The only thing rising faster than greenhouse gas emissions are regulations to track them, particularly in high technology. As consumers and policymakers get serious about understanding the carbon footprint of the latest high-tech toys and innovative machines, industry leaders are making sustainability a core commitment with transformational impacts on business models.
“The high-tech sector is under regulatory pressure to consistently capture data measuring the carbon footprint of their devices throughout the entire product life cycle, from sourcing materials to end of life and reuse,” said Joerg Kaufmann, director of high-tech solution management at SAP. “They need a certifiable, auditable trail of data to prove regulatory compliance and avoid penalties. This will help manage operational costs while building a more sustainable business model.”
A recent Oxford Economics survey found that high-tech executives demonstrated the most mature outlook on sustainability: over 75% agreed that good sustainability practices reduced overall risk, versus 61% of total respondents. They were also the most likely of any sector to have a specific plan for reducing carbon emissions (71%).
Tracking Product Lifetime CO2 Emissions
Make no mistake, for high tech and every industry, net zero is a bottom-line issue. IDC researchers predicted that by 2024, to improve long-term supply chain profitability, 70% of manufacturers in global supply chains will invest in software tools supporting sustainability and a circular economy business model. Gartner analysts said that by 2025, 40% of all manufacturing IT will own the responsibility of data modeling for sustainability and net-zero carbon targets.
Consider the carbon footprint of a laptop. It begins with the sourcing of raw materials that are transported to the plant, stored in a warehouse, and productized into the manufacturing of the laptop, which is shipped to customers who use it before, hopefully, recycling it for another use. During each phase of life, the product emits CO2, increasing a company’s total carbon footprint over time. Tracking this level of tonnage with accuracy and consistency is the next frontier in sustainable business.
“CO2 is the new currency for resilient, sustainable supply chains,” said Kaufmann. “For example, SAP Product Footprint Management is designed to collect internal and external data and calculate carbon emissions across the product life cycle. Companies can explore what-if scenarios, such as finding closer suppliers to reduce shipping miles and energy consumption. They could look at alternate designs and operations, sourcing recycled materials or increasing manufacturing efficiencies to produce an identical product for the same price with a lower carbon footprint.”
Circular Economy Beats High-Tech Obsolescence
Built-in obsolescence has become both a growth driver and reporting burden for high-tech manufacturers. Yes, we want the latest innovations, but sustainable business isn’t tenable at the expense of climate change regulations. Many high-tech companies are transforming business models, in part, to innovate and better manage costs plus address climate change requirements. IDC analysts predicted that by 2024, digital-first enterprises will enable empathetic customer experiences and resilient operating models by shifting 70% of all tech and services spending to as-a-service and outcomes-centric models.
“Over the past decade, many of our high-tech clients have shifted from selling boxes to services,” said Kaufmann. “We’re researching analytics that would help a manufacturer that sold, for instance, printing-as-a-service to track usage and provide insights prolonging the sustainable life cycle of the printer, including service and maintenance, replacement and exchange timelines, and reuse for business value and lowered lifetime carbon emissions.”
High-Tech Players Recalculate Cost of Innovation
Having connected data may already be paying off for some companies. In the Oxford survey, high-tech respondents appeared to have made more progress in ensuring suppliers have sourced sustainable materials (72%) versus other industries. Business model transformation isn’t necessarily wholesale change all at once. With the right data, high-tech manufacturers can make adjustments that deliver stronger business results. No doubt regulations will spark innovations as well.
“When you can measure your product’s entire CO2 footprint, you can reduce it,” said Kaufmann. “With more comprehensive data, high-tech companies can factor CO2 emissions into the entire cost of the product, alongside everything else like the battery or the shell. They can make more informed decisions about the total cost to the company, including the environment.”
Innovation at any cost is no longer sufficient for sustainable business. With the right data, high-tech leaders can recalculate the price all of us pay for a more sustainable world.
Follow me @smgaler.
This also appeared on SAP BrandVoice on Forbes.