Tech, Long Only, Growth
Contributor Since 2007
We’ll now hear how more enterprises are optimizing their IT kit and finding innovative means to reduce waste -- as well as reduce energy consumption and therefore their carbon footprint. Stay with us as we learn how a circular economy mindset both improves sustainability as a benefit to individual companies as well as the overall environment.
Here to help us explore the latest approaches to sustainable IT is William McDonough, Chief Executive of McDonough Innovation and Founder of William McDonough and Partners, and Gabrielle Ginér, Head of Environmental Sustainability for BT Group, based in London. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.
Here are some excerpts:
Gardner: William, what are the top trends driving the need for reducing waste, redundancy, and inefficiency in the IT department and data center?
McDonough: Materials and energy are both fundamental, and I think people who work in IT systems that are often optimized have difficulty with the concept of waste. What this is about is eliminating the entire concept of waste. So, one thing’s waste is another thing’s food -- and so when we don’t waste time, we have food for thought.
A lot of people realize that it's great to do the right thing, and that would be to not destroy the planet in the process of what you do every day. But it's also great to do it the right way. When we see the idea of redesigning things to be safe and healthy, and then we find ways to circulate them ad infinitum, we are designing for next use -- instead of end of life. So it's an exciting thing.
Gardner: If my example as an individual is any indication, I have this closet full of stuff that’s been building up for probably 15 years. I have phones and PCs and cables and modems in there that are outdated but that I just haven’t gotten around to dealing with. If that’s the indication on an individual home level, I can hardly imagine the scale of this at the enterprise and business level globally. How big is it?
McDonough: It’s as big as you think it is, everywhere. What we are looking at is design is the first signal of human intention. If we design these things to be disassembled and reusable, we therefore design for next use. That’s the fundamental shift, that we are now designing differently. We don’t say we design for one-time use: Take, make, waste. We instead design it for what's next.
And it's really important, especially in IT, because these things, in a certain way, they are ephemeral. We call them durables, but they are actually only meant to last a certain amount of time before we move onto the next big thing.
If we design your phone in the last 25 years, the odds of you using the same phone for 25 years are pretty low. The notion that we can design these things to become useful again quickly is really part of the new system. We now see the recycling of phone boards that actually go all the way back to base materials in very cost-effective ways. You can mine gold at $210 a ton out there, or you can mine phone boards at about $27,000 a ton. So that’s pretty exciting.
Gardner: There are clearly economic rationales for doing the right thing. Gabrielle, tell us why this is important to BT as a telecommunications leader.
Ginér: We have seen change in how we deal with and talk to consumers about this. We actually encourage them now to return their phones. We are paying for them. Customers can just walk into a store and get money back. That’s a really powerful incentive for people to return their phones.
Gardner: This concept of design for reuse and recovery is part of the cradle-to-cradle design concept that you have helped establish, William. Tell us why your book, Cradle to Cradle, leads to the idea of a circular economy?
McDonough: When we first posited Cradle to Cradle, we said you can look at the Earth and realize there are two fundamental systems at play. One is the biological system of which we are a part, the natural systems. And in those systems waste equals food. It wants to be safe and healthy, including the things you wear, the water, the food, all those things, those are biological nutrients.
Then we have technology. Once we started banging on rocks and making metals and plastics and things like that, that’s really technical nutrition. It’s another metabolism. So we don't want to get the two confused.
When we talk about lifecycle, we like to refer it to living things have a lifecycle. But your telephone is not a living thing -- and we talk about it having a lifecycle, and then an end of life. Well, wait a minute, it's not alive. It talks to you, but it's not alive. So really it's a product or service.
In Cradle to Cradlewe say there are things that our biology needs to be safe, healthy, and to go back to the soil safely. And then there is technology. Technology needs to come back into technology and to be used over and over again. It's for our use.
And so, this brings up the concept we introduced, which is product-as-a-service. What you actually want from the phone is not 4,600 different kinds of chemicals. You want a telephone you can talk into for a certain period of time. And it's a service you want, really. And we see this being products-as-services, and that becomes the circular economy.
Once you see that, you design it for that use. Instead of saying, “Design for end-of-life. I am going to throw it in a landfill,” or something, you say, “I design it for next use. That means it’s designed for disassembly. We know we are going to use it again. It becomes part of a circular economy, which will grow the economy because we are doing it again and again.
Gardner: This approach seems to be win-win-win. There are lots of incentives, lots of rationales for not only doing well, but for doing good as companies. For example, Hewlett Packard Enterprise (HPE) recently announced a big initiative about this.
Another part of this in the IT field that people don't appreciate is the amount of energy that goes into massive data centers. The hyperscale cloud companies are investing billions of dollars each a year in these new data centers. It financially behooves them to consume less energy, but the amount of energy that data centers need is growing at a fantastic rate, and it’s therefore a larger percentage of the overall carbon footprint.
William, do carbon and energy also need to be considered in this whole circular economy equation?
McDonough: Clearly with the issues concerning climate and energy management, yes. If our energy is coming from fossil fuels, we have fugitive carbon in the atmosphere. That's something that's now toxic. We know that. A toxin is material in the wrong place, wrong dose, wrong duration, so this has to be dealt with.
Some major IT companies are leading in this, including Apple, Google, Facebook, and BT. This is quite phenomenal, really. They are reducing their energy consumption by being efficient. They are also adding renewables to their mix, to the point that they are going to be a major part of the power use -- but it's renewably sourced and carbon-free. That’s really interesting.
When we realize the dynamic of the energy required to move data -- and that the people who do this have the possibility of doing it with renewably powered means – this is a harbinger for something really critical. We can do this with renewable energy while still using electricity. It's not like asking some heating plant to shift gears quickly or some transportation system to change its power systems; those things are good too, but this industry is based on being intelligent and understanding the statistical significance of what you do.
Gardner: Gabrielle, how is BT looking at the carbon and energy equation and helping to be more sustainable, not only in its own operations, but across your supply chain, all the companies that you work with as partners and vendors?
Ginér: Back to William's point, two things stand out. One, we are focused on being more energy efficient. Even though we are seeing data traffic grow by around 40 percent per year, we now have nine consecutive years of reducing energy consumption in our networks.
To the second point around renewable energy, we have an ambition to be using 100 percent renewable electricity by 2020. Last year we were at 81 percent, and I am pleased to say that we did a couple of new deals recently, and we are now up at 96 percent. So, we are getting there in terms of the renewables.
What's been remarkable is how we have seen companies come together in coalitions that have really driven the demand and supply of renewable energy, which has been absolutely fantastic.
As for how we work with our suppliers like HPE, for example, as a customer we have a really important role to play in sending demand signals to our suppliers of what we are looking for. And obviously we are looking for our suppliers to be more sustainable. The initiatives that HPE announced recently in Madrid are absolutely fantastic and are what we are looking for.
Gardner: It’s great to hear about companies like BT that are taking a bellwether approach to this leadership position. HPE is being aggressive in terms of how it encourages companies to recycle and use more data center kit that’s been reconditioned so that you get more and more life out of the same resources.
But if you are not aggressive, if you are not on the leadership trajectory in terms of sustainability, what’s the likely outcome in a few years?
McDonough: This is a key question. When a supplier company like HPE says, “We are going to care about this,” what I like about that is it’s a signal that they are providing services. A lot of the companies -- when they are trying to survive in business or trying to move through different agendas to manage modern commerce -- they may not have time to figure out how to get renewably powered.
But the ones that do know how to manage those things, it becomes just part of a service. That’s a really elegant thing. So, if a company like HPE says, “Okay, how many problems of yours can we solve? Oh, we will solve that one for you, too. Here, you do what you do, we will all do what we do -- and we will all do this together.” So, I think the notion that it becomes part of the service is a very elegant thing
As we see AI coming in, we have to remember there is this thing called human intelligence that goes with it, and there is natural intelligence that goes with being in the world.
Gardner: A lot of companies have sustainability organizations, like BT. But how closely are they aligned with the IT organization? Do IT organizations need to create their own sustainability leaders? How should companies drive a more of the point of the arrow in IT department direction?
McDonough: IT is really critical now because it’s at the core of operations. It touches all the information that’s moving through the system. That's the place where we can inform the activities and our intentions. But the point today is that humans, as we see artificial intelligence (AI) coming in, we have to remember there is this thing called human intelligence that goes with it, and there is a natural intelligence that goes with being in the world.
We should begin with our values of what is the right thing to do. We talked about what's right and wrong, or what’s good and bad. Aristotle talked about what is less and more; truth in number. So, when we combine these two, you really have to begin with your values first. Do the right thing, and then go to the value, and do it all the right way.
And that means, let’s not get confused. Because if you are being less bad and you think it's good, you have to stop and think because you are being bad by definition, just less so. So, we get confused.
What we really want to be is more good. Let’s do less bad for sure, but let’s also go out and do more good. And the statistical reference points for data are going to come through the IT to help us determine that. So, the IT department is actually the traffic control for good corporate behavior.
Gardner: Gabrielle, some thoughts about why sustainability is an important driver for BT in general, and maybe some insights into how the IT function in particular can benefit?
Ginér: I don't think we need a separate sustainability function for IT. It comes back to what William mentioned about values. For BT, sustainability is part of the company’s ethos. We want to see that throughout our organization. I sit in a central team, but we work closely with IT. It’s part of sharing a common vision and a common goal.
Gardner: For those organizations planning on a hybrid IT future, where they are making decisions about how much public cloud, private cloud, and traditional IT -- perhaps they should be factoring more about sustainability in terms of a lifecycle of products and the all-important carbon and energy equation.
How do we put numbers on this in ways that IT people can then justify on that all-important total cost of ownership and return on investment types of factoring across hybrid IT choices?
McDonough: Since the only constant in modern business life is high-speed change, you have to have change built into your day-to-day operations. And so, what is the change? The change will have an impact. The question is will it have a positive impact or a negative impact? If we look at the business, we want a positive impact economically; for the environment, we would like to have a positive impact there, too.
Since the only constant in modern business life is high-speed change ... for the environment we would like to have a positive impact there, too.
When you look at all of that together as one top-line behavior, you realize it’s about revenue generation, not just about profit derivation. So, you are not just trying to squeeze out every penny to get profit, which is what's leftover. That’s the manager’s job; you are trying to figure out what’s the right thing to do and bring in the revenue, that’s the executive’s job.
The executives see this and realize it’s about revenue generation actually. And so, we can balance our CAPEX and our OPEX and we can do optimization across it. That means a lot of equipment that’s sitting out there that might be suboptimal is still serviceable. It's a valuable asset. Let it run but be ready to refurbish it when the time comes. In the meantime, you are going to shift to the faster, better systems that are optimized across the entire platform. Because then you start saving energy, you start saving money, and that’s all there is to it.
Gardner: It seems like we are at the right time in the economy, and in the evolution of IT, for the economics to be working in favor of sustainability initiatives. It’s no coincidence that we are seeing at HPE that they are talking more about the economics of IT as well as sustainability issues. They are very closely linked.
Do you have studies at BT that help you make the economic case for sustainability, and not just that it's the good or proper thing to do?
Ginér: Oh, yes, most definitely. Just last year through our Energy Efficiency Program, we saved 29 million pounds, and since we began looking at this in 2009-2010, we have saved more than 250 million pounds. So, there is definitely an economic case for being energy efficient.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: HPE Helped defray the costs of travel and production to conduct this interview.