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Why sustainable tech is becoming a top initiative for execs

Why sustainable tech is becoming a top initiative for execs

New data from Gartner shows sustainability is now a top-10 issue for business leaders because it can create greater efficiencies, save money, and address investor demand.

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Sustainable technologies can increase the efficiency of IT services (and boost overall enterprise efficiency) using  technologies such as traceability, analytics, artificial intelligence and renewable energy — and the issue is now a top 10 initiative for CEOs, CIOs, and other top executives, according to a new report by research firm Gartner.

Gartner found that the issue of sustainability traverses all of the strategic technology trends for 2023. And by 2025, 50 per cent of CIOs will have performance metrics tied to the sustainability of the IT organisation.

The findings are part of a report on the 10 top strategic tech trends organisations need to explore in 2023. Gartner announced the findings during its IT Symposium/Xpo this week in Orlando. Environmental sustainability was in 14th place in 2019 and 20th in 2015.

Investments in sustainable technology can pay off by providing new areas of growth. For example, Japanese transport company Mitsui O.S.K. Lines uses AI-powered models to improve shipping efficiencies in the maritime industry.

And utilities such as Dubai Electricity Water Authority (DEWA), use IoT and digital twins — a virtual copy of the water supply system that can simulate how it behaves — to create smart building management solutions that use 50 per cent less water.

In May, a Gartner survey found that environmental, social and governance (ESG) initiatives are now a top three priority for investors, after profit and revenue.

“As business leaders feel the pressure from key stakeholders to do more on environmental sustainability, they are now treating the needed changes as opportunities to drive business efficiency and revenue growth,” Mark Raskino, distinguished research vice president at Gartner, said in a statement.

Seventy-four per cent of CEOs agreed that bolstering ESG efforts attracts investors. Of the 80 per cent of CEOs who intend to invest in new or improved products this year and next, environmental sustainability was cited as the third largest driver, just behind functional performance and general quality.

Sustainability has also become something as a competitive differentiator – in fact, it is on the same level as brand trust among respondents.

The pandemic, Raskino noted, brought a number of “deep societal trends” to the surface, such as a desire to change the way employees work and the fragility of long-distance global supply chains. More recently, the Russian invasion of Ukraine has amplified the macroeconomic factors CEOs now face, such as inflation, Raskino said.

At the same time, CEOs’ digital business ambitions continue unabated by the pandemic and related crises. That means executives have to spend more on innovative solutions designed to address ESG-based sustainability goals.

“To do this, organisations need a new sustainable technology framework...," Raskino said.

Jack Gold, principal analyst with J. Gold Associates, said he’s seeing a lot of interest in sustainability, but for now there's more smoke than fire.

Some companies now have sustainability officers, “and that is a good thing as it concentrates the potential for strategic action,” Gold said. But they still represent a minority of companies, “especially if you’re not in the Fortune 1000, or a not-publicly-trader enterprise.

“There is increasing pressure in the public markets to invest in sustainability oriented companies,” Gold continued. “While some companies are willing to make the [significant] investment to achieve a sustainability posture, many organisations are not making the investment, or at least not a sufficient investment.”

Gartner recommends organisations focus on IT infrastructure and workplace services (“sustainable IT”) and prioritise tech investments based on an overall enterprise strategy.

Examples include:

  • Cloud services to raise utilisation rates of shared resources and reduce environmental impacts.
  • Enterprise greenhouse gas emissions management software to facilitate collection, analytics, and reporting of past, present, and future emissions data.
  • Supplier sustainability applications to track ESG performance of third parties.
  • Supply chain blockchain to protect, verify and trace transactions, for example, to ensure ethical sourcing.

Gold said companies should not try to move too quickly on sustainability efforts, which are likely to take years to develop. But organisations can start with simple things like acquiring more energy-efficient equipment, including newer, more power-efficient computer systems, and simple things like making sure to turn off equipment when not in use.

It’s also important to tell employees about corporate sustainability efforts, and educate them on how they can help.

“And finally, designate a person or group to delineate a sustainability strategy that is right for the organisation, and then implement it,” Gold said.

One major problem that remains: defining what sustainability is in the first place, according to Gold. The term itself is broad and not universally defined, Gold said.

Generally, though, sustainability can be thought of as is a strategy to reduce the carbon footprint an organization by using  the least amount of non-sustainable energy and converting to sustainable alternatives such as wind and solar. “And that includes not only in your own operations, but also throughout your supply chain and employee chain,” Gold said.

“That’s where it gets a bit confusing and difficult to manage. Is purchasing carbon credits, for example, being sustainable?” he said. “Really, that’s just offsetting your pollution with the better management of sustainability by others."

Many organisations are now feeling the pressure of potential regulations, especially in areas hard hit by climate change.

“So, they are trying to get ahead of the curve by making their own sustainability initiatives, which in some cases are really just window dressing,” Gold said. “And it gets really complicated if you are a multi-national company having to deal with all the various regulatory bodies.”

Gartner noted that the top strategic tech trends it identified will continue to drive significant disruption and opportunities over the next decade.


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