Pipeline preview: The IT growth opportunity from the shift to sustainability

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Pipeline preview: The IT growth opportunity from the shift to sustainability
Michael Salvatico, S&P Global Market Intelligence

The shift to sustainability will fundamentally change the way Australian companies and governments operate, recasting business models and operating processes, remaking supply chains and creating new pricing signals for entrepreneurs.

Digital technology will play a central part in the transition and will create huge opportunities for the Australian technology channel, but only if channel leaders position their businesses as partners in this historic shift.

The decarbonisation of Australia and New Zealand is the “Greatest economic shift of our lifetime” according to National Australia Bank Chairman Philip Chronican.

His comments, made at the NAB AGM earlier this year, reflect the steadfast view of Australia’s biggest organisation that sustainability will be one of the most important business drivers over the next decade.

That’s the reason CRN has asked Michael Salvatico, the head of Asia Pacific ESG Solutions at S&P Global Market Intelligence, to deliver the closing keynote address at this year’s CRN Pipeline conference in August.

At CRN Pipeline we will also drill deeper into this subject during a panel discussion featuring Salvatico, Korn Ferry IT Services VP Bridget Gray and Laing O’Rourke head of HSE Richard Coleman.

As CRN sister publication Digital Nation Australia noted in its report into data centre sustainability last year, “With 30 trillion dollars worth of cash flooding into impact investment funds during the last decade according to McKinsey and Co, companies are coming under much tighter scrutiny from ESG focused investors.

That trend continues unabated, with Bloomberg reporting in February that Global ESG assets are on track to exceed $53 trillion by 2025.”

Late last year, Mary Delahunty, head of impact at industry super fund HESTA, told media that businesses are rapidly transforming as they begin to understand the business risks associated with climate change, as well as the opportunities that exist in embedding sustainability into core business strategy.

As disruptive as digital

It is not simply a matter of managing energy consumption. Shifting to a sustainable way of operating impacts supply chains, business processes, hiring strategies, infrastructure and software choices.

All that pressure on IT buyers to help their organisations meet sustainability goals creates a target-rich environment for the Australia channel community to help organisations adjust and adapt. Yet few partners spoken to by CRN have recognised the potential.

Now Gartner is weighing in. According to industry researchers, environmental sustainability is now a top corporate priority, driven in part by rapid growth in software/cloud services spending and power consumption.

In a recent paper, Gartner analysts Rob Schafer, Melanie Alexander and Rob Wilkes wrote that “Sourcing, procurement and vendor management leaders must play a pivotal role by incorporating environmental objectives into software and cloud contracts.”

Furthermore they are warning buyers that “Sourcing, procurement and vendor management (SPVM) leaders who do not identify their organization’s environmental sustainability objectives and incorporate them into their software and cloud contracts may put their organization at material risk of missing those objectives.”

There is a growing opportunity for technology partners to help their customers meet these goals.

But there’s a problem, according to the Gartner analysts: “Sourcing, procurement and vendor management (SPVM) leaders who do not identify their organization’s environmental sustainability objectives and incorporate them into their software and cloud contracts may put their organization at material risk of missing those objectives.”

Data centres

Data centres in particular are attracting significant scrutiny.

Globally, they are responsible for approximately two per cent of the world’s carbon emissions, on par with the aviation industry. With regulation increasing, pressure to reduce the huge level of emissions for which data centres are responsible is ratcheting up.

And those emissions are set to grow dramatically as hyperscalers expand.

North Ridge Partners, an investment advisory business that assists technology companies in the Asia Pacific with strategic financial advice, M&As and capital raisings, reported in August last year that there were about 600 hyperscale data centres globally.

It noted at the time that “Significantly, almost a hundred of those were built in 2020 alone. There are believed to be another 200 under construction around the world. And while approximately 40 per cent of those are in the US, demographic trends will see the region’s share shrink in the coming year.”

Large corporations believe they capture cost, innovation and sustainability gains from partnering with the digital giants in the hyperscale world.

Take Lendlease as an example – the construction giant has made a public commitment to exit from its data centres by the end of this year and has partnered with Google Cloud as part of its pledge to reach net-zero by 2025.

Lendlease Group co-CIO Harvey Worton has said Lendlease expects the Google Cloud partnership to help the business reduce its IT carbon footprint. Worton said the partnership will increase the organisation’s ability to track and measure its emissions moving forward.

“Google publishes all of its energy scores so we will know at any one time, how are we doing in terms of carbon consumption across regions across the globe,” Worton said.

Leveraging digital expertise

According to Karsten Fruechtl, digital practice leader and partner at Bain & Co, sustainability and digital transformation go hand in hand and can be seen as the ‘new digital’. “We see so many parallels here, quickly disrupting established industries. Both are increasing consumer demand and opening up opportunities for value creation,” he commented previously.

His colleague Brian Murphy, digital practice leader for sustainability and responsibility at Bain & Co, said sustainability can be used for a wide variety of strategies and value creation. “Digital plays a role in both defensive or risk-oriented opportunities, as much as it does the value creation opportunities, if not more,” Murphy commented earlier this year.

Indeed, Bain & Co argues that digital technologies are critical in delivering an organisation’s sustainability agenda.

A report late last year by Bain & Co highlighted a “three-part game plan” for utilising digital to achieve sustainability goals by not only measuring and tracking progress, but also driving collaboration and innovation in building a sustainability strategy.
According to the report, “The urgent demand for companies to make progress on sustainability is now coming loud and clear from all corporate stakeholders: customers, employees, investors and regulators. They expect companies to make sustainability central to their mission, and executives recognise that they need digital technologies to meet those expectations.”

No choice but to act

Rebecca Mikula-Wright, CEO at Investor Group on Climate Change (IGCC), told the S&P Global Sustainable1 Summit in Sydney last month that every dollar invested in Australia has twice the carbon risk than in other markets.

That creates a capital flight risk for Australian business and for the country.

Mikula-Wright says that the high carbon intensity of the ASX makes it harder for Australia to transition to a sustainable economy than the rest of the world.

In comments after her speech, she noted, “The impact already is that investors go offshore, they invest in other markets where they have really stable climate policies like Europe. I mean, it was only a few years ago, where Australian investors said it's easier to invest in renewables in Brazil and emerging economies than it is in Australia because of the sovereign risk, because of the lack of policy in Australia.”

Attend this year’s CRN Pipeline conference to learn more about the opportunities the Australian business sustainability agenda will create for your business. Secure your CRN Pipeline ticket today. Places are strictly limited.


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