%) has a significant impact on the environment than those who think the same of supply chains (23%). And nearly one-half of all respondents believe that working from home has no environmental impact.

Getting the basics right

But although there appears to be a significant amount of misinformation or confusion, older messages around saving paper and recycling seem to have become entrenched. For example, 84% of respondents say their businesses recycle paper and toner cartridges, and more than two-thirds (69%) have a printing policy, advising staff on how to reduce their paper consumption. “Initiatives that were in the background in IT, such as reducing the amount of printing, are now coming to the foreground,” notes Mr Liggins of TNT.

“We are very aggressive with respect to online banking initiatives, such as the use of image enablement and online statements,” says Marty Lippert, CIO at the Royal Bank of Canada. “Millions of our customers receive statements online—and many no longer get cheques, they just see images of them online.” For the bank, this not only reduces its environmental impact, but also “significantly” reduces its paper costs.

Encouragingly, initiatives to cut energy consumption—and thereby reduce an organisation’s carbon impact—are also making headway. Two-thirds of firms polled for this report routinely advise staff to turn off their desktop computer when it is not being used. Others, however, admit to being laggards here. “Unfortunately, nothing,” admits one banking executive when asked what his firm was doing.

Working from home is popular with one-third of organisations, although it is a lot less popular in Asia-Pacific (15%) than it is in Western Europe (39%). Fully 60% of respondents believe that home working will be an important way in which IT will help to contribute to green practices. Even so, in about one-half (47%)

The action being taken

Personnel (eg, daily commute to work)

Production and manufacturing

Supply chain (eg, shipping, freight)

IT (eg, energy use)

Delivery and customer services (eg, shipping)

Sales and marketing (eg, flights and other travel)

General back-office functions (eg, energy use)

Remote workers (eg, employees working at home)

In your view, how much of an impact does each of the following parts of your business have on the environment (considering their use of energy and resources and overall carbon emissions)?(% of respondents, selecting ‘Significant impact’ only)


29

25

23

19

18

16

13

6



of the organisations that allow home working, less than 10% of staff are eligible to do so. And few organisations allow many of their staff to work from home for more than one day a week.

Also, teleworking is not necessarily the panacea it purports to be. At least, not yet. Research9 conducted by Oxford University Centre for the Environment (OUCE) found that the extra heat and lighting needed at home wipes out 80% of energy savings accrued through not commuting. The team concluded that government and companies need to promote changes in the way people use technology if the green advantages of teleworking are to be realised.

Reforming the data centreBut there are other low-hanging fruit that are far juicier than recycling teleworking, delivering both cost and environmental benefits. Much of this can be found in the data centre. As the corporate thirst for

data increases, these centres have grown to the size of aircraft hangars—and draw significant power from the grid.

Mr Culver recalls his boss showing him a data centre, 20 years ago. “The room was about 6,000 sq ft. My manager said to me: ‘One of these days all of this stuff will sit in one box.’ And he was right, but now we buy hundreds of those boxes. If you look at the increase in information storage it used to be measured in terabytes; now it’s up to petabytes and continuing.”

According to the EPA, US data centres and servers consumed 61bn kilowatt-hours (kwh) in 2006, equivalent to the electricity consumed by all of the country’s colour televisions—or about 1.5% of all electricity consumption in the country10. This energy use is estimated to have doubled since 2000, and could nearly double again by 2011, under current efficiency trends.

“Systems which are standing idle consume power,” says Mr Meyer of IDC. “Often, even production systems are at low utilisation rates of 10%-15%. With the

Which of the following IT-related initiatives has your company implemented in order to reduce its overall environmental impact? Select all that apply. (% respondents)

Recycling programme for paper and toner cartridges

A printing policy, advising staff on how to reduce printing

An energy policy, advising staff to turn off PCs when not in use

Data centre server consolidation, to improve energy efficiency

Server virtualisation, to improve energy efficiency

Set printers to automatically print double-sided pages

Automated system for turning off PCs and/or monitors when not in use

Increased home working

Revised data centre design, to improve energy efficiency

Energy management software within data centre, to improve energy efficiency

Sourcing energy from renewable sources

Reusing heat generated within data centre (eg, for office heating)

Other

84

69

67

63

47

41

35

31

30

21

16

8

6


9.David Banister, The Costs of Transport on the Environment – The Role of Teleworking in Reducing Carbon Emissions, Oxford University Centre for the Environment, May 2007.


In the lead Recycling and energy policy adoption, by sector(% respondents)


60 65 70 75 8060

65

70

75

80

85

90

95

100

Public sector and education

IT, telecommunications, entertainment, media and publishing

Manufacturing and automotive

Financial and professional services

Retailing, consumer goods, logistics and distribution, transportation, travel and tourism

Recy

clin

g pr

ogra

mm

e (%

)

Energy policy (%)



introduction of virtualisation technologies, these systems can be consolidated and their utilisation increased.” Virtualisation appears to be a popular option for energy efficiency. Almost one-half of the organisations surveyed for this report (47%) had a server virtualisation programme in place. Even more are involved in data centre consolidation (63%).

Cooling is another option for energy saving. For every dollar spent powering a server, another dollar is spent cooling it11. Many companies have point solutions that do little to optimise the overall cooling. According to Mr Meyer, there is a lot of over-provisioning of cooling in data centres, or, as Mr Culver put it, “You can hang meat in most data centres.”

The solution to cooling data centres is often quite straightforward. Wells Fargo achieved energy savings of 15% in one of its data centres by replacing air-conditioning units with a central fan. “There is quite a degree of confusion about what really would make a

difference, and what’s hype,” notes Mr Restorick. “The ridiculous thing about carbon management is that it’s actually quite simple.”

Of course, data centres represent only one part of the challenge—and typically the easier part. This is primarily because corporate data centres are typically contained within a single place and have a single budget holder responsible for them. The distributed computing infrastructure beyond the data centre—encompassing PCs, laptops, printers, mobile phones, hand-held computers, networking equipment and so on—is where it is becoming more challenging to make breakthroughs in energy saving.

Recycling: going from cradle to graveThere has been a lot of focus on the energy expended to run IT equipment, but studies in this field suggest that embodied carbon can account for a significant portion of a computer’s lifetime carbon dioxide

The ever-elusive paperless office

The paperless office as a concept has been around since the mid-1980s but is argu-ably even further away from being realised today than when it first appeared. “There are two phases in its development. Firstly when computers started becoming useful, people started talking about the paper-less office but it was not actually viable. Then in the more recent second phase with the advent of the internet it really looked as if the concept could happen. In retro-spect, this was also blue-sky thinking,” says Braden Allenby, professor of civil and environmental engineering at Arizona State University.

One major US corporation agrees. “We never got as far as the paperless office.

Between the mid-1990s and mid-2000s, the question for us was, “If we buy recycled paper and if we recycle this paper, then who cares how much we use?” The answer is paper costs money,” says Michele Blazek, a director for AT&T environment, health and safety compliance.

Cost-cutting at the US phone giant was a main driver in reducing paper consumption, according to Ms Blazek. Exact figures on its progress are hard to calculate since the US telecoms giant acquired or shed a number of businesses over the last ten years, making comparisons difficult. Most recently, it was itself acquired by regional Bell carrier SBC.

The move to make information such as engineering manuals and human resources material such as pay cheques available online was also aided by a high degree of tele-working and a large number of field staff, particularly telecoms engineers. For both groups, accessing services from a central

electronic source was more convenient. Anecdotally, Ms Blazek reckons that less

paper is used today by AT&T staff. “I think individual paper usage has gone down, including the consumption of mail such as periodicals. Back in 1994, our global real estate business found that their average employee used 2.5 lb of paper a day. We don’t have the same problem anymore. A clean desk is not that hard anymore. It’s really a behavioural issue.”

Of course, some take longer than others to change. Ms Blazek admits to one errant colleague who a decade ago routinely printed out each of his e-mails each morning promptly at 11 am before reading them. She claims such antics are now in the past. But other observers are more sceptical that the advent of e-mail has actually increased paper consumption in offices. Overall, however, as far as anyone can tell, the paperless office remains elusive.

11. Stephanie N Mehta, “Server Mania”, Fortune, August 7th 2006.



emissions, depending on whether it is sold wholesale to business or government (up to 20%) versus being sold via a retail supply chain (up to half)12. The average PC requires 240 kg of fossil fuels, 22 kg of chemicals and 1,500 kg of water to make13. “The energy required to produce a computer is far higher than for other comparable products,” agrees Anja ffrench, a supply officer at Computer Aid International, a UK-based charity. For an appliance like a refrigerator, the majority of the energy is consumed during its operation, whereas with computers it is important to save energy in the production phase and increase the life span of its use.

Computer Aid sends discarded computers to developing countries where they are re-used for another three to four years to ensure the maximum possible return on the environmental cost of production. The computers are used at weather stations, hospitals, schools and community organisations.

ITC in India, a major conglomerate, returns its printer cartridges and other consumables back to the relevant vendor. Other equipment is donated to disadvantaged communities: “When we upgrade to higher technology levels, the computers replaced still have a useful life for many years, and we make them available to disadvantaged schools to support computer education programmes,” says Nazeeb Arif, a vice president at the firm.

However, not all organisations are keen to donate their old computers to charity—in fact just 15% of survey respondents chose this route. “We don’t give them to charity because with the WEEE [Waste Electrical and Electronic Equipment] regulations we become the supplier,” says Mr Liggins of TNT. “We wouldn’t want anything to do with that because of the

potential liabilities.” TNT’s old equipment is broken down into component parts and recycled. This survey shows that this is the most common method for disposing of obsolete IT equipment, selected by 27% of respondents.

Only 12% of companies recycle old kit via vendor programmes, whereas 57% believe that technology vendors should be responsible for disposing of obsolete equipment, suggesting that vendors could play a much bigger role. However, 16% of people are not aware of environmental regulation regarding the disposal of IT equipment. And a small core of 7% admits that their firms are not currently compliant with environmental regulation. So much scope for improvement still remains.

All of these issues add up. CIOs today not only have to balance all of their usual demands, but also need to take into consideration environmental issues, rising energy bills during the operation of that equipment—and how to dispose of all of it in a responsible manner.

How does your organisation primarily dispose of its obsolete IT equipment? (% respondents)

Recycled via third-party organisation

Pay for physical destruction via third party

Donated to charity

Recycled via vendor programme

Sold to employees

Dumped

Auctioned externally

Other

27

15

15

12

7

4

3

17


12. Christopher L. Weber, et al., Carbon Emissions Embodied in Importation, Transport and Retail of Electronics in the U.S.: A Growing Global Issue, May 2007

13. Ruediger Kuehr and Eric Williams (eds),Computers and the Environment, Understanding and Managing their Impacts, 2003.



Recycling IT

UPS, a parcel delivery specialist, is using its advanced online logistics technology to help the organisation and its customers manage the recycling of their waste. “It’s about making the most of the work the com-pany does,” says Graham Nugent, the com-pany’s regions applications manager. “We want to provide recycling to our customers and provide an effective returns policy that grows out of the popularity of the web.”

The delivery firm helps its customers dispose of unwanted electronics through an asset recovery and recycling management service, which uses UPS’s supply chain technology to provide an enhanced logistics service. “The return service helps us get to waste technology,” says Mr Nugent. “Sensible destruction is really important, as is the re-use of components.”

Mr Nugent says that another bespoke website helps UPS technical staff to decide whether computer equipment should be repaired or recycled. In the UK, the company has initiated a recycling programme and if

a PC is still usable it is sent to a charitable organisation. The scale of this operation is growing steadily: UPS recycled 2.7m lb of electronic equipment from its own operations in 2006—and a total of 19.7m lb since 2000.

“We’ve used IT to analyse the way we conduct business to ensure we operate as efficiently as possible,” adds Mr Nugent. “Originally, such analysis was important in helping the company to save money - now it’s to help save the environment.”

Perhaps surprisingly, some believe the US to be ahead of the game when it comes to recycling. Cormac McCarthy, IT director for Ben Sherman, a fashion brand, agrees that firms across the Atlantic are light years ahead of European organisations when it comes to technology waste and recycling. “American firms will increasingly only invest in a business if it has an environmentally responsible strategy in place, so you’ll start to see more green auditing and companies establishing an awareness of their carbon footprint.”

Mr McCarthy says Ben Sherman, which is owned by Oxford Industries, a US clothing manufacturer, has been quick to introduce

a range of environmentally responsible strategies. For example, waste cardboard packaging that cannot be reused or recycled is offset by planting replacement trees. And office renovations worldwide now include energy-efficient computers and lighting.

Other green policies have developed in a more ad hoc nature. While employees have been recycling paper and toner in individual offices for many years, this reprocessing has not been part of a wider business strategy until more recently. “Now recycling has become the de facto standard for the company around the globe and we are more environmentally aware,” confirms Mr McCarthy.

But even more needs to be done in other areas of the organisation, especially with regard to energy efficiency and computer facilities being left on at night. Mr McCarthy expects a key individual to be made responsible for the global environmental impact of Ben Sherman during the next 6-12 months. And with green computing set to dominate the business agenda, he hopes to be considered for the role. “It’s like Y2K again, except this time green is a concept that really is a significant issue.”



Climate change has already had a big impact on some industries, such as insurance and tourism, to name two, but it will affect all industries as energy prices increase and carbon emissions legislation comes on stream. While only 6% of those polled say that their organisations plan to appoint someone at board level over the next three years to handle energy and the environment issues, it is likely that the CIO will have a louder voice in this matter, given the demands for power made by the IT function. Played correctly, IT could make a big mark on the issue.

At present, the CIO plays only a minor role when it comes to environmental concerns. “I think a lot of CIOs are quite interested in this [environmental issues], but feel they’ve been excluded from the corporate social responsibility discussions,” stresses Mr Restorick of Global Action Plan.

But the CIO’s contribution as technology innovators will have a big impact on the so-called triple bottom line—taking into account environmental

and social performance, along with financial performance. Also, there is a strong correlation between IT investment and productivity growth. “Servers and computing equipment are probably the main driver in business getting more efficient,” affirms Mr Culver of Wells Fargo. “A lot of growth is achieved through leveraging technology.”

Given that firms are likely to continue to invest heavily in IT, it is imperative that the IT function is up to speed on environmental issues and invests wisely in technology solutions, rather than just reacting to growth by throwing more capacity at it.

“From an overall environmental affairs perspective, we recognise that the environment is something that our stakeholders care about, our customers care about, our investors care about, we care about,” explains Mr Culver. “And what you’re starting to see throughout the organisation is environmental responsibility integrated into what we do.”

Conclusion


Appendix: Survey resultsIT and the environment: A new item on the CIO’s agenda?

AppendixIn June and July 2007, The Economist Intelligence Unit surveyed 213 chief information officers and other senior IT executives from around the world. Our sincere thanks go to all those who took part in the survey. Please note that not all answers add up to 100%, because of rounding or because respondents were able to provide multiple answers to some questions.

No

Yes, we have a director with a role specifically focused on energy and/or environmental issues

Yes, this role is handled by our CIO / IT director

Yes, this role is handled by another director

No, but we plan to appoint someone within three years

Don’t know

34

17

10

29

6

5

Does your company have someone at the board level responsible for energy and environmental issues? (% respondents)

Yes

No

Don’t know

49

45

6

Does your company have a programme in place to reduce its overall carbon impact? (% respondents)

We do not have precise reduction targets

Cuts of 1-10%

Cuts of 11-20%

Cuts of 21-30%

Cuts of 31-40%

Cuts of more than 40%

We plan to be entirely carbon neutral by 2012

52

15

11

10

0

3

9

If your company does have a carbon reduction programme, what cuts does it intend to make by 2012? (% respondents; excludes respondents selected ‘Not applicable’ and ’Don’t know’)

Yes

No, but we are considering doing so within the next three years

No

Don’t know

9

15

62

13

Does your organisation pay to offset some or all of the carbon emissions produced in the production and operation of its IT equipment?(% respondents)

1,000-5,000

More than 10,000

5,000-10,000

Fewer than 1,000

42

39

19

0

Approximately how many people does your company employ? (% respondents)



Significant impact Moderate impact No impact Don’t know Not applicable

Personnel (eg, daily commute to work)

Production and manufacturing

Supply chain (eg, shipping, freight)

IT (eg, energy use)

Delivery and customer services (eg, shipping)

Sales and marketing (eg, flights and other travel)

General back-office functions (eg, energy use)

Remote workers (eg, employees working at home)

In your view, how much of an impact does each of the following parts of your business have on the environment (considering their use of energy and resources and overall carbon emissions)?(% of respondents)

29 58 10 3 1

25 34 21 2 18

23 51 16 3 8

19 63 15 2 1

18 49 22 1 9

16 47 26 2 8

13 63 21 2 1

6 33 46 3 12

Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree Not applicable/Don’t know

Our organisation promotes good practices regarding IT usage to employees (eg, reminders to shut down PCs at night, etc)

We do not measure the environmental impact of our IT systems and policies

Increased home working will be an important way in which IT will help contribute to green practices within our business

An industry standard on energy efficiency on IT equipment would cause us to change our procurement policies

We do not measure the company’s overall environmental impact

Our CIO/IT director is heavily involved in our organisation’s overall plans to reduce its carbon impact

Environmental concerns don’t currently play any role in our planning and strategy

To what extent do you agree or disagree with the following statements, in terms of how they apply within your organisation?(% of respondents)

47 31 12 6 4 1

26 28 12 21 12 2

20 39 19 11 8 3

19 45 19 11 5 1

19 30 9 20 19 3

18 33 16 16 11 5

9 24 8 27 33 1



Critical factor Important factor Moderately important factor Minor factor Not a factor Not applicable/Don’t know

Reliability

Price

After-sales support

Use of toxic materials within equipment (eg, lead, PVC)

Vendor’s financial strength/ reputation

Current vendor relationship

Delivery times

Equipment’s energy efficiency

Vendor’s equipment disposal/ recycling services

Vendor’s environmental credentials

Vendor’s offsetting scheme, to account for carbon impact of IT equipment’s operational lifecycle

When tendering for new IT equipment (eg, PCs, servers), how much of a factor does each of the following factors play in your purchasing decision?(% of respondents)

63 29 6 1 1 0

32 57 9 1 1 0

30 51 15 4 1 0

22 24 21 18 10 5

18 49 24 9 1 1

16 56 20 7 1 0

13 36 39 9 1 1

12 34 31 18 5 1

10 24 35 19 10 2

7 25 32 21 13 2

6 13 32 22 22 5

If your organisation pays to offset IT-related carbon emissions, what percentage does it offset? (% respondents)

1-10%

11-20%

21-30%

31-40%

41-50%

More than 50%

We offset all carbon emissions

Don’t know

Not applicable—we do not offset IT-related carbon emissions

6

5

1

1

1

1

1

18

68

If your organisation monitors or audits its IT-related energy spending, how has this changed over the past two years? (% respondents)

We don’t monitor our organisation’s IT-related energy spending

Consumption has decreased

No change

Increased 1-10%

Increased by 11-20%

Increased by 21-30%

Increased by 31-40%

Don’t know

42

15

10

12

9

1

2

9



Which of the following IT-related initiatives has your company implemented in order to reduce its overall environmental impact? Select all that apply. (% respondents)













Other

84

69

67

63

47

41

35

31

30

21

16

8

6

Yes

No, but plan to implement one within the next three years

No

Don’t know

33

12

54

1

Does your organisation have a policy in place to allow and encourage home working for one or more days per week? (% respondents)

1-10% of our workforce



More than 50% of our workforce

Don’t know

Not applicable—we do not have a home-working policy

22

12

4

4

5

54

If your organisation does have a such a policy, what percentage of staff is eligible to work from home? (% respondents)

Which of the following IT-related initiatives, in your opinion, are most effective in terms of their overall environmental impact? Select up to three. (% respondents)













Other

45

38

32

30

29

29

22

18

13

13

10

7

3



Yes, in all markets we operate in

Yes, in all markets that have relevant legislation

No, but we are working to become compliant within the next two years

No, we are not compliant

Not aware legislation existed

Not applicable/Don’t know

34

26

4

7

16

13

Is your organisation compliant with any legislation regarding disposal of electronic goods (eg, European WEEE directive)? (% respondents)

How does your organisation primarily dispose of its obsolete IT equipment? (% respondents)

Recycled via third-party organisation

Pay for physical destruction via third party

Donated to charity

Recycled via vendor programme

Sold to employees

Dumped

Auctioned externally

Other

27

15

15

12

7

4

3

17

In your view, which of the following parties should be responsible for disposing of end of life IT equipment? Select all that apply. (% respondents)

My own organisation

Equipment vendors

IT suppliers

Local government

Other

69

57

42

20

3

In which region are you personally based? (% respondents)

Western Europe

Asia-Pacific

North America

Middle East and Africa

Latin America

Eastern Europe

59

19

19

2

1

0

About the respondents

Which of the following best describes your title? (% respondents)

CIO/CTO

Head of IT

SVP/VP for IT

CEO/President/Managing director

CPO

47

32

12

8

1

What is the size of your overall enterprise (in US dollars) in its last fiscal year? (% respondents)

Under $100m

$100m – $250m

$250m – $500m

$500m – $1bn

Over $1bn

8

22

10

19

41



What is your primary industry? (% respondents)

Manufacturing

Financial services

Healthcare, pharmaceuticals and biotechnology

IT and technology

Professional services

Government/Public sector

Education

Transportation, travel and tourism

Energy and natural resources

Retailing

Construction and real estate

Consumer goods

Logistics and distribution

Entertainment, media and publishing

Automotive

Chemicals

Telecommunications

17

14

11

9

8

8

6

4

3

3

3

3

3

1

1

2

2

Whilst every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in the white paper.

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IT and the environment: A new item on the CIO's agenda