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6. Wiring for a sustainable world Even as regulatory frameworks continue to evolve, environmental stewardship and sustainability clearly are C-level agenda topics. What’s more, sustainability is fast becoming an important corporate-performance metric—one that stakeholders, outside influencers, and even financial markets have begun to track. Information technology plays a dual role in this debate: it is both a significant source of environmental emissions and a key enabler of many strategies to mitigate environmental damage. At present, information technology’s share of the world’s environmental footprint is growing because of the ever-increasing demand for IT capacity and services. Electricity produced to power the world’s data centers generates greenhouse gases on the scale of countries such as Argentina or the Netherlands, and these emissions could increase fourfold by 2020. McKinsey research has shown, however, that the use of IT in areas such as smart power grids, efficient buildings, and better logistics planning could eliminate five times the carbon emissions that the IT industry produces. Companies are now taking the first steps to reduce the environmental impact of their IT. For instance, businesses are adopting “green data center” technologies to reduce sharply the energy demand of the ever-multiplying numbers of servers needed to cope with data generated by trends such as distributed cocreation and the Internet of Things (described earlier in this article). Such technologies include virtualization software (which enables the more efficient allocation of software across servers) to decrease the number of servers needed for operations, the cooling of data centers with ambient air to cut energy consumption, and inexpensive, renewable hydroelectric power (which of course requires locating data centers in places where it is available). Meanwhile, IT manufacturers are organizing programs to collect and recycle hazardous electronics, diverting them from the waste stream. IT’s bigger role, however, lies in its ability to reduce environmental stress from broader corporate and economic activities. In a significant push, for example, utilities around the world are deploying smart meters that can help customers shift electricity usage away from peak periods and thereby reduce the amount of power generated by inefficient and costly peak-load facilities. Smart grids can also improve the efficiency of the transmission and distribution of energy and, when coupled with energy storage facilities, could store electricity generated by renewable-energy technologies, such as solar and wind. Likewise, smart buildings embedded with IT that monitors and optimizes energy use could be one of the most important ways of reducing energy consumption in developed economies. And powerful analytic software that improves logistics and routing for planes, trains, and trucks is already reducing the transportation industry’s environmental footprint. Within the enterprise, both leaders and key functional players must understand sustainability’s growing importance to broader goals. Management systems that build the constant improvement of resource use into an organization’s processes and strategies will raise its standing with external stakeholders while also helping the bottom line. Podcast: Microsoft’s chief environmental strategist, Rob Bernard, says that existing technologies hold enormous, latent potential to boost energy efficiency—but not without substantial changes in human behavior. Download the podcast or listen in the player below. Podcast: Collaboration across industry boundaries, says McKinsey’s Markus Löffler, is critical to forging the technology innovations needed for sustainable growth. Download the podcast or listen in the player below. Further reading: Smart 2020: Enabling the low carbon economy in the information age, The Climate Group, 2009. Giulio Boccaletti, Markus Löffler, and Jeremy M. Oppenheim, “How IT can cut carbon emissions,” mckinseyquarterly.com, October 2008. William Forrest, James M. Kaplan, and Noah Kindler, “Data centers: How to cut carbon emissions and costs,” mckinseyquarterly.com, November 2008.
