Environmental sustainability objectives have rapidly become a top CEO priority.
Achieving these objectives requires a shared responsibility approach: responsible use by organizations, coupled with responsible provision by vendors. Linking these two fundamental contributors is the sourcing function.
Although the enterprise can act internally on sustainability, many are limited by their vendors’ priorities and capabilities to support decarbonization goals. By selecting sustainable vendors, products and services that align with the enterprise’s sustainability requirements, sourcing can have a material impact on environmental outcomes.
Information technology sourcing leaders cannot afford to be bystanders to environmental sustainability. Through the foreseeable future, IT will drive an increase in energy consumption, including extensive impact through generative AI. As IT sourcing enters an environmental revolution, sustainability must be embedded within the fabric of every IT sourcing decision. By setting clear yet demanding requirements, sourcing leaders can direct the IT industry along a sustainable trajectory by fully embedding and operationalizing sustainability in the decision-making process.
Mandate IT sourcing environmental sustainability assessments
The enterprise value equation will no longer be a simple combination of technology, cost and output but must include sustainability as a fourth vector of value optimization. Accordingly, evaluating environmental practices of technology and service providers is now an imperative.
Greenwashing is currently widespread. IT sourcing leaders must ask difficult questions and demand granularity from prospective vendors. For example, where cloud service providers’ data centers and digital infrastructure are renewably powered, organizations’ digital strategies can accelerate the transition to an environmentally sustainable economy. Software publishers must take responsibility for efficient design and asset utilization. Hardware vendors must be driven to produce equipment that is durable, repairable and upgradable, lengthening the product life cycle while actively participating and enabling the circular economy.
Incorporating a process of preselection dedicated to environmental sustainability will eliminate vendors and providers out of compliance with an organization’s standards. Criteria must be meaningful and aligned to beneficial outcomes, verified by independent experts or demonstrable results wherever possible. Greenhouse gas emissions and renewable energy are frequently the default focus of environmental sustainability. Yet asset utilization, energy efficiency, responsible water management and circularity each make significant contributions throughout the IT supply chain, and the relevant credentials of vendors also must be probed in the preselection process.
IT sourcing leaders must take on new responsibilities to demonstrate sustainable supply while gathering credible data and performance reporting to validate that vendors meet expectations. Partner with vendors and providers that build on a durable, circular and renewable model, exercising responsible consumption management practices. Each vendor’s execution across sustainability principles must be supported by trustworthy data and reporting that demonstrates performance and enables further reporting downstream through the chain of customers.
Prequalify vendors’ environmental sustainability credentials
Sourcing and comparing sustainability performance information for different solutions from publicly available information can be prohibitively difficult. While vendors may articulate audacious goals, representative action may be limited, and reports on progress are often incomplete, inconsistent and dominated by marketing phrases. Portions of required information may only be available through third-party sources, such as rating agencies or ecolabels. Still, such information may omit key insight into product carbon footprint, dematerialization and modularity.
Obtaining sufficient sustainability data with reasonable consistency depends on pursuing specific detail from vendors and providers. A practical approach is to transform the sourcing process by pursuing prospective vendors with a prequalification and down selection mechanism. A detailed questionnaire can help comprehensively evaluate environmental sustainability practices of prospective vendors. Questions should fit a limited range of potential responses, with specificity necessary to secure comparable and measurable responses.
Adapting the sourcing approach in this fashion will require that IT sourcing leaders have gathered stakeholder support from the onset to ensure aligned criteria across five key dimensions of environmental sustainability: governance, greenhouse gas emissions, energy (renewables and efficiency), responsible water consumption and management, and circularity.
Align your approach to gather the right level of detail for each scenario
Assessing each vendor’s maturity requires sophisticated data, which limits subjective interpretations. As outcomes of the assessment process, metrics and data should be measurable and comparable. It should include a relevant baseline year, the most recent reporting year’s progress and forecast performance levels.
Example metrics which should be incorporated include:
- Greenhouse gas emissions for scope 3, identifying all upstream and downstream components measured
- Greenhouse gas emissions scopes 1 and 2
- Energy efficiency, including power usage effectiveness (PUE)
- Renewable energy factor (REF)
- Water usage effectiveness (WUE)
- Electronics disposal efficiency (ERE)
Assessing the material impacts of each sourcing requirement against predefined tiers or technology verticals may help categorize requirements and apply a flexible framework.
High-impact scenarios — where technology is adopted at scale or solutions are sourced — have a broad range of facets that would warrant a comprehensive questionnaire. Lower-volume requirements or those with limited, temporary or niche usage may utilize an abridged question set. Similarly, the comprehensive questionnaire may not be applicable to some categories. For example, a custom subset of questions oriented to data centers would be out of scope for sourcing laptops.
The prequalification questionnaire in either core, custom or comprehensive form should represent a key bridge across which only vendors with required credentials may pass. Once prospective vendors have completed the questionnaire, those meeting the minimum required standards may progress to the following sourcing stages, which assess the dimensions of utility through technical efficacy, cost and value. Retain questionnaire responses to help secure required commitments by the vendor during the contracting phase.
Sustainability is a shared responsibility. While the organization collectively takes responsibility for internal sustainable consumption of IT resources, IT suppliers’ role in a sustainable future is significant and must be incorporated in the selection process. By embedding environmental sustainability in decision-making, IT sourcing can set the organization on a path to sustainability from procurement through contracting and vendor performance management.
Stephen White is a VP analyst at Gartner Inc. focusing on the software industry, including environmental sourcing, strategic software reseller relationships and selection, software asset management and FinOps managed services and licensing models. He wrote this article for SiliconANGLE. Gartner analysts will provide additional analysis on sustainability and IT sourcing at Gartner IT Infrastructure, Operations, & Cloud Strategies Conference taking place Dec. 5-7 in Las Vegas.
Images: geralt/Pixabay, Gartner
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