Over 90 wildfires ravaged Spain’s Asturias principality in March this year. Though not as cold and wet as northern Europe, March is still the tail end of winter in northwest Spain, a region not typically considered a tinder box. But the climate emergency is steadily changing that.
But Spain’s predicament isn’t unique. Across the world, climate change has bitten hard into the economies of tech-centric California, again due to wildfires. Australia and Pakistan have seen communities wrecked by large-scale flooding and continual rain, while in 2022, Europe had its hottest summer on record.
There is a need and realization by the business world to be more environmentally sustainable since organizations are seeing an impact on the bottom line as a direct result of climate change. So the CIO, the technologies they deploy, and the partnerships they form are essential to the future of a more environmentally sustainable way of doing business.
A question of time
Thomas Kiessling, CTO with Siemens Smart Infrastructure, part of the German engineering and technology conglomerate that makes trains, electrical equipment, traffic control systems, and more, understands that time is running out. His concerns are backed up by the Intergovernmental Panel on Climate Change (IPCC), which on March 20, 2023, said it’s unlikely the world will keep to its Paris Climate Accord promises.
And if the world’s temperatures rise by or above 1.5 degrees Celsius, businesses will feel further impacts to their bottom line, including increased supply-chain issues on a network already overstretched and fragile. Food and water insecurity will increase, and energy systems, housing stock, insurance, and currency markets will all become more volatile—a worrying set of scenarios for business leaders and boards.
Historically, CIOs have been vital enablers during times of major change, championing e-commerce, digital transformation or agile ways of working. Organizations responding to the climate emergency are, therefore, calling on those enablement skills to mitigate the environmental impact of the business.
Key to this is a greater understanding of business operations and their production of CO2, or use of unsustainable practices and resources. As with most business challenges, data is instrumental. “Like anything, the hard work is the initial assessment,” says CGI director of business consulting and CIO advisor Sean Sadler. “From a technology perspective, you need to look at the infrastructure, where it’s applied, how much energy it draws, and then how it fits into the overall sustainability scheme.”
CIOs who create data cultures across organizations enable not only sustainable business processes but also reduce reliance on consultancies, according to IDC. “Organizations with the most mature environmental, social, and governance (ESG) strategies are increasingly turning to software platforms to meet their data management and reporting needs,” says Amy Cravens, IDC research manager, ESG Reporting and Management Technologies. “This represents an important transition toward independent ESG program management and away from dependence on ESG consultants and service providers. Software platforms will also play an essential role in an organization’s ESG maturity journey. These platforms will support organizations from early-stage data gathering and materiality assessments through sustainable business strategy enablement and every step in between.”
Sadler, who has led technology in healthcare, veterinary services, media firms, and technology suppliers, says consultancies and systems integrators should be considered as part of a CIO’s sustainability plans. Their deep connections to a variety of vendors, skills, experience and templates will be highly useful. “It can often help with the collaboration with other parts of the business, like finance and procurement as you have a more holistic approach,” he says.
The IDC survey further finds that the manufacturing sector is leading the maturity of ESG strategies, followed by the services sector, indicative, perhaps, of industries with the most challenging sustainability demands to get on the front foot.
CIOs in organizations already with ESG maturity adopt data management, ESG reporting, and risk tools. In the 2022 Digital Leadership Report by international staffing and CIO recruitment firm Nash Squared, 70% of business technology leaders said that technology plays a crucial part in sustainability.
“CIOs are in a great position to demonstrate their business acumen,” says Sadler. “They can cut costs and generate additional revenue streams.” And DXC Technology director and GM Carl Kinson says IT is now central to cost reduction, while high inflation and rising energy costs make CIOs and organizations assess their energy spending in a level of detail not seen for a long time. This will have a knock-on environmental benefit. Kinson says CIOs are looking to extract greater value from enterprise cloud computing estates, application workloads, system code, and even the use or return of on-premise technology in order to reduce energy costs.
“We’re working with clients to set carbon budgets for each stakeholder to make them accountable, which is a great way to make sure all areas of the business are doing their bit to be more sustainable,” says Sadler.
Falling short of corporate sustainability goals will not only upset the board but exacerbate the search for skills CIOs face, which, in turn, complicates strategies to digitize the business.
Becoming an environmentally sustainable business is core to the purpose of a modern organization and its ability to recruit and retain today’s technology talent.
Climate urgency also impacts CIOs themselves in their employment decisions, too. “I would need to understand the sustainability angles of an organization,” says James Holmes, CIO with The North of England P&I Association, a shipping insurance firm. Business advisory firm McKinsey also finds that 83% of C-suite executives and investment professionals believe that organizational ESG programs will contribute to an increase in shareholder value in the next five years. And the Nash Squared Digital Leadership Report adds that due to the urgent global move to integrate sustainability into core business operations and the customer proposition, it’s important that digital leaders have what it calls a dual lens on sustainability.
Part of that increased shareholder value will be to ensure the business is able to meet the evolving regulations surrounding environmental sustainability. For CIOs in Europe, the EU Sustainable Finance Disclosure Regulation was adopted in April 2022, and the Corporate Sustainability Reporting Directive (CSRD) secured a majority in the European Parliament in November 2022. California also introduced environmental regulations in September 2022, and other US states are likely to follow.
“Regulation can be pro-growth,” Chi Onwurah, shadow business minister in the UK Parliament and a former technologist, recently said at an open-source technology conference. “Good regulations create a virtuous circle as more people trust the system.”
CIOs and IT leadership, whether in the UK or not, are integral to make organizations more environmentally sustainable in order to help stave off environmental collapse. No vertical market can operate effectively during an ongoing environmental emergency unless a technological response based on collated data is enacted and supported across the organization.
During the Covid-19 pandemic, CIOs and IT leaders enabled new ways of adapting to change, and these need to continue as environmentally sustainable business processes become greater priorities.
CIO, Green IT, IT Leadership