Written by: Jonathan Tapp, Head of Sustainability Services, Capgemini
What do we mean by ‘green outsourcing’? It is such a broad term. On one level outsourcing effectively reduces your energy consumption by transferring your IT processing to a third party. So long as that third party can process the same amount of work more efficiently, perhaps because they have more efficient data centres or can offer economies of scale in the use of their facilities, then the net amount of energy will reduce; your company wins but so does the environment.
But this is little different from shuffling the chairs on the Titanic as the net gains are usually small and to all intents and purposes, it is effectively just a reallocation of energy use.
Three steps to greener pastures
There are, however, other approaches to green outsourcing. First of all, if you are involved in the procurement of an outsourcing contract, ask for a carbon based business case as part of the exercise and ensure that any RFI or ITT includes questions that ensure your prospective partners truly are energy efficient. The business case will ensure that the energy implications of any proposal are properly thought through whilst the qualification questions will ensure your outsourcer really is efficient in everything it does. Ask for the outsourcer’s own published environmental targets and information as to how they are doing in achieving their aims.
Secondly, look at your own use of IT within the procurement function. It is not always practical or commercially possible to simply outsource all or part of your existing IT estate. What may be possible, though, is to use third party systems providing “Software as a Service” (SaaS) to extend your own capability into the monitoring, analysis and exploitation of the data you hold on your supply chain, thereby generating additional valuable intelligence without increasing your own foot print.
That intelligence can then be used to highlight the green (environmental) business risks that have an impact on your organisation; ‘green’ in this context applies to many aspects of the business. Your manufacturing might be exposed to constrained resources, such as minerals, as much as energy supply. How many CEOs these days plan a decade ahead but assume security of supply while in fact those rare earth minerals coming out of the Congo may simply not be available by then? Leading companies are now looking to their supply chains to highlight such risks.
Thirdly, remember that green is also not just about energy and resource supply. For example, water is becoming a key focus for many as companies realise too much can be as bad as too little! The business interruption caused by flooding can be every bit as disruptive when factories are shut as the consequences of drought can be on the availability of raw materials.
As a consequence of this change in awareness, many organisations now offer IT programs designed to help with the monitoring and analysis of supply chains that go beyond simple business intelligence. Typically such programs will allow you to define almost any business event as an emission source, hold all the commonly accepted conversion factors and most crucially, provide you with fully flexible reporting and a complete audit trail with which you may support your results. Such programs can be provided on a SaaS basis so you my annexe them onto your existing systems without the need for expensive IT investment or disruptive implementation phases.
What is also useful about these systems is that they will support other departments within the organisation. The finance team should be beginning to consider the implications of what they call Scope 3 reporting together with “Integrated Reporting”, where sustainability reporting is interwoven into standard financial accounting. Facilities and energy managers increasingly wish not just to read meters but also use their Building Management Systems as proper management tools. Any good carbon accounting system will provide a database to record, model, allocate and extrapolate all metered data, from energy to air quality. Those responsible for corporate and social responsibility reporting can use the same system to record charitable giving, either of time or money. What’s more, being SaaS, such systems can provide global analyses, underlining best practice and areas of weakness wherever they may occur.
Such systems can also help develop supplier relationships. One of the ways in which good environmental reporting systems work is a supplier questionnaire and the program will have the functionality to issue, manage and monitor these as well as collating the results. Given the relative ease of doing this, what leading companies may now be doing is issuing regular questionnaires to selected segments of the supplier base as a way of creating and developing intimacy with key suppliers.
Can you afford not to go green?
So, ask your colleagues. You may well be able to pool resources, giving each of you value for money and as the instigator of such an initiative, underline the key role you and colleagues can play. The clock is already ticking on sustainability reporting, money wasted through sub optimal procurement can never be recovered and if you can’t demonstrate best practice to your customers, they may not be customers for much longer.