Going green isn’t easy, but IT leaders need to find a way to make it happen – soon.
As more companies focus on environmental sustainability, CIOs and other technology leaders play an important role, said Ned Calder, partner at Innosight, a strategy consulting firm based in Lexington, Massachusetts. Many companies attach great importance to “e”. ‘ in their environmental, social and governance (ESG) objectives. To create success, technology must be a key driver and the IT department must be an important partner.
In this interview, Calder discusses the following concepts:
Drivers for climate protection measures by companies;
the importance of defining terms;
sustainability first steps;
the role of technology in climate action;
Basics of a sustainability strategy; And
Aligning IT and business with environmental concerns.
Why companies need to care about their impact on the climate
Companies and software providers suddenly seem to be talking about climate action, including technologies to support a circular economy, ways to measure carbon emissions, etc Decarbonizing data centers. What factors are driving business and IT leaders to pay more attention to environmental sustainability?
Ned Calder: Several factors come together. Where the focus lies depends on the industry, but I think there are four big ones [environmental sustainability drivers]:
Consumer expectations. This is consumers’ increased expectation that the companies they buy from act responsibly towards the environment.
Employee expectations. As concerns about sustainability become more prevalent in our society, employees want to work for an employer that represents their values. People want their companies to take action on issues that matter to them.
Investor expectations. A really important one [corporate sustainability driver] is that the investment community is starting to take into account what companies are doing about climate change. If a company finds itself on the wrong side of this macroeconomic trend toward sustainability, investors will be increasingly affected [view that] as a risk to the long-term health of a company. Companies that want to attract an investment base absolutely need to have one [sustainability] History and action plan.
Government regulatory measures. More aggressive government regulatory action to address sustainability, whether that means improving the health of their populations or making the right contributions to curb climate change more broadly.
How can IT and business leaders support more productive conversations about environmental sustainability in their organizations?
Calder: Define your terms. When we discuss sustainabilityFor example, what do we actually understand by this term in our corporate context? Often missing is the practice of truly defining terms so that we can then have productive conversations about what actions we want to take, where we want to take those actions, and what roles different parts of the organization need to play in supporting our priorities.
First steps towards ecological sustainability
What should leaders tackle first if they haven’t made sustainability a priority?
Calder: One of the biggest changes we’ve seen around sustainability is the way the discussion has expanded to include a greater sense of ownership. [Concern for the environment has] was typically something that existed in a small part of the organization and may only have been supported by “lip service.”
Now sustainability must be fundamentally linked to the company’s long-term strategy. Sustainability must influence:
How do executives think about which markets they will operate in?
what types of products and services will they offer?
how they will bring these products and services to market;
Which business models will they implement? [and]
What types of resources will they provide to deliver this in an increasingly sustainable way?
One of the biggest changes we have seen around sustainability is that the discussion has broadened to include a greater sense of responsibility.
The impact must be measurable so that there is a way to track and demonstrate progress.
CIOs and other IT leaders—as they are involved in shaping a business strategy—need to be part of the discussion about how we will integrate it [an environmental focus] into the overall strategy. Then they have to translate that and say, “How does this affect the way I run my business as a CIO and what the priorities are for the IT organization?”
There must be a clear connection between IT priorities and the organization’s overall sustainability strategy.
Calder: That depends on the direction of the company. In any organization of a certain size and complexity [the right type of sustainability technology is] probably not one thing, it’s probably many things.
Take the packaging issue at CPG, for example [consumer packaged goods]. Some product categories can benefit from recycled plastic. Others may be able to switch to paper alternatives. Still others could benefit from completely eliminating packaging.
One of the related challenges that many companies are currently struggling with is simply understanding and quantifying it [environmental] have impact and be able to measure it consistently and objectively over time. This is done on the one hand so that they can first understand where their larger impact lies, but on the other hand so that they can monitor any actions they take and communicate this progress both internally and externally.
That’s not to say organizations haven’t done this any Insight into this, but they certainly haven’t optimized their internal systems in the past to be able to measure all the variables they want to measure.
CIOs typically play a large role in setting up the systems and analytics to enable environmental impact. This is a really important task.
Basics of the sustainability strategy
What are the essential fundamentals for creating a sustainability strategy?
Calder: Companies need to look beyond the existing planning horizon and develop a longer-term strategy that clearly defines priorities and has the scope to address the importance of these challenges – for example, by considering more fundamental decisions about whether and how to transform the business.
Having an effective conversation with the company doesn’t mean just taking orders.
A “future-focused” approach can be extremely clarifying, allowing you to pre-empt weak signals and short-term tactical issues and helping leaders decide what is more or less important to the company’s long-term health. By having a longer-term perspective, you can see how things might turn out and make some decisions that can help you prioritize what things you want to invest in and what things you don’t need to invest in.
The technology organization can play a key role and act as a partner in setting this long-term vision. What doesn’t work is when a tech company tries to set a path that doesn’t align with what the company wants.
IT business alignment on climate change
What happens when a CIO or IT leader understands the need for climate action, but realizes that the business side doesn’t match that focus?
Calder: You may see something in the world that could be a blind spot for the company.
Having an effective conversation with the company doesn’t mean just taking orders. You can bring a perspective that can help shape and influence. A crucial success factor is connecting this perspective with the reality of the company.
If there is a clear vision that provides clarity on priorities as well as a strong partnership with the company around what we want to achieve, then you can be much more confident about where and how to invest and how quickly have to act. And you have the right partners internally to support you. [IT-business alignment on climate change] can make dealing with a really complicated set of problems and the change program much easier.
