Greening Your Business:Is the key driver for green ICT adoption financial gain?

February 26th, 2015By 140024385

As our society faces the growing problem of global warming, companies have started to adopt environmentally healthy practices to help slow climate change and to be sustainable for many generations in the

future. Google and Apple are only a few companies among many distinguished companies who are switching over to alternative energy to reduce their carbon footprint and incorporating corporate sustainability responsibility (CSR)

into their values (Love & O’Brien, 2014). Another result of the growing perception of global warming is the creation of the term, green information and communication technology or green ICT. In his article, Dedrick defined green

ICT as “... the study and practice of designing, manufacturing, using, and disposing of computer, servers and associated subsystems… efficiently and effectively with minimal or no impact on the environment” (Dedrick, 2010,

p. 174). In other words, green ICT describes environmentally sustainable practices and all the characteristics of information and communication technologies. Since nearly every company has an ICT department in the age of

technology we are in, green ICT has been thought of as an effective solution to decrease the negative impacts businesses have on the environment. Research conducted by GeSISMARTer found ICT could improve efficiency

and reduce greenhouse emissions (GE) in many economic sectors (Global, 2012). If maximized to the fullest extent, ICT has the potential to decrease GE by 9.1 gigatons of Carbon Dioxide (GtCO2) in 2020, which equals 16.5% of the

estimated GE in 2020. Adapting green ICT has also been shown as a job generator and major savings for companies. It is important to note though ICT itself as a department does contribute 2.3 GtCO2 towards the total emission output

(Global, 2012). However, they can greatly lessen their effects by recycling their software in cleaner ways and employing virtualization. Companies also can transition to alternative energy to power their data centers.

Despite the many benefits green ICT adoption provides to both the environment and businesses alike, there has been resistance by companies to switch over for various reasons such as cost and lack of government incentives.

To fix this problem, research has been conducted to identify what the drivers and inhibitors are to companies for adapting green ICT (Dedrick, 2010; (Molla, Pittayachawan, Corbitt & Deng, 2009). One popular belief is that the

key driver to adopt greener ICT practices for companies is for financial gain. The body of literature suggests financial gain is certainly one of the top drivers if not, the top driver for businesses to change over to and the rational

behind it is straight forward. The impact on financials is important to any company in making decisions in major changes of business operations and practices. Nonetheless, financial gain is not the only major factor that businesses

consider upon taking significant action. Other key drivers are environment consideration as well as corporate strategy (Dedrick, 2010; Molla et al., 2009). These will be further discussed in addition to whether or not the key

driver for businesses to adopt greener ICT is financial gain. The motivation and potential barriers to the adoption will also addressed.

For many companies and businesses in today’s society, there are multiple motivating factors to adopt green ICT as a high priority to their other core values. GE, the primary cause of global warming, has been steadily

increasing in the past century and there is no sign that the trend will reverse due to the amount of energy our society uses in our personal and business lives (Global, 2012). Consequences from global warming like worse hurricanes

and long lasting droughts are being felt around the globe in addition to the rising sea levels. To solve this problem, the main action has been to curb GE worldwide. As a result, green ICT adoption has been a popular solution since

embracing green ICT in many sectors can result in a significant reduction of GE. In particular, the three sectors that have the largest potential to reduce emissions the most are power, transportation, and buildings (Global, 2012). By

going green, the power sector could lessen its emission output by 2.0 GtCO2 which is 22% of the projected total in

2020. To accomplish this, ICT needs to incorporate renewable energy in power production and store power in off-grid renewable energy sources like solar panels among other tasks (Global, 2012; Dedrick, 2010). Adopting green

ICT practices in their sector such as videoconferencing and eco-driving, transportation can decrease their projected emissions by 1.94 GtCO2 or 21% of their total. Buildings can also reach it’s potential 1.6 GtCO2 reduction if the

sector can optimize voltages they use as well as increasing efficiency in the heating and lighting of buildings (Global, 2012; Dedrick, 2010). In addition green ICT adoption can also cutback emission output in three other

industries: agriculture and land use, consumer and service, and manufacturing. On the contrary, ICT does contribute 2.3 GtCO2 to global GE (Global, 2012). For a company to adopt green ICT, the practices must benefit the company

IIT’s environmental impact first rather than contributing to the problem more (Dedrick, 2010). Nonetheless, ICT can also reduce their own emissions by integrating virtualization and cloud computing into their data servers (Global,

2012). Slowing down GE is a big motivator to adopt green practices and this is due to the potential large abatement across all sectors and to itself.

Public perception is also a big motivator for businesses to adopt green ICT. Since climate change has been brought to public awareness in the last decade, there has been mounting pressure for businesses and governments to

change their behavior to prolong the impact of global warming (Dedrick, 2010). This has influenced consumers to be more selective in the products companies they use. In turn, businesses are beginning to incorporate CSR into their

values to keep loyal consumers and gain new ones and to be perceived well in the marketplace (Dedrick, 2010). However, as a consequence of the heightened importance of being green to consumers, businesses have started to

greenwash themselves in their marketing strategies to the public. Greenwashing can be defined as “the dissemination of false or incomplete information by an organization to present an environmentally responsible

public image” (Furlow, 2010, p. 22). Notable companies such as Shell have been found guilty of false advertising and governmental groups like Advertising Standards Authority are placing a closer examination on the claims of

corporate sustainable responsibilities (Dow, 2015). Another motivating factor to adopt green ICT are the cost savings and jobs it will generate. According to

the GeSISMARTer study, businesses will potentially save over 1.9 trillion USD and 29.5 million jobs will be created if all the industries implement the maximum capabilities of green ICT (Global, 2012). For example, savings will

accumulate once smart cars and highways are created because they enable route optimization to reduce wasted time and avoid rush hour traffic. Other examples include smart buildings and smart meters to closely provision the

demanded energy and the automation of a power grid to adapt efficiently to the environment (Global, 2012). All of these motivators mentioned above have had an influence on the adoption of green ICT. However, these are not the

actual reasons for companies to adopt greener practices, just motivators for desired environmental values. Besides the motivation to adopt green ICT are the drivers for companies to actually take action to

accomplish what motivates them. There are multiple factors to influence companies to become environmentally sustainable but they are categorized in three broad categories, economic forces, regulative forces, and normative

forces (Molla et al., 2009). Overall, economic forces focus on cost reduction and cost-effective strategies in the ICT department to maintain economic growth in the marketplace and increase profitability. Since businesses are

spreading out globally more, demand for server space will continue to increase in the long term and companies will need to use energy more efficiently and maximize profits (Molla et al., 2009). Changing to green practices such as

utilizing efficient cooling for data centers allows businesses to both succeed financially and environmentally.

Regulative forces include government incentives and polices for environmental sustainability standards and practices. For example, governments are placing restrictions where e-product waste goes and caps for the amount a

company emits of greenhouse gas. The majority of these regulations are guidelines to follow but the regulations are likely to become binding for businesses in the future. Lastly, normative forces account for the incorporation of CSR

into values business wide and to act morally in dealing with these problems while living up to the social expectations of consumers and the public overall. (Molla et al., 2009)

In regards to financial gain and if it is specifically the key driver for transitioning into green ICT, financial gain is undoubtedly a crucial driver for businesses. Nonetheless, there are other drivers that come in closely after

cost reduction. In their study, Molla et al. examined what factors led businesses to pursue green adoption and found the reduction of ICT cost was the primary reason with 80% of businesses placing this as a top importance (Molla et

al., 2009). However, 79% of companies also placed corporate strategy as a top importance to them. In addition, the third key driver, environmental consideration, garnered 71% of those businesses surveyed. These findings suggest

that financial gain is the key driver for adopting green ICT but only by a close margin to other drivers. Although there are many drivers for companies to adopt green ICT with the top one being financial gain,

there are multiple barriers. Molla et al. also found that the top barrier was the cost from installing and implementing green ICT practices (Molla et al., 2009). In comparison to other barriers, the green adoption cost was significantly

higher than the rest with 71% of companies choosing this as their top inhibitor. As opposed to the second barrier chosen, 48% of companies chose the lack of business value. Other significant barriers included the lack of

government incentives and the lack of business leaders to set the trend for adopting green ICT (Molla et al., 2009). Unlike the results of the top drivers chosen in Molla et al.’s study, the results demonstrate the cost of switching is the

clear basis for businesses to resist green adoption which further suggests that the key driver is financial gain. However, the other barriers still play a strong role in the resistance of the adoption for businesses. If ICT and other

green organizations clearly express the business value of acquiring green ICT to businesses, more companies will consider the idea to convert (Molla et al., 2009). To fix the cost problem, governments need to create more

incentives such as tax breaks in order to start persuading companies to change for the better (Dedrick, 2010). Lastly, Google and Apple are becoming the top leaders of the green movement by relocating data centers to renewable

energy sources and building large solar panel grids (Love & O’Brien, 2014). However, with the lack of business leadership in the ICT industry, more companies like Google are needed to pave the way for ICT adoption for others

to follow in their steps. Once these barriers are removed, green ICT adoption will begin to accelerate until it’s the norm for businesses to be environmental sustainable.

Overall, it is inevitable that businesses will fully adopt green ICT in their differing industries due to the problem we face and the motivation behind it. It’s not a matter of if but when. The key driver for adoption currently

looks like financial gain but it wouldn’t be a surprise if another driver surpasses it in the next decade. With the large potential gains in savings and energy optimization, companies will not be able to resist from adapting. Companies

will also start to take action as we start to see intensifying effects of climate change on earth. To avoid the worst consequences, the best action for adopting green ICT is now to become more profitable and environmentally stable.

Bibliography

Dedrick, J. (2010). Green IS: concepts and issues for information systems research. Communications of the Association for Information Systems, 27(1), 11-18.

Dow, L. (February, 2015). Green ICT, IT in the Organization. Lecture conducted from University of St. Andrews,

Scotland.

Furlow, N. E. (2010). Greenwashing in the new millennium. The Journal of Applied Business and Economics, 10(6), 22-26.

Global e-Sustainability Initiative Global e-Sustainability Initiative and The Boston Consulting Group Inc (2012).

GeSISMARTer 2020: The Role of ICT in Driving a Sustainable Future.

Love, J., & O'Brien, M. (2014, February 11). Google and Apple harness wind and sun in huge green energy deals to power Silicon Valley campuses. Retrieved February 25, 2015, from http://www.mercurynews.com/

business/ci_27504196/google-and-apple-harness-wind-and-sun-huge?source=infinite

Molla, A., Pittayachawan, S., Corbitt, B., & Deng, H. (2009). An international comparison of Green IT diffusion. International Journal of e-Business Management, 3(2), 3.