How "green" is your information technology strategy?

21st November 2005
Green issues are no longer confined to the cranky fringes of society. New regulations, and a heightened awareness of global warming and environmental pollution, particularly amongst the younger generation, are driving a change in attitude that businesses ignore at their peril. But you do not need a social conscience to feel strongly about green issues because there are also sound business reasons for pursuing a more enlightened approach, especially when considering what computer and other technology to buy. Gary Simon, FSN's managing editor, examines green issues in computing decisions.

Annually, millions of businesses and consumers throw out old and obsolete computers without a second thought for how difficult it is to dispose of these devices safely or the harm that they may do to the environment. Neither do businesses typically concern themselves with the environmental impact of computers in everyday use though most users have heard of repetitive strain injury or are aware of the possible impact that screen glare can have on eyesight.

But what about energy consumption, noise and all of the noxious elements that a computer contains? Batteries for example contain cadmium and mercury, plastic mouldings and housings contain halogens and printed circuit boards are full of PBBs (Polybrominated Biphenyls) and flame retardants such as PBDEs Polybrominated Diphenyl Ethers). Dismantling computers is also a challenge as anyone keen to destroy personal data by wrecking a hard disk before disposal is aware of. Whilst computers may have been transported to landfill sites for disposal in the past this is no longer a viable option as these are rapidly filling and costly to manage.

Two new pieces of environmental legislation are beginning to concentrate minds on the environmental damage caused by computers. The EC Directive on Waste Electrical and Electronic Equipment (WEEE) and EC Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) will come into effect next year and affect all businesses.

The WEE seeks to limit the total volume of used electronic equipment for disposal and set targets for the recovery rate and level of recycling. All producers of equipment, that is manufacturers and importers will be obliged to take back used equipment. Additionally, the RoHS Directive seeks to prevent the use of hazardous substances such as lead, mercury, cadmium and PBBs in the production of electrical and electronic equipment.

The impact on manufacturers and importers of electrical goods is obvious but large businesses can also play their part in supporting a sustainable environment by, for example, moving to compliant equipment. Fujitsu Siemens Computers, for example, has embraced the new legislation and believes it is one of the first to produce a "green" computer and says that most of its business products will be RoHS compliant by the end of this year.

Dave Scott of Fujitsu Siemens told FSN that the company has taken environmental concerns very seriously since the early 90's but saw no reason to delay on the implementation of the RoHS and WEEE directives. However, he acknowledged that not all finance directors are conversant with or interested in green issues. "If you look at the average FD's agenda its around compliance, profit forecasts, share process and investor relations. The environment hasn't really been on the FD's agenda but increasingly it will be because legislation is getting much tougher."

But the switched on FD can save money and pursue a green policy at the same time. "IT costs in large organisations are very significant but energy cost savings alone can be a persuasive factor," says Scott. "One of our key accounts in Europe saves 35 megawatts of electricity per annum on just 1000 more energy efficient PCs which roughly translates into cost savings of 6,500 Euros. Companies with tens of thousands of employees stand to make significant savings," he added. In addition, the machines are quieter and recent research carried out by Fujitsu amongst Britain 's students showed that 37% percent would reject a "non-green employer" and 48 percent say that they try to buy "with an environmental conscience."

One company that is a shining example in environmental matters is Hiscox plc an international insurer, which in 2004 received a Platinum award at the Clean City Awards Scheme for its continuing contribution to reducing, reusing and recycling as much waste as possible. For example, they have begun programmes to recycle batteries, mobile phones, lamps and CD's. Stuart Bridges, Group Finance Director, told FSN, "We have a strong policy to minimise the impact of our business on the environment and would definitely take into account green computing if we felt that this helped us with our policy. We have for instance installed air filters, on all printers and fax machines to remove toner dust, irritants and general fumes."

The good example shown by a few enlightened boards of companies has an impact far beyond the confines of their own organisation. For example, Fujitsu Siemens seeks to ensure that all of the components in its supply chain are environmentally friendly and Hiscox tries to minimise its insured risks by encouraging businesses that insure with it have sound environmental policies that minimise mishaps and subsequent claims.

However, not all companies and finance directors are similarly enlightened and Bridges is not convinced that companies take sufficient note of environmental factors in their purchasing decisions.

Isobel Sharpe, a Deloitte audit and technical partner points to a number of issues that may limit what companies declare in relation to their environmental concerns. Whilst the Operating and Financial Review (OFR) and the Accounts Modernisation Directive urge consideration be given to the reporting of environmental KPI's such as the reduction of waste or the level of recycling Sharpe cautions that they have to be significant to the business. "I don't expect companies to report more than five KPI's in total, which doesn't leave much room for environmental KPIs. The other problem is that by bringing reporting into the OFR itself as opposed to other areas of the annual report and accounts, directors are exposing themselves to oversight by the FRRP and a tighter regulatory regime." But this view is at odds with Defra guidelines on environmental reporting which suggest that more companies need to report environmental impacts. It considers that there are 25 KPIs which are significant to UK businesses although around 80 percent of businesses will be affected by 5 or less.

It seems that boards have to decide for themselves whether active management of environmental concerns is to be a matter of regulation or good citizenship. But Dr Richard Mattison, Head of Strategic Planning at Trucost plc, the environmental consultancy, told FSN, "I expect most companies in the FTSE 350 to include information about environmental factors in their OFR. This seems to be supported by research from the ACCA. It may be one KPI, a page or even less, but companies that omit to say anything will probably find themselves subject to closer scrutiny and the markets will seek explanations as to why environmental factors are not relevant to their future strategy."