7 minute read 2 Oct 2023

Companies must avoid the pitfall of using digital technology to help achieve sustainability without managing its carbon footprint.

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How green IT can accelerate sustainability and ESG ambitions

Authors
Praveen Tekchandani

Climate Change and Sustainability Services Leader and Partner, Assurance, Ernst & Young LLP

Extensive experience in climate change and sustainable development. Enterprise Singapore Merit Award recipient for significant contributions to Singapore Standardisation Programme for climate change.

Atul Chandna

EY Asia-Pacific Supply Chain Leader; ASEAN Consumer Consulting Leader

Knowledgeable in sales and supply chain functions in consumer goods, retail and chemicals sectors. Experienced in advanced supply chain analytics and process consulting.

7 minute read 2 Oct 2023
Related topics Consulting Sustainability Technology Government and Public Sector Digital Technology leader's agenda
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Companies must avoid the pitfall of using digital technology to help achieve sustainability without managing its carbon footprint.

In brief

  • While digital technology can help achieve sustainability, it has the potential to contribute significantly to global greenhouse gas emissions and e-waste.
  • Green IT can address this issue and suitable technology consulting firms can mitigate transition risks in its adoption and implementation.
  • For organizations to benefit from green IT and software, nurturing a collaborative ecosystem of stakeholders within the value chain is essential.

The world’s quest to achieve the 2050 global net-zero target has rapidly mobilized governments, organizations and societies that are increasingly aware of the role of IT in accelerating this agenda. In the global EY Reimagining Industry Futures Study 2023, the majority (54%) of businesses that participated believe that emerging technologies can play a vital role in accelerating sustainability.

Digital technology is a key enabler for managing information to achieve crucial goals. These include meeting compliance requirements and the reporting needs of key stakeholders as well as driving operational changes within the organization to achieve sustainability and environmental, social and governance (ESG) targets. The information and communications technology (ICT) sector has the potential to directly and indirectly reduce global carbon emissions by 15% and 35% respectively by 2030.1 However, the ICT sector contributes an estimated 2.1%–3.9% of global greenhouse gas (GHG) emissions, which is possibly higher than emissions from the aviation industry.2

The exponential increase in the utilization of digital technology across every sector globally as a lever to achieve sustainability also comes with the responsibility of not allowing it to become a major contributor of global GHG emissions. Rapid adoption of the latest technologies, such as big data, digital twins, artificial intelligence (AI), Internet of Things, blockchain, 5G and embedded software, could create a rebound effect in the form of high energy consumption from technology utilization. This would delay progress toward achieving the 45% reduction in emissions from the ICT sector by 2030, which is required to be in line with the Paris Agreement.3

The disposal of technology products (e-waste) also contributes to global GHG emissions from the ICT sector. Global production of e-waste was a staggering 53.6 million tons in 2019 and is projected to increase to 74.7 million tons by 2030.4 E-waste poses further environmental risks due to hazardous substances such as lead, mercury and cadmium, which can contaminate soil, water and air. The extraction and mining processes associated with these materials also contribute to deforestation, habitat destruction and soil erosion, emphasizing the urgent need for effective e-waste processing and material reuse.

Efforts must maintain a net positive impact from the ICT sector on the planet and people. Therefore, the need for innovation in green IT has now become crucial.

Green IT refers to IT products and services that enable organizations to reduce environmental impact, including the impact of IT energy consumption. This is a notable issue that organizations need to address. For example, data centers and data transmission networks were responsible for nearly 1% of energy-related GHG emissions in 2020.5

The implementation of green IT across all sectors not only can drive sustainability but also improve productivity, reduce operational costs, and facilitate compliance with regulatory requirements and standards. Organizations that implement green IT can gain a competitive advantage by building trust with key stakeholders, including customers, investors and partners.

An important green IT practice is green software, which refers to the implementation of low-carbon principles in the software development and utilization lifecycle. While software may not be a direct carbon emitter, it is a medium that shapes how technology operates and consumes energy. For example, an AI model trained to classify different species of iris flowers achieved an accuracy of 96.17% with only 964 joules of energy.6 However, the next 1.74-percentage point increase in accuracy required 2,815 joules of energy, about 192% more than that needed in the first stage. This jumped to nearly 400% for the last 0.08-percentage point increase in accuracy.

How green IT can accelerate sustainability and ESG ambitions

This EY report produced for Asia Tech x Singapore 2023 examines the role of technology in sustainability, how green IT can add value to sustainability and how organizations can build a green IT ecosystem.

Request a copy

Organizations can realize the positive impact of green IT and software by nurturing a collaborative ecosystem of stakeholders within the value chain. This involves several key players.

Technology providers

Technology providers, from global leaders to startups, have been increasing green IT innovation and offerings to meet market demand and expectations. At the same time, they must manage and disclose scope 1 to scope 3 carbon footprints resulting from the production and use of their technologies in compliance with regulatory requirements and standards. In addition, industry groups of technology providers are well placed to establish standards and best practices as well as proactively work with governments to develop green IT policies.

The application of green IT principles to the providers’ product and service designs will help reform the future of the IT landscape, resulting in positive environmental and social impacts.

Technology buyers 

With sustainability integrated into many organizations’ core strategy, companies have become more aggressive in looking for the right technologies, digital platforms and applications to support their sustainability and ESG goals.

While their focus is on selecting suitable technologies to meet sustainability requirements and address sustainability challenges, they need to be aware of the potential environmental impact of implementing the selected technology on a large scale.

Companies that are forward-thinking and innovative in their business strategy for sustainability will include green IT implementation in their sustainability transformation roadmap. They will incorporate green IT principles into a robust, sustainable sourcing and procurement framework and be selective in choosing suitable technology providers starting from the request for proposal process. They may also go one step further by adopting an internal carbon pricing mechanism to align strategic decisions with their climate ambition. As they are generating market demand for green IT, they can drive innovation in future green IT landscapes.

As companies focus on selecting suitable technologies to address sustainability issues, they must also consider how large-scale implementation of the selected technology can potentially impact the environment.

Governments and other regulatory authorities

Governments play a vital role in driving green IT adoption to help accelerate the green transition. To this end, there are six government priorities7:

  1. Provide detailed action plans with clear accountability.
  2. Be bolder in incentivizing the market and mandating change.
  3. Boost innovation through increased funding.
  4. Improve the design and delivery of green initiatives.
  5. Act as a role model for other parts of the economy.
  6. Promote a whole-of-society, people-centered approach.

Governments that are more mature in governing and implementing regulations and standards for sustainability can lead strategy implementation within their organizations and departments. For example, the UK government developed a policy paper as part of its greening government commitments.8 It sets targets that include GHG emission reduction, resource and waste management improvement, sustainable technology and digital services procurement, and the provision of sustainability strategy statements by all departments.

The United Nations also sets standards, guidance and criteria for the ICT sector through its specialized agency, International Telecommunication Union (ITU). ITU issued guidance and criteria for ICT organizations on setting net zero targets and strategies.9

Technology consulting firms 

Technology consulting firms can support the diverse needs of key players in the green IT ecosystem.

This includes providing technology providers with market insights and informing them of industry trends so that they can better innovate and develop products. In some cases, technology providers form alliances with technology consulting firms to accelerate product introduction and implementation.

Technology consulting firms can assist technology buyers in technology deployment by defining technology strategies and goals, assessing current and future landscapes, building a technology roadmap, and supporting technology implementation.

They can also advise governments and other regulatory authorities on IT policies and regulations as well as help them understand the industrial and geographical contexts to define and implement appropriate green IT policies and assess their societal impact.

In general, key evaluation criteria for choosing the right technology consulting firms include the following:

  1. Breadth and depth of knowledge, skills and experience in providing the required services
  2. Market presence, network credentials and track records that match the company’s requirements
  3. The consulting firm’s own sustainability and ESG ambitions, practices and achievements
  4. A fit-for-purpose value proposition that addresses the company’s needs, which cover scope, cost, time and budget
  5. Previous or existing relationship and collaboration outcome with the company (if applicable)

The maturity of green IT and software adoption by organizations and societies has a significant bearing on global sustainability ambitions. To that end, rapid innovation of technologies, together with close collaboration among key entities within the ICT sector’s value chains, is imperative. 

How EY can help

Climate and decarbonization

The EY climate and decarbonization services help businesses respond to the physical and transition risks associated with climate change, as well as advise on how to operate in new markets and regulatory environments related to carbon and renewable energy.

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  • Show article references#Hide article references

    1. Falk, J., Gaffney, O. et al., “Exponential Roadmap 1.5.1.,” Future Earth, January 2020.
    2. “Emissions from computing and ICT could be worse than previously thought,” ScienceDaily website, sciencedaily.com/releases/2021/09/210910121715.htm, accessed 4 May 2023.
    3. “ICT industry to reduce greenhouse gas emissions by 45 per cent by 2030,” ITU website, itu.int/en/mediacentre/Pages/PR04-2020-ICT-industry-to-reduce-greenhouse-gas-emissions-by-45-percent-by-2030.aspx, accessed 4 May 2023.
    4. “Projected electronic waste generation worldwide from 2019 to 2030 (in million metric tons),” Statista website, statista.com/statistics/1067081/generation-electronic-waste-globally-forecast, accessed 4 May 2023.
    5. “Data centres & networks,” International Energy Agency website, iea.org/fuels-and-technologies/data-centres-networks, accessed 4 May 2023.
    6. “How Green Is Your Software?,” Harvard Business Review website, hbr.org/2020/09/how-green-is-your-software, accessed 4 May 2023.
    7. “Six ways that governments can drive the green transition,” EY website, ey.com/en_gl/government-public-sector/six-ways-that-governments-can-drive-the-green-transition, accessed 4 May 2023.
    8. “Greening government: ICT and digital services strategy 2020–2025,” UK government website, gov.uk/government/publications/greening-government-ict-and-digital-services-strategy-2020-2025/greening-government-ict-and-digital-services-strategy-2020-2025#commendation-by-the-senior-responsible-owner, accessed 4 May 2023.
    9. “L.1471: Guidance and criteria for information and communication technology organizations on setting Net Zero targets and strategies,” International Telecommunication Union website, itu.int/rec/T-REC-L.1471-202109-I/en, accessed 4 May 2023.  

Summary

Green IT allows organizations to reduce environmental impact, including the impact of IT energy consumption. Businesses can engage suitable technology consulting firms to mitigate transition risks in green IT adoption and implementation.

By nurturing a collaborative ecosystem of stakeholders within the value chain, organizations can benefit from green IT and software. Key players include technology providers, technology buyers, governments and other regulatory authorities, and technology consulting firms.     

About this article

Authors
Praveen Tekchandani

Climate Change and Sustainability Services Leader and Partner, Assurance, Ernst & Young LLP

Extensive experience in climate change and sustainable development. Enterprise Singapore Merit Award recipient for significant contributions to Singapore Standardisation Programme for climate change.

Atul Chandna

EY Asia-Pacific Supply Chain Leader; ASEAN Consumer Consulting Leader

Knowledgeable in sales and supply chain functions in consumer goods, retail and chemicals sectors. Experienced in advanced supply chain analytics and process consulting.

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