Hayes Van Der Berg, Senior ESG Consultant at ITPEnergised looks at the issue of sustainability in the Technology sector.
Q: How can the technology industry contribute to achieving global sustainability goals such as reducing carbon emissions and mitigating climate change?
Broadly speaking, the technology sector can contribute to global decarbonisation and climate change mitigation through two ways:
- Developing innovative low carbon products and services – Developing new and upscaling mature green technologies such as renewable energy, green storage, energy efficiency devices and processes, lower carbon transport systems, demand side management, artificial intelligence (AI) powered solutions, transparency and data sharing are all examples of green products and services offered.
- Decarbonising its own sector – The technology sector is a carbon intensive sector which requires significant amounts of infrastructure and energy to power. Therefore, utilising the sectors’ own technologies and expertise such as using renewable energy sources, implementing energy efficiency measures, demand side management and reducing waste in its own offices and data centres will contribute towards reducing carbon emissions. Companies in the technology sector also often have complex supply chain with multiple tiers. Having a stronger influence and degree of control of the sustainability of its own supply chain will be essential in offering greener and more sustainable products and services.
Q: What are some innovative ways that tech companies are incorporating sustainability into their products, services, and operations?
Tech companies are using innovative ways to make their operations more sustainable and offer greener products and services:
- Sourcing low carbon energy – Powering data centres is critical for the technology sector to operate. Tech companies have adopted several approaches to sourcing greener energy such as installing renewable energy (solar, wind, ground source heat pumps, combined heat, and power (CHPs)), sourcing renewable energy offsite via purchase power agreements (PPAs) or purchasing credible renewable energy certificates.
- Circular economy – Tech companies who offer physical products are adopting a circular economy approach to the upstream and downstream phases of the products’ lifecycles. Recycled and more sustainable materials are used in the manufacturing process with products designed to be recycled, reused, or repurposed at the end-of-life stage.
- Innovative technologies – Tech companies are using its own expertise to develop innovative technologies to improve their own operations and offer as a product or service to others. For example, companies are leveraging artificial intelligence (AI)-powered solutions to optimise operations, schedule maintenance, improve quality control and predict future events and patterns.
- Promoting transparency – The tech sector enhances data collection and storage which increases transparency globally and can be further utilised for analysis and forward planning.
Q: How can technology companies ensure that their supply chains are sustainable and environmentally responsible, and what are some challenges they face in doing so?
The tech sector operates in highly diverse and complex supply chains. Ensuring sustainable and responsible supply chains is critical and can be achieved through several approaches:
- Supply chain audits – Conducting supply chain audits can help companies in the tech sector to identify any environmental and social risks within their supply chain. Once identified, companies can either look to mitigate supply chain risks by replacing suppliers or engaging with them to support improvement measures.
- Supply chain engagement – Engaging and supporting suppliers to set sustainability targets, providing sufficient resources and educational learning will help build stronger relationships and encourage a more sustainable supply chain.
- Supply chain due diligence – Establishing specific environmental and social criteria when assessing suppliers will ensure a robust due diligence process is in place for selecting suppliers and further encourage them to be more sustainable and transparent.
- Establishing standards – Tech companies can establish environmental and social criteria or standards for their suppliers and require them to adhere to these standards, such as reducing carbon emissions, reducing waste, having appropriate policies and governance systems and social safeguards.
However, the technology sector faces several challenges in ensuring sustainable supply chains, including:
- Complexity of supply chains – Tech sector supply chains can be complex with multiple tiers of suppliers located globally. This reduces a company’s oversight and influence over these suppliers and make sustainability risk identification difficult.
- Lack of standardisation – Different countries and jurisdictions and varying degrees of enforcement of environmental and social standards making it difficult for tech companies to influence suppliers in these regions.
Q: What role do consumers play in driving sustainability in the technology industry, and how can companies effectively engage and educate their customers on sustainability issues?
Consumers are becoming increasingly aware of sustainability issues in the tech sector and are increasingly demanding more sustainable products and services, as well as greater transparency on environmental and social performance. Consumers therefore play a pivotal role in driving sustainability in the tech sector through their purchasing decisions.
Effective engagement and education with consumers will encourage more sustainable culture and practices. Tech companies can achieve this through several approaches:
- Greater transparency – Tech companies can disclose their environmental and social impacts and performance with consumers to create a transparent market where consumers have all the relevant information to make informed purchasing decisions. This can be achieved through disclosing sustainability information on product packaging or regular reporting, such as annual sustainability reports.
- Sustainable options – Tech companies can offer sustainable options for the same product or service being offered. For example, some companies are offering lower carbon or eco-friendly products or offering consumers the option to contribute towards carbon offsetting programmes or social campaigns.
- Active engagement – Tech companies can collaborate with consumers to gain key feedback to further build consumer relationships and better their product and service offerings.
- Education – Tech companies can educate consumers on sustainability issues and their products or services which will contribute towards a more sustainable market. This can be achieved through the disclosure of key information on product design and recommended end-of-life treatment. Marketing campaigns can also be used to educate consumers about its own products and services or create greater awareness of environmental or social issues for the industry in which it operates in.
In summary, the technology sector will play a significant role in creating a sustainable world. Be it through innovative technologies that mitigate climate change and reduce carbon emissions or through creating more sustainable practices within their own operations.
For more information on how ITPEnergised can support you and help develop robust and commercially-focused environmental, social and governance (ESG) strategies, please contact Hayes Van Der Berg at Hayes.Van-Der-Berg@itpenergised.com.