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While there is certainly much focus on sustainability – acting in a way that meets current needs without compromising future generations – in the business world, it’s often a case of much talk but little action.
According to research from consultancy Designit, 11% of international businesses consider sustainability at board level just once each year. Investment in the area is currently very low, with companies spending an average of just 4% of revenue on sustainability, following that research.
When it comes to barriers to operating in a sustainable way, rising costs was the biggest issue, cited by 63% of the 1,000 sustainability professionals interviewed by Designit. Having too much data to make sense of, or not having the right data (49%) and technological constraints (42%) were also listed as obstacles.
This reluctance to invest in sustainability is at odds with the proven benefits for businesses. A recent Morningstar US sustainability leaders index report found companies with the best ESG scores returned 33% higher returns over one year compared with the average company.
There is also growing pressure from more environmentally conscious consumers, who are starting to consider a company’s sustainability credentials before making purchases.
Another proven benefit is a reduction in energy costs. Property company Savills is one of many examples of how sustainability investment can lead to ongoing cost savings.
When Savills wanted to improve energy efficiencies at one of its offices in Dublin, the firm called on climate tech company IES to carry out an assessment. IES Consulting used a monitoring-based commissioning approach and its iScan data analytics platform to improve energy efficiency through the correct operation of the building’s systems.
A detailed review of the building’s utilities data and building management systems revealed several areas that would offer significant performance improvements.
In one block of the building, the return water temperature set-point on the boilers was too high, meaning some boilers were running when outside temperatures were relatively moderate. Data from outdoor air temperature sensors, meanwhile, identified that some of the sensors were receiving direct sunlight. This was causing issues with the low pressure hot water (LPHW) temperature set-points.
The 14,000m2 office building in George’s Quay, Dublin was fitted with new energy-efficient lighting and controls, weather compensation controls for heating, rainwater harvesting, solar panels, and a new mechanical ventilation system with heat recovery. A weather shield was also installed to reduce exposure to direct sunlight.
As a result of the project, Savills is on course to achieve energy cost savings of up to €108,000 every year, and carbon savings of up to 302 tonnes of CO2 per year.
Another potential cost-saving is around compliance with new legislation, which is increasingly holding businesses accountable for managing sustainability taxes and fees.
Policies such as the Extended Producer Responsibility places an obligation on the business to manage a product’s end-of-life, including collection, transport, sorting and recycling or treatment. In 2024, the implementation of the Corporate Sustainability Reporting Directive and a finalised UN Plastics Treaty will require businesses to have an even better understanding of their environmental data.
“Solutions that support businesses to monitor and comply with these regulations can be a valuable investment for the future,” says Stephen Jamieson, global head of circular economy solutions at SAP. “By taking a data-driven approach, businesses can effectively measure their material use and emissions, implement more sustainable products, and ensure ongoing compliance while reducing costs. Those who do not have these capabilities risk missing opportunities to save and streamline spend, and avoid inaccurate fees or over-payment.”
Risks of not acting
When it comes to sustainability investments, businesses need to consider not only the potential positive benefits, but the risks of not acting as well. Firms choosing not to invest in such technology could soon face financial penalties.
Sarwar Khan, BT’s global head of digital sustainability, notes: “We expect to see most regions introduce a carbon tax for businesses in the form of cap and trade. In the UK, the government is exploring the potential for import carbon taxes to create a level playing field for organisations who are driving the sustainability agenda.”
There could also be a negative impact on the ability to raise investment. According to Gartner, 85% of investors are using ESG metrics to inform their decisions on who and how much to invest in organisations.
“Laggards are seen as high-risk holdings, which will impact the ability to raise capital,” he says. “We’ve seen some divestments already, with UBS shifting investment away from Exxon Mobil and four other ‘unresponsive’ energy companies.”
For businesses wanting to invest in sustainability to reduce operating costs, data is the best place to start. Without data, it’s difficult to identify the hotspots. “Many organisations don’t have metering or telemetry in place to collect granular information,” says Khan. “In other cases, organisations don’t have the software to disaggregate the power consumption data.”
Once businesses have access to data, they can identify the best technology to invest in to help them optimise efficiencies. This includes:
- Building energy management software to drive down energy use and costs across the built environment, particularly on days where there is low occupancy due to hybrid working or tweaking their renewable energy resources onsite to match usage patterns.
- Artificial intelligence to drive energy efficiency across networks and also other energy-hungry assets such as machinery and processes in the manufacturing vertical.
- Digital twins, which reduce the need for upfront investment by simulating real world applications in the virtual world to make informed decisions on how to run operations more efficiently.
- Mixed reality for reducing operating costs associated with travel by enabling seamless collaboration from anywhere in the world.
The datacentre also offers some effective ways to begin reducing operating costs for those at the start of their sustainability journey, according to Tim Loake, vice-president of Infrastructure Solutions Group, UK at Dell Technologies.
Deploying a power management system that can report on and manage infrastructure, particularly from a heat and power point of view, will enable platform optimisation. Power management software can help reduce costs, but it also enables the flexibility necessary for a healthy IT infrastructure. “Features like demand-based power management, where performance is balanced to workload, help reduce power consumption over time when there are opportunities, ultimately helping save energy costs,” says Loake.
Minimising stranded power in the datacentre is also an effective way to save cost and operate more efficiently. “Cooling systems are actually less efficient when not highly used,” he adds. “Many vendors, Dell included, offer online tools and features integrated into platforms to help you rescue power stranded in your datacentre.”
Last, focus on eliminating zombies and ghosts – technology that is under-utilised or isn’t used at all. “Start with the oldest systems in the datacentre and assess whether a modern replacement will consume less energy,” says Loake. “Generally, most infrastructure older than three years can be replaced with modern technology that will recover the capital purchase cost in under 12 months due to energy and support savings.”
Data management has a role to play in sustainability, too – both the exponential growth in data and how companies manage it, especially data no longer needed.
“Keeping sometimes multiple copies of transient data is pointless and expensive in terms of infrastructure utilisation and power consumption,” says Loake.
“Data classification and retention policies will allow you to make clear decisions on what data you’re keeping, where you’re keeping it, and for how long. If you know that and action it, you can anticipate and control your data growth, improve platform utilisation, and reduce infrastructure sprawl, which ultimately helps you deliver on your sustainability measures.”
Software also offers businesses an effective way to measure the use of materials and emissions along the full length of their supply chain, letting companies track everything from where their raw materials are sourced to supplier emissions.
“That’s how they can make better-informed decisions about how they evolve their operations to meet net-zero targets, reduce waste and cut down on the use of energy-intensive suppliers,” says SAP’s Jamieson.
Sustainability software lets businesses accurately track the carbon footprint of their products and use the data to inform R&D and strategy, whether that’s implementing more energy-efficient manufacturing equipment or working with different suppliers on low-impact raw materials. A good example of this is Unilever using blockchain technology from GreenToken by SAP to eliminate deforestation from global supply chains by 2023.
“Targeting palm oil in particular, the solution creates a trail of digital tokens that capture information on the materials’ origin and journey across the supply chain, giving them the ability to verify that it is coming from a sustainable source,” says Jamieson.
The importance of sustainability for businesses is clear, whether positives like energy cost savings or increased sales from eco-aware consumers; or negatives like fines for failing to comply with legislation or difficulties securing financial investment.
There is a range of software available to firms wanting to take their first steps towards sustainability, or looking to enhance their current measures. Data is often the crucial aspect, required to both analyse current operations, and identify areas where firms can and should make changes.
The pressure on businesses to operate in more sustainable ways is only going to grow in the coming years. Smart companies will take action now to improve their bottom line, and mitigate potential risks of inaction.