Service providers battle to reduce carbon footprint as datacentres expand

IT service providers are united in their attempt to reduce carbon footprints on paper, with corporate targets to support them, but despite putting a lot of energy into the cause, their power consumption is rising, according to a major benchmarking study.

The explosion in demand for datacentre services means suppliers are increasingly inheriting customer energy consumption as part of outsourcing deals so IT suppliers are attempting to meet targets through other means.

A reduced carbon footprint can be attractive to potential customers with a green corporate agenda, but if suppliers can reduce their energy consumption, and therefore costs, their customers could have the real fiscal benefit of lower prices.

Datacentre processing power consumes more energy

The findings of the survey, carried out by sustainable business analyst firm Verdantix, revealed that only a small group will actually reduce their energy consumption despite carbon emission reduction targets.

"They have CO2 reduction targets for corporate reputation management because potential customers expect them to reduce CO2. Very few have actual targets to reduce the energy used or have actually reduced the amount of energy used," said David Metcalf, director at Verdantix.

He says IT suppliers have relatively mature carbon reduction strategies, but these have been developed for the purpose of marketing rather than improved ways of working. Suppliers offset their usage by purchasing renewable energy certificates from providers of green energy, such as wind and solar power, to reduce their carbon emissions on paper, he says.

But with outsourcing increasing and more corporate IT infrastructures being moved into supplier datacentres, higher energy consumption is inevitable, says Jeff Chater, head of UK sustainability at Atos Origin. "It is difficult in our sector to reduce energy use because we are seeing growth in datacentres. If it were not for the growth in the use of datacentres, I think every service provider's energy consumption would be going down."

He says suppliers are using technology such as virtualisation and smart cooling to bring down datacentre energy use. Capgemini recently opened a datacentre in Swindon, which it claims is the most energy efficient in the world. The Merlin datacentre, as it is known, is built in modules. Rather than build the datacentre from scratch, it has used an existing building which is then populated with mini datacentres.

Environmental considerations when choosing an IT service provider

The green credentials of IT service providers are important considerations for corporate customers when choosing a partner.

Lee Ayling, a partner at KPMG who heads up the Equaterra sourcing consultancy business that KPMG acquired earlier this year, says the energy efficiency of suppliers is something potential customers look at closely. "It is becoming more and more important. It went away during the recession, but we are seeing it more often in requests for proposals (RFPs)."

According to Ayling this is not just about corporates trying to improve their public image, but has real business benefits if suppliers can actually reduce the energy they use. "Energy is a cost that is passed on to clients, so if suppliers can reduce their energy use, the cost to the client will go down."

The survey also revealed challenges facing businesses that take into account green credentials when they choose a supplier. This is the result of the incommensurable carbon reduction targets set by the IT service providers.

All 14 global IT service providers interviewed have set a greenhouse gas (GHG) reduction target, but the way they set targets and measure success are different. The benchmarking study also revealed that less than one-third of the companies studied achieve real cuts in energy consumption as part of their carbon reduction programme.

The suppliers surveyed were Accenture, Atos Origin, BT Global Services, Capgemini, CSC, Fujitsu Services, Hitachi, HP, IBM, Infosys, Logica, Orange Business Services, TCS and Wipro.

Wide-ranging greenhouse gas benchmarks make comparison difficult

The difficulty in benchmarking arises from the lack of standardised metrics. For example the date at which the greenhouse gas benchmark was taken, which reductions are based on, is different among the companies. Also the period of time set to achieve the cuts differ. Two of the 14, Accenture and TCS, set reductions based on emissions per employee, while the majority set targets for absolute reductions in emissions.

"Verdantix analysis indicates that IT services providers are striving towards a global standard in their disclosures. While the sector favours absolute CO2 reduction targets over improvements in carbon intensity, there is considerable variation in the duration and ambition of carbon reduction goals within the industry," said the report.

There are also differences between the suppliers regarding which operations of the targets apply to. For instance, some apply it to 100% of their operations, whereas others only to 80%. Also some companies only apply them to certain regions, while others have global targets.

The table below shows the "absolute target carbon emissions" for the 12 suppliers using the that measure. It reveals substantial disparity between the suppliers. The year used as the baseline varies from 1990 to 2008, the time span for the reductions ranges from three years to 22 years, and total reduction targets for the suppliers range from 5% to 100%.

Photo by Martin Poole