Green issues matter to business, despite the global downturn, but this has more to do with economic and legislative pressures than altruistic virtue, as Lesley Meall discovers when she looks at the drivers behind ‘greensourcing’.
Greensourcing is an interesting concept. As is often the case with the IT industry, the term of reference means so many different things to so many different people, that it is teetering on the brink of being meaningless. For Dell greensourcing (or green sourcing) initiatives range from its use of renewable energy, to making its bamboo packaging compostable; for Microsoft initiatives range from moving people around campuses using hybrid shuttles, to building power management features into operating systems; and the broadness of these greensourcing initiatives are reflected in the attitudes and approaches of other providers of IT, and their customers.
So it is unsurprising that greensourcing also describes green outsourcing, and service providers green credentials are often selection criteria. In 2009, when the Brown Wilson Group surveyed 4,000 businesses worldwide for its Black Book of Outsourcing Top Green Vendors Survey half of the respondents reported considering “green criteria” during their IT procurement processes. Sustainability issues increasingly form part of the contracting process, with questions on suppliers’ green credentials appearing in requests for proposals from commercial organisations as well as public sector bodies – though the latter have been requesting information on environmental certifications such as BS7750 and ISO 14001 for some time.
Perception filters?
In addition to the fairly standard contract requirement, that suppliers must comply with “all laws”, more organisations are specifying a list of voluntary codes and behaviours to which their suppliers are bound. “This list would commonly include an organisation’s environmental policy, CSR and diversity policy, commitment to minimising environmental impact and so on,” said Mark O’Conor, a partner in the technology, media and commercial group of the law firm DLA Piper, and he is expecting to see “more focused and detailed environmental standards and codes become increasingly common within such lists”.
But the motivation behind the increased focus on this area does not necessarily indicate a genuine concern for the environment or a genuine interest in corporate social responsibility (CSR). During the Black Book international research on green vendors, six out of seven respondents admitted that the greening of outsourcing had more to do with economic conditions and escalating energy costs than with ecological altruism, a perspective that was mirrored in a white paper from the National Outsourcing Association (NOA) in the UK.
In Greensourcing: the challenges facing the business world, reducing carbon emissions did not even make it into the top three drivers behind the trend towards green IT outsourcing. According to the NOA, green issues are high on the boardroom agenda because of three factors: “cost savings, government enforcement and competitive advantage.”
It’s not hard to see how being able to simultaneously improve all three makes greensourcing seem like a win, win, win, approach. “Reducing wastage, increasing efficiency and simplifying compliance all marinade well to help companies bolster their bottom-line, as well as stimulating their corporate social responsibility,” said Martyn Hart, chairman of the NOA, “and green procurement can deliver significant benefits while addressing climate change.” This is particularly apparent in the data centre, where outsourcing seems able to deliver cost savings and competitive advantage, whilst improving legislative compliance and sustainability – if only superficially.
The elephant in the data centre?
Outsourcing and offshoring data centre energy consumption can have a positive impact on a business’s bottom line, its carbon footprint, and its compliance with legislation such as the UK’s new Carbon Reduction Commitment Energy Efficiency Scheme (CRC); but this does not necessarily reduce overall emissions levels. The CRC only relates to the largest consumers of power and it only relates to their in-house carbon emissions, not those generated by outsourcing providers on their behalf, so despite its best intentions, the legislation may lead to a rise in offshore outsourcing (among UK-based data centres and other big consumers of power), and increase the likelihood of ‘carbon laundering’.
A more optimistic perspective is that providers of outsourced IT services will voluntarily take more steps to improve the green credentials of their data centres, and organisations that outsource their emissions will actively monitor the green record of their service providers. But how realistic is this? ‘Green has secured a major role in the IT outsourcing decision making and vendor selection processes,’ said Doug Brown, co-author of the Black Book Green Vendor report, ‘and competing suppliers are peddling their green credentials,’ because customers want to bask in the reflected glory. But the report found that 87 per cent of organisations were taking a ‘mostly passive’ approach to monitoring vendors, ‘as long as costs are stabilised and a green program is drafted.’
All of this threatens to make carbon management accounting into a black art, that conceals more than it reveals. Organisations can avoid accusations of deliberate emissions outsourcing and comply with the CRC, because it does not prevent them from gradually increasing their use of co-location and third part service providers, whilst simultaneously demonstrating improvements in their emissions reductions - and banging a big drum about how responsible they are being. “The ease with which companies can show off their green credentials is a catalyst to implementing a green agenda,” according to the NOA, as it can have a marked impact on the success of the businesses in question (whether they are buying or selling outsourced IT services).
Cause for confusion?
In defence of the corporate world, the bottom line is a lot less woolly than many sustainability issues are, so it is perhaps unsurprising, that the Black Book Green Vendors Survey found widespread uncertainty about what “achieving true sustainability” actually means. Likewise the NOA white paper, which stated that “despite the growing legislation surrounding the issue of carbon emissions and climate change, businesses are finding it increasingly difficult to cut through the chaff and establish exactly what it is they need to do in order to implement an effective green strategy.” But it’s hard to believe that this is true, and at the risk of seeming churlish, this position seems rather childish (“But Mummy, I didn’t know what I was doing was wrong”) and short sighted.
Maybe organisations that outsource IT and their service providers could learn a thing or two from the banking crisis and the BP oil disaster. If nothing else, these staggeringly significant events should have brought home how interconnected and interdependent the world has become, how globally and ecologically far-reaching the activities of one business can be, the dangers of power without responsibility, why principles-based standards trump rules based every time, and that merely paying lip service to compliance with regulatory safeguards is a recipe for disaster. Maybe greensourcing should be about more than saving money and outsourcing your carbon emissions.
