How Sustainability is Driving Growth in IT, Telecom and Cleantech

How Sustainability is Driving Growth in IT, Telecom and Cleantech

Companies in a wide range of industries are using sustainability as a springboard to growth, often doing so by working across industries as GreenBiz Group's VERGE conference recently demonstrated. I've written on about the three main strategies companies are taking to innovate and grow with sustainability as a primary driver.

While companies develop and execute comprehensive sustainability strategies with a range of stakeholders and business partners across their ecosystem and even across industries, the success of sustainability-driven revenue growth strategies ultimately depends on how well a company serves the needs of end markets and specific customers. Looking deep within an industry, in addition to across them, underlines how large and important the sustainability innovation and growth opportunity has become.

My work recently with the executive team of a multibillion-dollar client in the communications and high-tech industry brought this point home. This company manufactures hundreds of products from facilities in over 20 countries across the world. They win business and make money based on how well they procure components, run their supply chain, and operate their facilities.

Certainly any company with this range and complexity of operation would be highly focused on the environmental and social responsibility and the cost effectiveness of their business, and indeed this client is. But, in the midst of the global focus on sustainability, they wanted to determine what competencies they had and needed to be able to innovate and grow new businesses in markets driven by sustainability including those for solar panels, residential meters, power distribution, and water desalinization kits.

Look deeper into the communications and high-tech industry. Much has been written about how software will play an important role in monitoring environmental performance -- an estimated $12 billion market this year with some of the world's and industry's leading companies like IBM, HP and SAP actively competing for it. But, sustainability is playing a much larger, even pivotal role in remaking the competitive fundamentals, business models, and direction and growth of the industry itself. A snapshot of activity in three major sectors provides a compelling illustration of the industry-wide growth opportunity provided by sustainability.

• High-tech equipment and services -- Cloud computing is fundamentally shifting the way enterprises use communications and high-tech products and services. Enterprises are embracing "the cloud" to reduce capital and operating expenditures. Of course, one of the biggest operating expenditures in a data center is the cost of energy. The use of virtualization software (central to the operating effectiveness of servers in data centers) from the leading provider (VMware) saves more power than the amount of electricity used annually for heating, ventilation and air conditioning across all of New England. Further, the energy efficiency of computing and network equipment has improved by 70 percent to 90 percent in recent years. "Cloud" is the competitive game changer and a big growth opportunity that every major player in this industry is working on and sustainability is a fundamental reason for its emergence.

• Telecom services -- For major telcos and other players in the communications business, the focus on sustainability is reviving established services like video conferencing, fleet telematics, and telecommuting that date back a few energy crises. It is also putting communications companies in position to compete for business in the rapidly growing markets for cloud, hosting and vertical solutions like e-health against IT providers. New and potentially very large markets for smart buildings, smart grids, remote monitoring, and electric vehicle charging are also in the sights of many companies in this space. Leading telco services providers are beginning to put sustainability at the center of their product strategies and are looking to address the competitive and regulatory pressures customers are feeling around the sustainability issue. They are in a unique position to provide a broad and integrated set of solutions to the range of an enterprise's sustainability needs.

• Cleantech
-- Clearly a new and rapidly emerging, yet already large space ($188 billion market value in 2010, according to Clean Edge), more money is going into cleantech than any other communications or high-tech segment. Billions are being invested by venture funds, Internet players like Google and long established tech giants including Intel. Why? Solar, water, wind, power, electric vehicles and other cleantech products are highly dependent on information technology and communications in both their operation and distribution and represent the most significant growth and value creation opportunities in this industry for the foreseeable future.

Market and customer-driven growth that addresses sustainability needs in the communications and high-technology industry will provide important environmental benefits as well. Analysis by McKinsey showed that the potential to optimize energy productivity using existing technologies in just one, already identified opportunity area in each of the buildings, power, transportation and manufacturing sectors could abate at least 15 percent of all GHG emissions across the world by 2020. While emissions from communications and high technology products will also increase between now and then, the analysis also shows that the industry could abate at least 5 times what it is expected to emit.

Taken together, revenue growth and abatement opportunities put sustainability front and center in the strategies and success of communications and high-tech industry companies both now and in the future.

Images CC licensed by Flickr user Kecko and Jonathas Rodrigues.