How Green are Green Businesses?

Greenwashing?
Ethical statements and a corporate commitment to a green agenda are becoming
a standard component of many U.S. businesses. Organizations are increasingly
responding to demands from clients for ethically sourced and produced goods
and from employees for environmentally aware policies, with clearly defined
Corporate Social Responsibility (CSR) strategies that have a firm focus on sustainability
and reducing the carbon footprint.

There is also a growing recognition of the bottom line impact of the corporate
green movement. Investments in ‘Ethical Funds’ have grown rapidly
across the US and abroad and, as a result, an organization’s FTSE4Good
rating has become an important consideration. FTSE4Good is a series of indices
created by FTSE, a jointly owned subsidiary of the London Stock Exchange and
the Financial Times, and a world-wide expert in the creation and management
of equity indexes. The FTSE4 Good series provides independent measures of social
and environmental performance for the growing number of individuals, analysts
and fund managers who are becoming increasingly aware of the potential links
between such factors and financial performance.

But what is the basis for these new policies and statements of sustainability
and environmental concern? Are these statements based on tangible, provable
policies or, as an increasingly cynical consumer base suspects, simply “greenwash?”
While CSR strategies may grab a few headlines today, the potential negative
impact both financially and for the organization’s reputation could be
significant should these statements be proven to be overly optimistic or incorrect.

And while such strategies are currently a corporate choice, there are growing
indications that in the not so distant future organizations will have to prove
the true implications of environmental policies to government regulatory entities
or watchdog groups.

Visibly Green
Corporate transparency will become absolutely essential to provide regulatory
reporting and deliver highly visible environmental policies – from ethical sourcing
of products and services to regular asset maintenance to ensure optimum performance
and minimum carbon emissions.

According to Gartner’s Top Predictions for IT Organizations and Users,
2008 and Beyond: Going Green and Self-Healing, by 2010, 75% of organizations
will use full life cycle energy and CO2 footprint as mandatory PC hardware buying
criteria. As a result, the IT analyst group expects that most technology suppliers
will start some level of more detailed life cycle assessment during 2008. The
area of carbon accounting, tracking and product labeling (beyond IT) will explode
over the next two years.

In the short term, this process will be complex, oversimplified and crude and
it will lack standards, creating a limited impact until at least 2010. However,
Gartner believes, regardless of the lack of appropriate standards and common
metrics, enterprises will demand the information.

However, to be used effectively, organizations need a clear and coherent method
of recording, measuring and reporting on the life cycle of each asset, particularly
on energy consumed during manufacturing and distribution processes, and used
for IT equipment.

The Ethical Asset Register
This could prove to be a major stumbling block for organizations. Currently,
the majority of companies do not even accurately record the number and location
of assets, let alone their purchasing and maintenance history. In a recent survey
of 300 data center managers, over a quarter of respondents did not know how
many servers were under their control and more than 40% found they had servers
they did not know they had or had looked for one only to find it had been retired.

And this problem is far from limited to the IT asset register. Physical audits
of the asset base typically reveal that less than 40% of the assets on the register
are easily identified and an estimated 10% are no longer in existence. The problem
is often made worse because of varying asset tracking strategies and consistently
poor record keeping.

With each department typically recording asset information differently –
often on spreadsheets or even paper files – there are no common asset
definitions. There is rarely any integration with maintenance, resulting in
highly inaccurate information on the replacement of component parts, and few
organizations even bother to record the movement of assets around or between
buildings.

With this fragmented approach, organizations have no way of accurately and
consistently recording or reporting on the key information required to support
CSR strategies – from knowing an asset’s country of origin, to how
the product was made, what materials it is made from, maintenance schedules
and final, environmentally ethical, disposal.

Accurate records will also ensure that an asset’s life is as long as
possible. Companies with a loose grasp on which assets are ready for disposal
are far more likely to dispose of assets prematurely which can in turn impact
the environment through unnecessary waste and recycling. In addition to this,
any changes to the value of an asset throughout its lifecycle should always
be reflected financially within the business allowing for correct calculation
of depreciation. Failure to do this simply undermines business value.

Without a consistent, corporate-wide approach to recording comprehensive fixed
asset information, organizations will not be able to accurately report on their
asset performance, whether for fiscal or for environmental concerns such as
carbon emissions and recycling figures. It is only by capturing increasing detail
about an asset’s lifecycle that organizations can begin to provide the
corporate visibility required to underpin CSR strategies.

Information Imperative
So while Forrester Research maintains that a growing number of companies are
drawing up green initiatives for operating and disposing of IT assets and processes,
it is boldly clear that such strategies cannot be delivered until and unless
they are accompanied by robust asset register technology and processes.

Indeed, while the IT department may well be ahead of the game in achieving
ethical purchase and disposal, the green value will be lost if the rest of the
business is failing to follow suit. It is only by creating a single, centralized
asset register with consistent definitions and recording practices that an organization
can track its progress and drive forward environmental policies.

As the green imperative evolves from corporate choice to operational necessity,
organizations need to put the right building blocks in place to support, track
and monitor performance. By 2011, Gartner predicts that suppliers to large enterprises
will need to prove their green credentials via an audited process to retain
preferred supplier status. This will simply be impossible with today’s
fragmented approach to recording asset information.

The days of carefree green statements are coming to an end: organizations with
irresponsible environmental practices will be exposed. There are several reasons
for an organization to clean up its asset register, but without doubt those
organizations that persist in inaccurate recording of assets will rapidly discover
the true value of ethical business practices.