business and it, does bt deliver on it's sustainability promise

BIT, does BT deliver on IT‟s sustainability promise?

Version 1.1

Maarten J. Gubbens

June 20th, 2011


Nyenrode Business University, MBA Business & IT

Ownership of Governance and Enterprise

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Table of Contents

Executive Summary .................................................................................................. 3 Green IT hits the CIO radar ......................................................................................... 3 Challenge ..................................................................................................................... 3

1. Scientific modelling ........................................................................................ 4 1.1 Competitive Advantage & CSR ........................................................................ 4 1.2 Governance and Sustainability ......................................................................... 5 1.3 Green-IT – what makes a difference? .............................................................. 7 1.4 Green-IT – the extend of adoption .................................................................... 9 1.5 Green-IT and Governance .............................................................................. 11

2. BT Group practices ...................................................................................... 12 2.1 CSR strategy and governance ....................................................................... 13 2.2 Business Conduct ........................................................................................... 14 2.3 Green-IT portfolio development ...................................................................... 16 2.4 Recognition ..................................................................................................... 18

3. Confrontation ................................................................................................ 19 3.1 Competitive advantage and CSR ................................................................... 19 3.2 Governance and Sustainability ....................................................................... 19 3.3 Green-IT.......................................................................................................... 21 3.4 Conclusions and suggestions for improvement .............................................. 23

APPENDIX I, References ...................................................................................... 24

APPENDIX II, Risk Assessments ........................................................................ 25

APPENDIX III, CSR KPI’s ...................................................................................... 26




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Executive Summary

As one of the most influential developments, IT is quickly transforming today‟s

enterprise infrastructures and reshaping the way people work and live. Enterprise‟s

are under pressure to consider their impact on the environment. Governments,

shareholders, management boards and customers are beginning to expect

increased visibility of business environmental impact and measures taken to

minimise this. IT leaders, as representatives of major e-waste producers, are

obligated making green-IT-strategy mission critical.

Green IT hits the CIO radar

Greening IT is attracting a huge interest among IT vendors and consulting services

providers mainly due to the increasing demand to power data centres. Green IT

encompasses IT‟s overall role in causing and tackling emissions and covers policies,

technologies and practices from sourcing to disposing. Eco-friendly computing

practices have gained significant CIO mindshare. In an independent survey

conducted by Datamonitor, over 75% of respondent enterprises considered eco-

friendly computing as an important element in their IT strategy, while a further 15%

rated it as their top IT priority. IT organizations face the dual challenge of shrinking

budgets and increasing infrastructure footprints. Enterprises are now beginning to

realize the full potential of eco-friendly computing practices; namely, significant cost

savings, increased flexibility in managing IT resources and compliance with

environmental regulations.

Challenge

Many industries and enterprises are initiating strategies or policies to reduce

greenhouse gas emissions, there are many more that simply do not have the

capacity, commitment or money to act today. This paper highlights the current status

of business strategy of Corporate Social Responsibility from a competitive

advantage perspective, Governance & Sustainability and Green IT adoption which

can be used to benchmark for future development and improvements for BT.

Discussion BT is going to deliver on its sustainability promise in 2020 rather than 2015. Delays

are due to the financial and following economical crisis. BT is the global leader

among leaders. Sustainability, for BT, is a means of survival. This has been

recognised in the early ‟90 of the previous century. Governance, business conduct,

and portfolio development is mature. BT has a competitive advantage and is well on

its way to taste the benefits. Internal reporting and measurement however, can be

improved. Suggestion is to follow the Eric G. Olson model of “Creating an enterprise-

level green strategy”.

Green IT is now being driven as much by an element of business strategy as by a sense of corporate social responsibility




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1. Scientific modelling

1.1 Competitive Advantage & CSR

An enterprise framework, Porter & Kramer (HBR 2006), can be used to identify all of

the effects they have on society and determine which ones to address. License to

operate, moral obligation, sustainability and reputation are themes for CRS

according to Porter & Kramer. The triple bottom line (economic, social, and

environmental) has a tendency towards Enterprise self-interest rather than the

mutual dependence of enterprises and society, the conflict between society and

business rather than on their interdependence. Enterprise and society have a shared

interest and goal with respect to CSR and business decisions and social policies

should follow the principle of shared value.

Inside-out linkages

Enterprise activities have an impact on society in which they are active, creating

positive or negative social consequences. Monitoring the obvious social impact by

enterprises alone is not good enough anymore. Firm‟s very survival might be at risk

when ignoring carefully identifying evolving social effects of tomorrow.

Outside-in linkages

Enterprises operate in a competitive environment with strong influence on the ability

to carry out strategy, especially over longer periods of time. Of importance are social

conditions hence competitive context is divided in four areas: 1. the quantity and quality of available business inputs 2. the rules and incentives that govern competition 3. the size and sophistication of local demand 4. the local availability of supporting industries

Three generic social issues affect the enterprise: Generic social issues, Value chain

social impacts and Social dimensions of competitive context.

Enterprises should

integrate a social

perspective into the

core frameworks it

already uses to

understand

competition and guide

its business strategy

The essential test that

should guide CSR is

not whether a cause is

worthy but whether it

presents opportunities

to create shared value




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Porter & Kramer define responsive and strategic CSR as:

Responsive CSR: act as a good corporate citizen, open to evolving social

concerns of stakeholders, and mitigating existing or anticipated adverse

effects from business activities.

Strategic CSR choosing a unique position – act distinct from the

competition in a manner that cuts costs and/or better serves customer needs

moving beyond good corporate citizenship. Address enterprise harmful

value chain impact by initiating endeavours which benefit both society and

business significantly and distinctively. Strategic CSR involves both inside-

out and outside-in dimensions working in conjunction.

1.2 Governance and Sustainability

According to Aras G. & Crowther D. (2008), corporate governance is an environment of trust, ethics, moral values and confidence, a synergic effort of all ingredients of society stakeholders. This involves government, the general public, professional service providers and the corporate sector. Sustainability issues in relation to corporate governance is a topic of growing concern and is put on the board agenda. Ackerman (1975) concluded enterprises acknowledged the adaptation to a new social climate of community accountability however orientation of business to financial results was inhibiting. Financial performance is an essential aspect of corporate sustainability adding a further dimension for analysis of sustainability including a focus shift towards enterprise accountability to society (Aras & Crowther, 2008). Rubenstein (1992) explains the need for a social contract between a business and its stakeholders. Crowther‟s (2002) definition of sustainability; The concern of the effect which action taken in the present has upon the options available in the future. A sustainable enterprise can only exist by recognising environmental and social issues and incorporating them into its strategic long term planning Aras G. & Crowther D. (2008),

Through strategic

CSR the enterprise

will make the most

significant social

impact and gain the

greatest business

benefits

Strategic CSR unlocks

shared value by

investing in social

aspects of context that

strengthen enterprise

competitiveness

Sustainability implies that society must use no more of a resource than can be regenerated




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Financial performance, as an integral part of sustainability is not recognised by most analysis of sustainability (e.g. Dyllick and Hockerts, 2002; Spangenberg, 2004). Güler Aras et all (2008) find financial performance is an essential aspect of corporate sustainability adding an extra dimension to the analysis of sustainability. Hence four aspects of sustainability must be considered as key dimensions of sustainability: 1. Societal influence

impact that society makes upon the enterprise in terms of the social contract and stakeholder influence

2. Environmental impact

effect of the actions of the enterprise upon its geophysical environment 3. Organisational culture

relationship between the enterprise and its internal stakeholders, particularly employees, and all aspects of that relationship

4. Finance

terms of an adequate return for the level of risk undertaken The four elements of enterprise sustainability and governance performance are represented on a two-dimensional matrix along the polarities of internal versus external focus and short term versus long term focus. Aras & Crowther (2008) argue that sustainability is the distribution of effects – positive and negative – eliminating conflict between all of these and pays attention to the future as well as the present. A short term approach for enterprise is no longer acceptable for sustainability issues.

Sustainability can be defined as; consciously addressing planning for the future concerned with resource utilisation choices today. Enterprises should consider: generating and utilising renewable resources, minimising pollution and using new techniques of manufacture and distribution. Present sustainability costs are an investment for the future. Aras & Crowther (2008); management from a financial perspective and its external environmental management coincide in this common concern for management for the future.

An enterprise which has a complete understanding of sustainability and corporate governance will address issues more completely

Creation of value within the enterprise is followed by the distribution of value to the stakeholders and shareholders of that enterprise and adds to welfare for society at large

Good performance in the financial dimension leads to good future performance in the environmental dimension and vice versa




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Economic downturn and big corporate scandals have raised corporate governance as a topic of attention. In order to provide funding investors demand that enterprise implement rigorous corporate governance principles in order to achieve better returns on their investment and to reduce costs. Beiner et al (2004) find that investors are ready to pay a premium for enterprise to have good governance standards. Report‟s on corporate governance is a main tool for investor decisions. Enterprises are not able to ignore the pressure for proper governance from shareholders, potential investors and other markets actors. Transparency, accountability, responsibility and fairness are corporate governance principles related to CSR. Corporate governance is vital for business performance. Enterprises must understand the rules and learn how to improve strategy to apply these principles. Enterprise senior management must develop and adhere to corporate governance procedures balancing both shareholder value and satisfy other stakeholders. Sethi (2002), governance is balancing enterprise economic and social goals including aspects as efficient resources use, energy accountability, and the social behaviour of the corporation.. Good governance & sustainability will address the:

societal influence aspect of sustainability

environmental impact aspect of sustainability

organisational culture aspect of sustainability

finance aspect of sustainability

1.3 Green-IT – what makes a difference?

The trend towards green IT is a result of both the environmental impact of IT and the

role IT plays as a potential source of solutions to environmental concerns.

Enterprises are under pressure to act sustainably, environmental considerations are

taking greater importance for organisations and IT.

Environmental considerations form important dimensions in corporate sustainability

(PricewaterhouseCoopers & SAM 2008), corporate social responsibility (St James

Ethics Centre n.d.), corporate strategy (Enkvist & Vanthournout 2008) and the “triple

bottom line‟ measure of organisational success, which is comprised of economic,

social and ecological sustainability (Elkington 1998).

Enterprise IT is a source of, and a solution to, organisational environmental

degradation. CIO‟s expect that Greenness of IT suppliers become important (IDC

2008). Gartner (2009) predict green IT to be one of the top strategic technologies.

The amount of information regarding the relationship between governance and sustainability will also increase, not just as enterprises gain a clearer understanding of that relationship but also as they understand the benefits of greater disclosure in this respect




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Factors influencing green IT are:

1. Motivational, understanding the motives for enterprise‟s environmental

initiatives assist in predicting environmentally based behaviours (Bansal &

Roth 2000) and can be a significant factor in the development of green IT in

organisations. Bansal and Roth (2000) found three basic motivations that

induce corporate environmental responsiveness:

Competitiveness, focuses on profitability, reduce cost, generate

revenues or efficiencies.

Legitimation, is survival. Initiatives are based on satisfying

government, local community, stakeholders and compliance &

regulations to avoid penalties and lessen risk.

Social responsibility, act from a sense of obligation, responsibility or

philanthropy rather than out of self-interest (Bansal & Roth 2000)

2. Organisational, as green IT initiatives have impacts on human resources

and organisational capabilities (Sayeed & Gill 2008), the extent of green IT

will be influenced by organisational factors. An enterprise‟s human

resources and capabilities must be leveraged to manage environmental

performance (Russo & Fouts 1997). Senior management support has been

identified as the important internal organisational factors, they facilitate the

requisition of resources, and environmental policy seems to follow a top-

down progression.

3. Technological (constraints), James (1999) identified technology facilitation

as a factor in the decision making process towards environmental

strategies. Molla (2008) suggested that technological context may also

influence the extent of green IT in organisations.

Research model showing the proposed factors which influence the extent of green IT

in organisations:

Enterprises that support IT to improve environmental performance are motivated by

employees - in an environment capable of change - as a sense of social

responsibility rather than responding to external pressures or pursuing competitive

advantage (Ben N. Kuo & Geoffrey N. Dick, 2009)




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1.4 Green-IT – the extend of adoption

IT is a factor in causing and resolving sustainability issues (Green-IT). Policy makers and IT managers recognise the importance of IT as a means of greening the enterprise. Two main and interrelated streams of thoughts can be identified in the discussion on Green IT:

1. Reducing of carbon emission and IT assets waste

2. Deploy IT in measuring, reporting and reducing greenhouse gas emissions, waste and water usage

Adoption Green IT can be influenced by 3 generic sources of influence could be identified as economical, regulative and, normative (Molla, 2008; Chen, Boudreau, & Watson, 2008):

1. Economic forces, the need for pursuing internal efficiency and market performance, the main motivator of Green-IT adoption. Compliance, business continuity strategies and global expansion increase the need for more data storage. More data implies larger server farms and more demand for power (Rasmussen, 2006).

2. Regulatory forces, demand compliance to green or environmentally responsible regulation. Government bodies should force the adoption of Green-IT by rules and laws that allow or prohibit certain practices. E.g. limitations on greenhouse gas emissions, institutionalising emissions trading, banning the use of hazardous materials and imposing restrictions on e-waste disposal.

3. Normative forces, the pursuit of legitimacy within the wider social context (DiMaggio & Powell, 1983). The need to meet social obligations and enforce moral governance can induce certain Green-IT practices.

These forces are not necessarily mutually exclusive. The preference of a dominant force can influence the adoption and extend of Green-IT activities and favour certain Green-IT practices.

A PC running for around ten hours per day produces 1200 pounds of CO2 which is almost 1/10 of what an a car generates annually (Weiss, 2007)

Rasmussen, the need for reducing the power, cooling and real estate costs and increasing data centre efficiency might drive some organisations to turn to Green IT




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Green-IT is an enterprise‟s ability to systematically apply environmental sustainability criteria (such as pollution prevention, product stewardship, use of clean technologies) to the design, production, sourcing, use and disposal of the IT technical infrastructure as well as within the human and managerial components of the IT infrastructure (Molla, 2009). The definition can be split into 4 different but interrelated perspectives of Green-IT:

1. Sourcing, procurement practice of environmentally preferable IT purchasing through analysis of the Green track record of software and IT services providers, incorporating Green issues in vendor evaluation, and inclusion of social concerns

2. Operations, improving energy efficiency in powering and cooling corporate IT assets and reducing greenhouse gas emissions.

3. Services, the role of IT in enabling an enterprise's overall sustainability initiatives including analytical IT tools, for Green supply chain management, environmental management and carbon foot print analysis and low based carbon business solutions (among others; video-conferencing, thin client & web business service, desktop virtualization, corporate-wide PC power management).

4. End of IT life management, practices in reusing, recycling or disposing IT hardware and consumables in an environmentally responsible manner.

Hoffman and Woody (2008) argue that the costs of being Green are high and costs must be seen in light of competitive, market and economic opportunities of becoming Green. Regulatory requirements and legislative actions play very significant roles in the adoption of Green technologies and can force some businesses to accept a technology (Olson, 2008; Gonzalez, 2005). Factors that influence the adoption of Green-IT, effort should be exerted to cover economical, regulatory and ethical issues.

Initiatives to replace equipment with more energy efficient equipment would generate a surge in electronic waste and consume additional resources if equipment is replaced before the end of its natural life




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1.5 Green-IT and Governance

In a grim and green economic era information technology has an important role to play in creating sustainable businesses. Recovery from the economic crisis is going to demand and eventually lead to more greener and energy efficient industries. It is the technology–sustainability connection that “Green-IT” has emerged as a topic of concern for IT and business leaders. Alem Molla (2009) defined Green-IT as follows (Organizational Motivations for Green IT: Exploring Green IT Matrix and Motivation Models, page 4):

Green-IT is an organisation’s ability to systematically apply environmental sustainability criteria (such as pollution prevention, product stewardship, use of clean technologies) to the design, production, sourcing, use and disposal of the IT technical infrastructure as well as within the human and managerial components of the IT infrastructure.

Green-IT has 2 dimensions:

1. Reach, the extent to which Green-IT touches an enterprise‟s IT activities from sourcing through operations to end-of-IT-life management.

2. Rich, the extent of maturity of Green IT polices practices and technologies.

The Green-IT Definition Matrix:

Maturity in Green-IT Reach and Richness provides evidence of an enterprise Green-IT strategy and commitment to the main goals of eco-sustainability, pollution prevention, product stewardship and use of clean technology (Hart,1997).

Responses to environmental challenges differ from environmental policies for public consumption to green-washing their strategies through recycling practices




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2. BT Group practices

BT‟s present challenge originate from its previous crisis in 2002, after the dotcom

crash, loaded with debt BT sold most of its international assets and span off its

mobile operation, leaving a fixed-line telecoms operator under pressure from both

competitors and regulators. Former BT Group CEO, Ben Verwaayen, championed

Global Services, which serves governments and big companies. In the financial year

to March „08 sales reached £8 billion, almost rivalling BT‟s traditional business.

Global Services margins were under pressure. In 07/08 Global Services contributed

almost 40% of sales but just 4% of operating profits. Global Services lost £800m in

the financial year 08/09.

In 09/10 BT generated about £1.3 billion which had to support dividend payments

and underwrite the giant and underfunded pension scheme. Hence BT Group,

Global Services especially, is scrutinized by analysts from the City on financial

performance. Investments are under pressure to satisfy shareholders and the

pension scheme.

Sources: internal reporting and BT communications

1. The Economist - BT’s Pension Problem - Aug 20th 2009 2. Accountability Report - The Materiality Report, Aligning Strategy: Performance

and Reporting, November 2006

BT has a huge

pension burden in the

UK. Its underfunded

scheme has 340,000

members. Trustees

expect scheme‟s

liabilities reach £40

billion gross

BT is pushing cash

flow above the £1.3-

billion mark resulting

in cutting costs. In

fixed-line telecoms

that means cutting

labour and focussing

capital expenditure




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2.1 CSR strategy and governance

BT Global Services Benelux has ambitious goals for reducing the CO2 footprint for

fiscal 2011/12. The governance aspects will be researched by interviewing the CFO,

(guardian of CSR endeavours) and Jan Willem Leguit (senior consultant within BT

professional Services) responsible for the ISO 14001 certification for BT Benelux.

A program to reduce BT Group‟s global carbon intensity by 80% by 2015, from 1997

levels is delayed to 2020. On the other hand, in California, the solar array powering

the offices and datacenter is in its first full year of operation.

BNL is ISO 14001 certified and is following the PLAN-DO-ACT improvement

scheme. Significant progress has been made on reduction of waste, car millage, air

travel, use of natural gas for heating and use of water, see Appendix II. This is,

however, mainly due to the downsizing since the beginning of the financial and the

following economical crisis. Ambitious targets from London were met automatically.

For the next fiscal 2011/2012 BT anticipate an increase of business volume and as a

result an increase of the use of resources. This will affect BT‟s footprint negatively.

Without additional measures, investment and financial commitment, the CSR goals

will likely not be met.

Green decisions are taken by and governance is performed on ad-hoc bases by BNL

employees often without senior management being aware. One FTE for CSR

governance is the BT Group norm, due to stringent cost reduction programs this

function is not fulfilled. There is a definite need for a dedicated FTE for governance

and ownership of “Green Development” within BT Benelux.

Sources: BT PLC Sustainability Report 2011 http://www.btplc.com/Responsiblebusiness/Ourstory/Sustainabilityreport/index.aspx

Eliminate, Reduce, Reuse & Recycle for electronics devices ER3 principle is the most efficient rule making control for enterprise green projects (Taylor, R. 2009)

http://www.btplc.com/Responsiblebusiness/Ourstory/Sustainabilityreport/index.aspx




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2.2 Business Conduct

BT‟s CSR strategy translates in the following day to day practices:

e-waste

98% of the IT equipment (mainly Cisco) is returned to the manufacturer at

end of life.

Green energy / CO2 reduction

All energy used in BNL is nowadays green. Data centers are transformed to

energy efficient operations in terms of cooling, energy used and supplying

heat to nearby greenhouses. Here significant investments are made. As a

simple measure the cooled environment temperature is raised from 21 to 25

degrees Celsius and the heating lowered to 19 degrees Celsius.

Procurement

BT is engaging suppliers to deliver products that operate effectively up to 50

degrees to reduce cooling cost in data centers.

Eat for own dog food

Benelux employees started using the BT mobility services enabling them to

work flexible, experiencing the possibilities and limitations, and addressing

ways for improvement.

Right First Time

RFT is about fulfilling our customers‟ expectations and our promises

perfectly as perceived by the customer. For BT Global Services it implies

improving the delivery and quality of services, removing the cost of failure

and reducing cost to serve. RFT has had a positive impact on BT‟s global

carbon footprint.

Travel

Due to telepresence solutions in Amsterdam and Brussels BT reduced air

travel with 60% (CO2 reduction of 70 tonnes and savings of 300,000 euro)

and car travel for BNL meetings (reduction of 81,259 Km, 15 tonnes CO2).




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Flexible working

Survey suggests that home working is reducing BT‟s work-related CO2

emissions by around 7,000 tonnes a year, on a net basis, professor P.

James University of Bradford “Home working at BT - The Economic,

Environmental and Social Impact “, 2008. BT is benefiting from higher

employee productivity and morale, lower absenteeism, and reduced property

costs.

BT closed an office building in Amsterdam in 2009. Over 400 employees

had to find a new way of working without much guidance from senior

management. With only little disturbance the flexible working scheme had

been adapted resulting in lowering cost for renting office space, less car

millage and energy reduction.

Sources: Proposition papers, product information, marketing analysis, published interviews, reporting by research institutions and interview CFO.

1. BT - Changing world: Sustained values: Our 2010 Sustainability Review 2. BT - Planning For A Sustainable Future: Helping Organisations Reduce Their

Carbon Footprints, Dr Daron G Green 3. HOMEWORKING AT BT - The Economic, Environmental and Social Impacts

Final Report June 15 2008 Professor Peter James, SustainIT and University of Bradford

http://www.globalservices.bt.com/AboutusHubAction.do?id=corporate_social_responsibility






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2.3 Green-IT portfolio development

BT Global Services is a Networked-IT business delivering hosted ICT commodities

from 24 data centers via a global MPLS network to customers. Data centers are the

fastest growing part of the ICT footprint (14% CAGR in USA) and have a large

potential efficiency gain. The principal measure of data centre efficiency is known as

the Power Usage Effectiveness (PUE) metric. This is defined as:

An ideal PUE measures 1.0 when all the facility power is used to power the IT equipment. A PUE of 2.0 implies 50% of the power is wasted – usually in cooling systems and uninterruptable power supplies. A typical legacy data centre has a PUE of 2.5. 20 years ago chips consumed 8 watts of power compared to 110 watts today. This phenomenon - underbelly of Moore‟s Law - along with blade server developments can increase the concentration of processing power, and therefore power demand, 8 times per square foot. A report by the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) revealed that between 43-65% of data center energy is used to power equipment, between 20-25% is used to power cooling systems and between 1-3% devoted to lighting. BT recognized the above issues and is developing sustainable data centers delivering green cloud services to global customer taking the following approach:

1) Audit and learn Discovery contributed to BT‟s consolidation of 3,000 servers and reduced electricity consumption by 23GWh a year while reducing CO2 emissions by 3,300 tonnes.

2) Renewable energy

BT Group is leading the largest enterprise wind power project outside the energy

sector, which aims to produce up to 25% of its UK electricity consumption by 2016.

3) Switch to fresh air cooling Data centers have enormous cooling requirements, which can amount to an enormous energy drain. BT data centers are able to channel the air that circulates outside the building into the data centre to help keep temperatures at an optimal level. Using fresh air instead of air conditioning to cool hardware is becoming a real option. It's highly energy efficient, but it implies that datacenter equipment has to tolerate a wider range of operating temperatures - 5 to 50 degrees Celsius, rather than 20 to 24 degree standard of today.

4) Move from AC to DC Computers operate of DC voltages, yet power is delivered in higher AC voltages. Avoiding the power conversion results in a 30% power saving. BT is introducing this power scheme globally.

Power and cooling is a pandemic in the world of the data center, said Michael Bell, Gartner research

50% of the data centers are obsolete due to insufficient power & cooling capacity to meet the demands of high density equipment

Imtech is building BT‟s

Green data centers in

Nieuwegein en

Amsterdam, CO2

reduction 40%,Dec ‟10




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5) Turn to multi-core processors

Consolidate systems, multicore processors combine 2 or more processors into a

single package. BT consolidated many small servers on to fewer, more powerful

systems and thus cut power consumption and energy spend.

6) Virtualisation

The most exciting of all the emerging technologies is virtualisation, a technique that

uses idle network power to use resources more effectively and efficiently. BT

reduced a 1,500-server data center down to just over 100.

7) Reduce infrastructure

Development of data centers which interact with the technology they house. By

building resilience and disaster recovery functions into the applications that manage

server hardware, the need for separate hardware to take care of these functions is

removed hence the need for power and cooling for those systems.

2.3.1 Carbon impact assessment, an example

SWIFT, The global provider of secure financial messaging services, planned to reduce carbon emissions by 60% towards end of 2012. BT performed a data center sustainability assessment to investigate its overall carbon footprint. The purpose of the audit was to support the following key business drivers:

Reduce overall carbon footprint

Reduce server population resulting in decreased infrastructure capital expenditure

Leverage the existing investments in technology

Provide cost-efficient high available technical infrastructure

BT performed the assessment on Swift‟s data center hosting a large server base (rack mounts and blade systems) both Wintel and UNIX, storage and networking devices. The assessment resulted in a roadmap for Swift providing a comprehensive TCO and ROI study, implementation and an investment plan. BT provided a solid business case achieving a 72% reduction in server population. The reduction would not only reduce up to 851 MWh/Year in energy consumption and 177 Metric tonnes of CO2 emissions but also save up to €2.3 million over 5 years with a very positive ROI.

Sources: Interview Senior Consultant Professional Services, study CSR reporting,

Green-IT portfolio development material and IDC report (October 6, 2009): BT's

Sustainability Practice Facilitates Green IT Initiatives for Enterprise Customers

1. BT - A realist’s guide to green data centres (whitepaper) 2. BT - Are ICT emissions running ahead of expectations? Produced by Chris

Tuppen, BT Chief Sustainability Officer and Chad Raub, Dawn Capital

BT‟s Virtual Data

Center is a green

virtual networked IT

infrastructure that

enables customers to

create, deploy,

monitor and manage

their own service on

demand through a self

service portal




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2.4 Recognition

BT has been awarded the “2010 European Telecoms Corporate Leadership Green Excellence Award”. This award recognises BT‟s leadership in environmental initiatives designed to reduce carbon emissions. BT is giving top priority to projects that bring emissions reductions by changing behavior engaging employees to reduce energy use is one of the most effective ways to cut emissions, whilst reducing operational costs. In 2008, BT launched a new global energy saving campaign to save 75,000 tonnes of CO2 emissions and £15 million by March 2011. This resulted in new measures that will reduce the company‟s energy consumption by more than 53 GWh per annum and its carbon footprint by 20,200 tonnes a year. BT has done a remarkable job leveraging internal successes by turning them into solutions, including energy efficiency management, remote working/collaboration practices, virtualisation designs, use of conferencing facilities and datacenter optimisation. BT Global Services has managed to grow a strong consultancy business focusing on sustainable solutions.

Dow Jones Sustainable Index, BT has ended number one on DJSI for seven years

running, until 2009 after which Telefonica has taken over de top position since. KPN

has entered the top five in 2010. Business Week & Boston Consulting Group, BT is one of the most innovative companies in its sector, 2008. Telemark (Platinum Award), acknowledges BT‟s success in capturing the hearts

and minds of customers with excellence and ahead of global rivals.

Gartner, BT Global Services is positioned in the "Leaders" quadrant in 3 key Gartner

Magic Quadrants: the Global Network Service Providers, the Pan-European Network

Service Providers and the for Communications Outsourcing and professional

services worldwide. BT have a strong vision that includes adopting more information

and communication technology (ICT) capacity which is a strategy they articulate

clearly and openly."

Accounting for Sustainability (Elaine Cohen CSR Wire, 2010), the case study

that I found most impressive was BT who published a first Environment Report in

1992. The study of the sustainability evolution at BT shows how the Business Case

for CSR was developed, the business benefits BT expects from its sustainability

programs, the drive to assess materiality and the application of a more quantitative

assessment of BT's sustainability performance in financial terms.

In its 2009 annual report BT includes a table of the 'Non-financial corporate

responsibility KPI's as a high level connected reporting summary of the most

material sustainability issues and shows both direct and indirect enterprise impacts,

most of which are translated into a money figure. Accountants will clearly love this,

as will investors and analysts, and indeed, it does remove some of the fogginess we

find in many Sustainability Reports around sustainability initiatives.




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3. Confrontation

This section of the paper confronts the scientific modelling with BT‟s strategic

planning, governance, business conduct and Green-IT developments with respect to

BT‟s competitive position.

3.1 Competitive advantage and CSR

Responsive CSR => BT has enormous pension scheme liabilities in the UK. BT has

to generate enough cash flow to fulfil its obligation to society resulting in never

ending mitigation of risk, hence seeking efficiencies in the value chain.

Strategic CSR => BT started reporting its impact on the environment in 1992,

understanding that its energy consumption and raising demand would impose

strategic challenges in terms of sourcing and growing carbon foot print. Consuming

about 2% of the nation‟s energy, saving and sourcing of reliable, affordable and

greener energy became crucial and got boardroom attention.

Competitive advantage => Due to the constant crisis it‟s in, BT was forced to

rethink its position and strategy with respect to CSR in the early ‟90. It set some big

hairy audacious goals with respect to energy production and consumption, 21

century network and involvement of employees.

3.2 Governance and Sustainability

Societal influence => As one of the largest employers in the UK, the extend of

wholesale and retail telecommunications and other services it‟s delivering, and

financial obligations BT‟s impact on society in the UK is significant and vice versa.

BT has an unwritten social contract to lead innovation and act as an example of

good (corporate) citizenship and ownership thereof.

Environmental impact => BT‟s actions take immediate effect on the geophysical

environment in terms of e-wast, carbon footprint and the landscape due to the build

of a wind farm generation ¼ of BT‟s energy demand in 2020. BT is scrutinised by

environmental organisations and governments (local & central).

Organisational culture => Employees have the ability to work flexible, this is

strongly promoted by BT, to save time and energy resulting in less pollution and

stress. In 2009 75% of the BNL staff worked from home during the “BT Beating the

Queue DAY”. The CSR culture, expectations and behaviour, is unwritten but lived.

Finance => BT constantly has to balance finance (investments, dividends & pension

scheme liabilities) satisfying many stakeholders among which the government and

society at large. Due to the 2008 financial and following economical crisis BT had

less funding for achieving its very ambitious sustainability goals.




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Mapping BT Group behaviour to the 4 sustainability aspects results in the following

diagram:

Red is before October 2008.

Blue is after October 2008. BT is focussed on financial performance, cutting internal

cost but maintaining the commitment to the sustainability promise.




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3.3 Green-IT

3.3.1 The difference

Motivational => Green-IT is an instrument for survival for BT Group and

differentiates BTGS from AT&T, Verizon and Orange Business Services.

Competitiveness => Applying Green-IT is instrumental in BT‟s quest to

reduce cost, increase profitability, generate cash and develop a sustainable

networked-it portfolio and grow domestic market share against KPN and the

black sheep.

Legitimation => BT is under pressure from UK government(s),

environmental organisations and Ofcom (the regulator). An overwhelming

amount of rules, regulations and public expectations have to be met. Early

initiatives with respect to greening IT are set over a long period of time to

avoid cost and reduce risk.

Social responsibility => BT Group‟s impact on British society is

tremendous. It‟s doubtful if BT acts from a sense of obligation or

philanthropy rather than out of self interest. At best it can be defined as “BT

understood the rules of the CSR game”.

Organisational => BT has the human and organisational capabilities to make the

difference. At BT Group awareness and attention is urgently present as a means of

survival. At BTGS Green-IT is a much needed portfolio ingredient. BT BNL sees

Green-IT as one of the business goals, it‟s present, but financial targets are more

demanding.

Technological constraints => Technologies are developing quickly and are readily

available. Due to the size of the BT organisation and its presence in 178 countries

the adaption of new green technologies is a constraint as portfolios (development)

are commoditised which takes “some” time.

3.3.2 Adoption Influence

Adaption Influence:

Economic => BT is in need of cash. Reduction of energy consumption is an

effective tool of cost reduction. BT has been successful in taking measures and

applying Green-IT in making BT Group financial thresholds by reducing cost of

operations (energy, travel, housing, IT-infrastructure estate, delivery and number of

staff).

Regulatory => Vision more than regulatory forces have driven BT to sustainability.

Normative => In many ways BT Group is normative for its sustainability endeavours.

BT is seen as seen the leader among leaders by Ovum (2009).




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BTGS ability to systematically apply Green-IT is described in the following

perspectives:

Sourcing => BT‟s sourcing strategy is about efficiency and effectiveness; more for

less, reduction of energy usage, joint communication & marketing, free pilots, better

services, available stock and reliable delivery. Strategic partnerships are key with

e.g., Cisco, Microsoft, HP and Cap Gemini.

Operations => On April 29th 2010 BT BNL joined the MJA (Meerjarenafspraak

Energie Efficientcy, Ministerie van Economische Zaken) committing to an energy

reduction of 2% annual YoY. ISO 140001 certified following DO-PLAN-ACT.

Services => The Professional Services branch of BTGS has several enterprise

assessments services, based on internal BT experiences, analysing carbon impact,

reporting and propositions for improvement. BT has introduced Green Bill (no more

paper invoices, only at an additional cost).

End of IT life management => 80% of the equipment goes back to the original

supplier.

3.3.3 Governance

A demonstration of BT‟s strategy and commitment, as a measure of governance,

can be demonstrated by scoring the Green-IT definition matrix.

Rating: X infant, XX in place needs improvement, XXX mature




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3.4 Conclusions and suggestions for improvement

According to Porter & Kramer‟s CSR Competitive Advantage Enterprise Framework

BT is definitely green in its strategy, governance, reporting, business conduct and

Networked-IT portfolio development. BT has a competitive advantage. Until Q3/2008

BT was the unchallenged leader.

The financial perspective of Aras & Crowther with respect to Governance and

Sustainability is indeed present and leading in BT. The financial and following

economical crisis forced BT to slow down programmes, postpone new programs

start-up and cut costs significantly. (Very) ambitious CO2 reduction and energy

saving goals were pushed-out in time. The last 2 years this has resulted in losing the

global lead to Telefonica and BT BNL being challenged by KPN. Even though

financial commitment is more balanced towards pension liabilities and share holders

BT invests vast amounts in greening data centers globally, green-IT and professional

sustainability services. BT‟s 10/11 cash flow will approximately be 1.7Bn £.

BT‟s employees are consciously aware of sustainability issues and are driving

greening of IT and energy reduction fulfilling Kuo, Geoffrey & Dick‟s requirements for

making the difference in Green-IT. The extent of adoption of Green-IT, following

Molla‟s Green-IT enterprise‟s ability definition, is applicable to BT‟s ability to adopt

and drive sustainability practises. With respect to Green-IT and Governance, Molla‟s

Organisational Motivations for Green IT, there is room and need for a Business

Consultant Sustainability Practises advising both BNL senior management as well as

(prospective) customers on CSR opportunities translating propositions in actual

reduction (cost) and generating new business.

3.4.1 A maturity assessment

BT is a complex organisation with many stakeholders, legacy systems, procedures

and reporting mechanisms not to mention the (Ofcom) regulation pressures. With

respect to the “Sustainability Promise reporting” and measuring progress against the

competition there is Maturity Level dashboard developed by Eric G. Olson, IBM.

I recommend that for further BT internal research on the subject the above model is

examined and tested. Is can be used as a dashboard filling the gap between

awareness and action and as a means of reporting.




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APPENDIX I, References

Watson R.T. et al. Department of MIS University of Georgia Altanta U.S.A. “IS and

Environmentally Sustainable Development: Energy Informatics and New Directions

for the IS Community” MIS Quarterly vol. 34 No. 1, pp 23-38/March 2010.

Eward T. Chen U. University of Massachusetts U.S.A. “Enhancing corporate

environmental management with green IT and Virtualization” Northeast Decision

Sciences Institute Proceedings, pp230-235/March2010.

Molla A. Et al. RMIT University “An International Comparison of Green IT Diffusion”

International Journal of e-Business Management, vol. 3, no. 2, pp 3-23/2009

Porter M. Kramer M.R. Harvard Business University. “ Strategy & Society: The Link

Between Competitive Advantage and Corporate Social Responsibility” Harvard

Business Review, 17 pages/December 2006.

Lozenz M. Hilty L.M. Ruddy T.F. Empa, Swiss Federal Laboratories for Materials

Testing and Research. “Sustainable Development and ICT Interpreted in a Natural

Science Context” Information Communication & Society, February 2010

Olson E.G. Management Consultant, Strategy and Change Practice, IBM Global

Business Services. “ Creating an Enterprise-level „green‟ strategy” Journal of

Business Strategy vol. 29 no. 2, pp22-30/2008

Vykoukal J. Goethe University, Frankfurt Germany. “Grid Technology as Green IT

Strategy?: Empirical Results from the Financial Services Industry” 18th European

Conference on Information Systems. 2010

“Green IT hits the CIO radar” Datamonitor/April 2008

Aras G. Crowther D. Yildiz Technical University Istanbul & Leicester Business

School, De Monfort University UK “Governance and sustainability: An investigation

into the relationship between corporate governance and corporate sustainability”

Management Decision, vol. 46, no. 2/2008

Kuo B.N. Dick G.N. University of NSW Sydney Australia “ The Greening of

Organisation IT” What makes a Difference?” Australian Journal of Information

Systems, vol. 16, no. 2/2009

Xing R. Wang J. Chen Q. Montclair State University “The Contemporary IT

Transformations” Operation Research and Management Information Systems/xxxx

Molla A. School of Business Information Technology RMIT Univesity “The Extent of

Green IT Adoption and its Driving and Inhibiting factors: An Exploratory Study”

Journal of Information Science and Technology/2009




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APPENDIX II, Risk Assessments




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APPENDIX III, CSR KPI’s

BT Group Corporate Social Responsibility Key Performance Indicators




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business and it, does bt deliver on it's sustainability promise

Business

governance sustainability

sustainability promise

csr strategy

bt group practices

discussion bt

ownership of governance

competitive advantage

mba business