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The Seven Pillars of a ‘Green’ Corporate Strategy

rich-lechnerCorporate leaders across all industries now face growing pressures to become more sensitive to their companies’ energy consumption and environmental impact.

While environmental concerns may start with the CEO, they quickly filter down to other C-suite executives and line-of-business leaders, who are being asked to quantify and reduce corporate energy use and environmental footprints, streamline supply chains, meet regulatory requirements and modify IT departments to drive more energy-efficient operations.

These activities are not merely environmentally responsible: they can also drive cost savings–another universal corporate mandate. For example, according to IBM’s projections, $1 in energy savings can often drive an additional $6 to $8 in operational savings. In addition, “green” policies can provide competitive differentiation.
To develop policies that are both good for the planet and good for business, corporate leaders must consider questions such as:

  • Are all aspects of our business, including operations, IT and product lifecycle management, efficient and protective of the environment?
  • As part of our overall strategy to increase business efficiency, are we considering that environmental stewardship and energy consumption are new business barometers?
  • Does our organization maintain a public commitment to meaningful and achievable goals, with transparency in reporting progress in meeting those goals?
  • Are we taking a leadership position in driving energy conservation and environmental stewardship through the value chain and across our industry?
  • Do we have a strategy that supports reducing costs, lowering complexity, and increasing operating and energy efficiency?
  • Are we looking for ways to improve IT operations to generate more computing performance without increasing power consumption?
  • Are we experiencing social and regulatory pressure and responding with verifiable energy conservation initiatives that proactively address energy and climate challenges?
  • Are we pursuing the development of energy and environmental strategies and policies to improve business and brand position?

Each of these issues can seem complicated when considered individually and perhaps overwhelming when viewed as an interrelated group. They require a framework that helps identify and prioritize environmental efforts by illustrating how problems and opportunities can be broken down into distinct areas and then segmented into manageable projects to be addressed. These projects can be joined to form a cross-organizational program managing energy and environmental issues.

Building a framework

This framework must address the needs of various executives in developing and implementing energy and environment strategies: the CEO’s need to respond to customer, government and employee expectations; the CFO’s need to deal with changing cost dynamics for energy; COO’s and line-of-business’ needs to design and implement new processes; and, the CIO’s need to increase computing power while managing energy consumption.

Overall, this framework must cover seven business components: strategy, people, information, product, IT, property and business operations. These components are common to virtually any enterprise or organization dealing with energy and environment issues.

The creation of an enterprise-wide energy and environment strategy as part of an overarching corporate social responsibility plan can help companies address “green” issues, resulting in improved financial and environmental outcomes. Issues to be considered include the alignment of a company’s environmental strategy into an overall business strategy and how environmental values may be translated into an improved brand image.

The impact of employee behaviors and policies on the environment is significant. Commute time and business travel form a large part of an individual’s carbon footprint. The use of online collaboration tools and policies that support reduction in commuting and traveling can also have an impact on costs. Companies also are discovering that their environmental policies and practices can impact their ability to attract and retain top talent.

With data compounding between 35 percent and 70 percent annually in some industries, it’s critical for companies to better manage their data infrastructures. Optimized collection, analysis, tiering and storage of key information helps companies comply with reporting mandates while minimizing their data footprints. These same information strategies improve business operations by improving information access and system response. They help reduce storage needs through sharing, elimination of redundancies and compression.

As companies begin to understand the environmental impact of their products or services across the entire product lifecycle, they can design products in a manner that has a lower environmental impact. Streamlining product development and manufacturing also means less material used, less waste created and less energy consumed. Concurrently, an examination of the product or service lifecycle often helps businesses find and exploit market opportunities. Finally, the need to reduce energy consumption is driving an increase in the energy-management intelligence built into certain products.

Information technology
Information technology is putting increasing levels of stress on power and cooling infrastructures. According to IBM estimates, IT kilowatt-hour usage has increased fivefold in the past five years. This IT-related energy use contributes to the establishment’s greenhouse gas emissions. CIOs and IT managers view this situation as an economic and environmental crisis.

Corporations need IT energy efficiency strategies designed to help them focus their efforts. A thorough understanding of IT energy consumption, operations and constraints is the foundation for improvement. From this foundation, companies can devise strategies to help them improve IT efficiency and resiliency, address emissions, reduce energy costs and measure their success against business goals.

Companies need to reduce the cost and greenhouse gas emissions of their physical assets-from office buildings to truck fleets. The process starts with determining and managing the environmental impact of physical assets and properly maintaining all property for energy-efficient operations and reduced environmental impact. Through improved maintenance and through improved tracking, deployment, location, and management of facilities and properties, reductions in environmental impact can be achieved.

Business operations

Corporations need to transform business processes to reduce environmental impact for operations end-to-end. Consider energy or water consumption, as a start. Understanding and controlling these costs can be achieved only once a company measures its existing use and compares it against conservation benchmarks. Through the use of “smart” systems, dramatic efficiency improvement can take place. Any transformation plan put into place must be communicated to key stakeholders.

Addressing any of those seven key components of a business can tangibly lower a company’s energy usage and reduce its environmental impact. Addressing them in combination, however, can dramatically amplify those effects in making a company more competitive, successful and social responsible.

Rich Lechner
Rich Lechner is Vice President of Environment and Energy at IBM.
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