IT Sustainability Think Tank: Tightening up a circular supply chain

With sustainability moving up the boardroom agenda, CIOs and IT managers should look to revamp their IT procurement strategies to align with the principles of the circular economy, but why and what does this mean when it comes to managing the lifecycle of their entire IT estate?

Reducing e-waste by recycling materials already in circulation, rather than extracting raw materials for new products, is a significant step towards reducing the IT sector’s carbon emissions. However, daily headlines about extreme weather remind us that climate change is already here, and reckoning with its risks and opportunities will require both foresight and insight.

Many businesses are stepping up to the challenge, putting emissions reduction – including through circularity – at the top of their sustainability agendas. But decarbonisation alone is not enough. Even if we reached net zero tomorrow, decades of historic emissions mean that further warming and extreme weather are inevitable in the coming years.

Alongside their strategies for decarbonising, IT businesses must take steps now to make sure they are able to withstand increasingly volatile weather events. As The Economist recently said: “The era of predictable unpredictability is not going away.”

As CIOs and IT managers know all too well, supply chain disruption has soared in recent years. From Covid-19 lockdowns in China to Brexit red tape to Russia’s invasion of Ukraine, global events and trends have created shortages of everything from raw materials to critical parts

According to McKinsey, further disruption awaits: “As climate change makes extreme weather more frequent and/or severe, it increases the annual probability of events that are more intense than manufacturing assets are constructed to withstand, increasing the likelihood of supply chain disruptions.”

For the IT industry, which relies heavily on the supply of parts like semiconductors, climate events like flooding anywhere across globally stretched supply chains could create major issues, whether through power outages, disruption to roads and transport, or damage to factories themselves. 

Whether your supply chain is linear or circular, its resilience to climate hazards is equally critical. Organisations with climate-resilient supply chains “may only lose about 5% of revenue” in the event of extreme weather, compared with unprepared competitors, which stand to lose more than 30%, says McKinsey

Building a more resilient supply chain means both understanding and anticipating its climate risks – and then adapting your procurement processes and management strategies to cope with them. Depending on where your suppliers are based, these risks could be short-term shocks (such as wildfire or flooding), longer term stresses (including water scarcity and heat stress) – or both. 

“Businesses that actively build resilience into their supply loops now as they shift towards a circular approach will be sustainable in the future”
Iggy Bassi, Cervest

With climate intelligence – asset-level intelligence on climate risk – IT professionals can quickly identify where the weak points are in their operations and supply chains, gain invaluable insights about the hazards, scenarios and timeframes to focus on, and make decisions about how to adapt to risks.

Climate intelligence can also inform IT procurement processes, helping to build resilience into supply chains right from the start. Cervest is already seeing organisations feeding such information into their supplier selection and renewal processes. The benefits are twofold: enterprises are better prepared for climate change; and suppliers are incentivised to make their own operations more resilient.

Building circularity into your business model is an undeniably important move towards reducing carbon emissions, as well as our unsustainable consumption of raw materials. Adapting supply chains and procurement processes to cope with the uncertainties of our future climate must be a parallel consideration.

The past few years have simultaneously taught us about the consequences of being caught unprepared – and the power of collaboration.  A Covid vaccine was developed in record time. Why can’t we apply the same approach to combating the effects of climate change? Meanwhile, businesses that actively build resilience into their supply loops now as they shift towards a circular approach will be sustainable in the future, by any definition. 

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