One of the most common buzz words in the tech industry today is “sustainability.” The tech industry is responding, at least in part, to the calls to reduce carbon emissions and to help slow or halt climate change. I say “in part” because the tech industry continues to grow with the digitization and connectivity of everything. In addition, the tech industry continues to grow in importance and as a percentage of the global economy. As a result, the tech industry faces the challenge of minimizing its carbon footprint as it grows.
In some respects, the tech industry offsets carbon emissions in other areas by increasing productivity and reducing the need for other resources. However, the complexity of the tech industry makes it difficult to analyze its total carbon footprint, much less attempt to define sustainability.
The reason it is difficult to define sustainability with respect to the tech industry is because it can include many aspects ranging from direct efforts and resources like mining rare earth materials, manufacturing, transportation, operation, and lifecycle management, to indirect resources like environmental systems, power generation, and labor resources. While it seems that every tech company has adopted the sustainability banner, the definition of “sustainable” varies company by company. If a company adopts one aspect of sustainability but not another, should it be deemed environmentally conscious? Through a continuing series of articles, Tirias Research will examine what various companies are or should be doing to be sustainable.
Some companies incorporate sustainability deeply into their culture, while others use it simply as a marketing ploy. In most cases, being sustainable comes at a cost. Using recycled materials can often be more expensive than using new materials and underwriting an end-of-life (EOL) recycling programs adds costs to electronic products. Companies still need to compete in the market in terms of both cost and time-to-market. As a result, there usually needs to be a business case for sustainability.
Thankfully, those business cases are emerging. The lack of rare earth materials, the increasing costs of mining, transportation issues, the cost of electricity, and the challenge of processing ever increasing amounts of information are just some of the growing business cases for sustainability in the tech industry. As an example, several forecasts estimate that the datacenter electrical power required to process the exponential growth in data will exceed all the electricity currently available in the world at or around 2030. Clearly, that can’t happen. In addition, the cost of cooling entire data centers and the servers they contain can account for as much as a third of the capital cost of a data center and can double a data center’s power consumption and operational costs.
Because of the globalization and specialization in the tech industry, achieving sustainability, especially for each individual product or service, is difficult. Companies that are more vertically integrated or have more control over their value chain are likely to have greater success in achieving a more sustainable level for their company and its products and services. This is a topic we will examine in more detail in the following articles.
Ironically, the COVID-19 pandemic has forced more companies to become more sustainable in terms of the use of labor. The shift to working from home or remote locations to avoid physical contact has reduced the energy and other resources required to maintain office spaces. While it has caused an increase in IT purchases for the remote workforce, those are expenses that would likely be made at some point anyway. In addition, it has reduced the time, fuel or electricity, and other resources many employees would be spending on commuting. Many tech companies are using this opportunity to make permanent changes to their workforce management going forward. This is one of those indirect resources that companies leverage and a step toward being more sustainable.
While sustainability may be used by many companies for marketing hype today, the need for sustainability in the tech industry is essential to help slow the climate change that the world is now facing. As the world leaders change policies to achieve carbon neutrality by 2050, it will be important for tech companies to adopt sustainability strategies to comply with new climate policies, to help achieve carbon neutrality, and to be competitive going forward.
In addition, as the focus on sustainability grows, businesses and consumers are more likely to include some aspect of sustainability into their purchasing decision, further driving corporate strategies. Follow this series of articles as we examine the impact of sustainability on the tech industry and what individual companies are doing to address it. If you have any suggestions or recommendations, please contact me directly.
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