Home Special ReportEnvironment ICT for a low-carbon world: Activism, innovation, cooperation

ICT for a low-carbon world: Activism, innovation, cooperation

Two industries are already making strides in cutting carbon emissions

by Karim Sabbagh

It is hardly news at this stage that climate change presents profound challenges to the environment as well as to societies and economies around the world. However, there has been limited discussion to date about the fact that companies in the information and communications technology (ICT) industry have the potential to make significant contributions in combating climate change.

The Smart2020 report, an analysis of ICT’s effect on climate change, estimates that the industry will contribute 3 percent of global energy emissions by 2020 thanks to the increasing prevalence of technology. Although it may seem that the industry is part of the problem, it could also be a major part of the solution. ICT could enable a reduction of up to 15 percent of global emissions, or five times the footprint of the industry itself, by not just reducing their own emissions but helping other industries reduce theirs. Individual ICT companies can adopt different strategies along a continuum to address climate change.

Limiting the environmental impact of operations and products

In their initial stages of environmental activism, companies will seek to control their own carbon footprint. A “passive environmentalist” will take steps to reduce the negative impact of its operations by minimizing the use of energy and resources and initiating green practices such as recycling. A “conscious environmentalist” will take these initial steps as well, but will also actively seek to minimize the environmental impact of its products with measures such as reduced packaging and online billing. Phone manufacturer Nokia is a “highly conscious environmentalist;” it looks at the lifecycle of its products and reduces its environmental impact using substance management, energy efficiency and recycling.

Innovating for sustainability

In later stages of activism, companies look at environmentally friendly products and services as a way to drive further business. A “green enabler” will seek to improve the operations of products in the ICT sphere so that they are more environmentally sustainable.

The real sweet spot is a highly innovative company — a “green innovator” — that can reduce the environmental impact of other companies’ products. Cisco’s “Connected Urban Development” initiative is an example of one such innovation. The company is working toward solutions to improve traffic flow, boost public transportation, spur the construction of energy-efficient buildings, and initiate other ventures that can help cities manage the size of their carbon footprint.

Passive and conscious environmentalists can have an impact on, at most, the 3 percent of global carbon emissions that their own industry generates. By becoming green enablers or green innovators, companies can capture the business potential of sustainability, and at the same time chip away at the remaining 97 percent of carbon emissions.

Furthermore, companies moving up the environmental activism ladder are reaping financial benefits and staking out enviable market positions. A survey of IT professionals across multiple industries showed that more than 50 percent of companies already have or are looking to implement green IT solutions within a year. Green IT is a rapidly growing multi-billion dollar industry. This fact alone points to the business opportunities for green enablers that help other companies control the environmental impact of their internal ICT services.

Green innovators are able to target an even broader market with products tailored to multiple industries that have an impact on environmental factors other than IT, such as energy use and waste. The smart grids market alone is estimated to exceed $100 billion by 2030.

One roadblock to truly effective change is the fact that ICT companies are developing green solutions in an individualistic and fragmented manner. There is limited alignment on the need for or the path toward more environmentally sustainable business. The consequences of such individualistic approaches could be unrealized business opportunities, diminished results and the potential for continued environmental damage.

A collaborative industry approach to developing ICT solutions that promote environmental sustainability would have a number of positive effects:

  • Growing the pie

By agreeing on compatible standards and interoperability measures, the ICT industry can ensure growth in the proverbial pie for ICT services that promote environmental sustainability.

For instance, if the virtual meeting solutions of Company X do not work with the virtual meeting solution of Company Y, executives at these companies have less incentive to use this technology and will instead meet in person more frequently. For participants, the meeting is more costly; for the environment, it is more harmful; and for the virtual meeting solutions provider, it is less financially attractive. In the long term, the virtual meeting platform pie is smaller.

  • Improving consumer experience

In addition to increasing the size of the market, industry alignment and collaboration can improve the customer experience. If one company’s temperature control system integrates well with another company’s lighting control system, customers with both systems in place will have an improved experience, since they will be able to use both technologies in the same home, potentially with the same control panel. The result is a customer base that is more likely to take advantage of ICT solutions that contribute to environmental sustainability.

  • Driving effective policy

By positioning itself as the champion for environmental sustainability, the ICT industry can improve its image and effectively lobby for environmental sustainability within other industries.

Lobbying efforts could include promoting research and development funding for ICT products that promote environmental sustainability, tax breaks for environmentally conscious organizations and other incentives. For example, the Demand Response Smart Grid Coalition (DRSC) is lobbying the Obama administration in the United States for tax credits to implement technologies that reduce power consumption. Wider lobbying efforts for other ICT products should be considered.

In addition, better policymaking could result in improved business opportunities for industry. For instance, a strong lobby that manages to drive legislation for minimum building standards (e.g., smart metering or energy monitoring requirements) would ultimately be beneficial for an industry that provides such solutions. A necessary first step in this approach is for companies in the industry to form national trade associations that can effectively lobby the relevant government agencies.

There is a growing consensus among industry and activist camps on the contribution that ICT can make to environmental sustainability. This role can unlock significant business potential, but it will require that companies work together toward developing and promoting such ICT solutions. Cooperation holds tremendous potential for industry to protect the environment, for consumers to change their behavior and for technology to save the planet, or at the very least, for ICT players to cash in on the benefits.

Karim Sabbagh is a partner and global practice leader for communications, media & technology and Hana Habayeb is an associate at Booz & Company

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