The changing times

The role of the CGO is to focus on the environment while still thinking about business, as the environmental lens has provided companies with a new way to look at what their actions. That’s according to John Davies, VP of Green Technology Research at AMR Research, who has spent the past several years researching green technology. “Today, there are multiple drivers intersecting that have brought about this shift in focus: energy costs and energy security, climate change and legislation. There’s also consumer awareness, although I discount consumer driven change at this point because we haven’t really seen tremendous buying shifts by the consumer.”

It might sound strange that consumer-driven change should be discounted as a driver, but while some studies say consumers will buy differently, Davies is yet to see one that has proven that consumers will buy differently and not just buy the low cost product. He points to the LOHAS movement (Lifestyle of Health and Sustainability type of consumer), the high-end consumer, who will engage in the purchasing environmentally friendly products regardless of cost. “But when it gets down to the average everyday consumer, no study that I’ve seen yet says they’re going to buy based on environmentalism. But surveys for 25 – 30 years have said that they will: it’s just that it’s never happened,” he says. This is why it is important for business to take a leadership role when dealing with environmental issues.

Another important factor Davies mentions is that NGOs like Greenpeace and Environmental Defense are seeing that they should embrace business instead of suing it at every opportunity. But this also shows a softening on the side of business: Davies likens environmental consideration to safety within enterprise. Within ten years time it won’t need to be a separate consideration, as it will be a business imperative embedded into people’s thinking.

The tasks of chief green officer

Unlike many executive positions within enterprise, the CGO is more of a concept: when Davies says CGO, he doesn’t necessarily mean a role that someone will be appointed to. “We don’t need another chief-something in a corporation, but rather that a certain set of responsibilities is going to be taken over by someone. It may be as with DuPont – they have a chief sustainability officer. Baxter has a VP of sustainability. HP has a VP of corporate, social, and environmental responsibility. They all have different titles, but their roles have changed fairly dramatically in just the last year or two.” These days, being VP of environmental health and safety changes a role that is integrated into the business and more strategic.

The person within an organization who takes on the work of CGO must have broad responsibility but relatively small staff. “This is because their real role is as a change agent,” Davies explains, “embedding the thinking about sustainability and climate change throughout the organization. Their role is to make procurement consider sustainability and climate change in their procurement policies. It’s to make manufacturing look at manufacturing in that way.” After all, if you make a one percent improvement in every change cycle, that’s a considerable amount of improvement.

Publicity stunt?

While many people are discounting the green initiatives that companies are undertaking as greenwash, Davies is less skeptical. “What’s driving a lot of the companies is that if you have Wal-Mart, or Google, or HP as a customer that you supply, you’ll find out they’re serious about what they’re doing, and that is where the best leverage comes from. Many of the technology companies’ suppliers are supplying commodities within which there’s very little price differentiation. Environmental criteria is a great differentiator. In talking with them, many suppliers have told me that this will be the deciding factor for who gets the business.

“Tod Arbogast at Dell told me that they had been to China to talk to Dell’s Tier I suppliers there, and explain that environmental criteria is going to become a part of their procurement strategy soon, and that green house gas emission reporting and reduction plans will be embedded amongst core purchase considerations such as pricing and quality. That’s a real impact.

“The things that Andy Rubin is doing over at Wal-Mart in terms of packaging and transportation is another way that Wal-Mart is seriously looking at environmental aspects as key, but as reflected in their ability to still give low price products to consumers,” states Davies.

The interesting part – as Davies points out – is that many of these initiatives have a great cost benefit to them, as “Wal-Mart is a business, after all, not a charity”. The choices that Wal-Mart is making are driving down prices. Davies tells me more about Wal-Mart’s story. Lee Scott and Andy Ruben came to the realization that they were leaving hundreds of millions of dollars on the table every year: dollars they hadn’t seen because they weren’t looking through the environmental lens. Wal-Mart is using environmental criteria in the same way they have used price, time of delivery, and who owns the inventory. As Davies puts it, “You could say, “Gee, that’s mean of Wal-Mart” but the end result is spectacular.” He remains bullish on their initiatives.

So how can going green improve business?

A big issue for enterprise to consider is new product development. All the people that Davies speaks to see a shift in how energy will be produced in the future and also how consumers will look at new types of products, so everyone is trying to get ahead of the curve on the next wave of products. Davies cites the example of Wal-Mart championing organic clothing, organic foods and organic cotton. That is where we find the incentive for many companies: they don’t want to get shut out of their industry by not keeping up with their competitors.

Another factor that can’t be ignored as the labor market tightens is what the next generation of talent is looking in a job. Companies see there is an issue if they want to attract the best and brightest. Davies points to the automotive industry as one that is feeling this pain: “They can’t attract great talent because students just don’t want to go to that sector”. On the other hand, it does work positively for companies like DuPont, or IBM, as it will help them in attracting and retaining talent. It’s clear that companies who continue to avoid the environmental issue will incur heavier costs. When setting your corporate agenda for next year, make sure you ask yourself: can you afford it?

About the author

John Davies, Vice President Green Technology Research, AMR Research
Davies has over 25 years of experience in technology, software, and manufacturing. He launched AMR Research’s Green Technology Research in 2006 to leverage and extend the organization’s strong history of providing independent, objective research, and advisory services focused on technology and supply chain management. He received his Master’s degree from the University of Delaware and his Bachelor’s degree from SUNY Fredonia.

Gold to green – recycling electronics is good for the environment and the CIO
By John Davies

According to the National Safety Council, over 500 million computers, monitors, and peripherals will be discarded in the United States by the end of 2007. The Environmental Protection Agency estimates that of the over 2 million tons of electronics thrown out in 2005, only 20 percent were recycled. In the case of older products, that means lead, mercury, and other poisonous materials are added to landfills both in the United States and, increasingly, in developing nations where workers are exposed to these substances while retrieving precious metals such as copper and gold.

The good news is there is a broad range of companies offering services to deal with this equipment ranging from large OEMs to independent full-service operators. The better news is that they’re making money at it. Many of these firms offer CIOs a value recovery service for recycling their assets that can help offset the costs of newer, more energy-efficient technology.

Computer manufacturers look to partner with CIOs

It’s not news that the major computer OEMs have been recycling at an ever-increasing rate. IBM’s Global Asset Recovery Service (GARS) has been disposing of end-of-lease assets like servers, hard drives, monitors, and more through refurbishment, resale, and recycling for over 20 years. Just a quick look at some of the major OEM programs includes the following:

• IBM has set up its Green Data Center Asset Recovery Hotline where data center owners receive guidance on how to dispose of their data center equipment and potentially get value to fund upgrades.
  
• Hewlett Packard is also marking the 20th anniversary of its recycling program, which operates in over 40 countries. In 2006, the company recovered over 187 million pounds of electronics globally. The success of its program spurred the company to set a goal of cumulatively recycling 2 billion pounds of electronics and print cartridges by the end of 2010.
  
• Dell was just a fledgling company when IBM and HP began their initiatives, but it’s making up for lost time with a comprehensive program focused on IT asset recovery. Dell’s programs also focus on producer responsibility and free consumer recycling. In 2006 Dell recovered more than 78 million pounds of equipment, a 93 percent increase over 2005 and a good start toward its goal of recovering 275 million pounds of computer equipment by 2009.

CIOs performing a technology refresh for their data centers must also figure out what to do with the old equipment. These executives, as well as several computer manufacturers, look to partners such as SIMS, Waste Management, and others to help them achieve their recycling goals. Over the summer we toured the facilities of TechTurn, one of the leading providers of technology recovery, refurbishing, and remarketing. Afterwards, we held discussions with its executive team to get a sense of how the market has evolved and what the future may hold for technology asset recovery services.

The environmental alphabet – reuse before recycle TechTurn was founded in 1999 by Jeff Zeigler in response to companies approaching him to discuss what they could do with IT equipment they were replacing as a part of Y2K initiatives. As Jeff’s background was in leasing, he saw an opportunity for taking back equipment and finding resale markets for it. His experience helped the company become profitable at inception, and it has since moved six times and expanded operations to keep up with demand. TechTurn’s services include:

• Value recovery – A residual value calculator provides CIOs an immediate market valuation for their equipment.
  
• Serialized asset accounting – Using software from Altiris, assets can be tracked for inventory writedowns, software license recovery, and verification against original invoices.
  
• Data erasure – Data destruction is performed on all hard drives in compliance with DoD and HIPAA standards.
  
• Recycling and disposal – Assets that cannot be reused are recycled for raw materials in support of the firm’s zero-landfill policy.

Prospecting for future growth

A big area for growth throughout the asset recovery industry is the expansion of the types of products being taken back to include cell phones, PDAs, iPods, routers, and many other categories of electronics equipment. There’s gold in that hardware and asset recovery. Companies such as TechTurn are looking to mine it to return value to the original purchasers. At the same time, TechTurn’s service helps CIOs ensure a cleaner
environment.

AMR Research’s sustainability peer forum

This forum is an organization that includes a number of leading companies that get together and share best practices and approaches to various sustainability initiatives. They look at how to address climate change, how to look at managing a company’s carbon footprint, product stewardship, and a number of issues along that line. The participating companies are from all different sectors.

All of these companies have done a lot in terms of sustainability and environmental initiatives. Probably the most compelling reason for them to participate in this is that they see it as a way of moving the ball forward, going to the next level of what they can do. By collaborating with their peers, they can get to that next level.

It turns out some companies who participated in the forum had been doing environmentally conscious things for an extremely long time but just never promoted it. John Davies went through all of IBM’s environmental reports since the late ‘80s when they started publishing them, and discovered they were probably one of the first companies to make their environmental reports public. In 1989 there is a reference in the reports talking about climate change and IBM’s role in climate change and how their operations affect it.

HP also has a long history of green initiatives, whereas Dell has only in the last couple of years started to focus on the environmental aspect. But the technology sector and the chemical sector are two areas that have longer records than others. Technology firms always tend to be at the leading edge. Some firms like Baxter Healthcare and Johnson & Johnson view their role in the world as making a healthy world, and so they see it as part and parcel of their mission as a company not just to provide healthy products, but also to help provide a healthy environment.