IT Services Firms Are Buying Their Green Credentials

IT services companies are buying green energy certificates. Several are increasing their energy use, but are claiming to reduce carbon emissions by using renewable energy credits, according to a new report.

Although IT services companies are increasingly reporting their carbon footprint, they are doing it in very different ways, and it is still difficult to compare how they are doing it, according to a report from environmental analyst firm Verdantix. The report relies on descriptions of the strategy of firms including IBM, Hitachi, HP, Logica and ten others – and comes to the conclusion that many of them are buying credits rather than reducing their underlying energy use.

Green tariffs are a marketing expense

“Many firms in the sector consume more energy every year but claim to reduce their CO2 emissions by buying green tariff electricity or renewable energy certificates,” said Janet Lin, senior manager for Verdantix in New York. “This is a corporate marketing expense reminiscent of pre-recession corporate responsibility initiatives.”

Executives should be careful to aim for real business value, and not duck the issue of energy efficiency by throwing marketing money at the problem, the report suggests, but Verdantix is not criticising, said its director, David Metcalfe: “This is where the market is today,” he said. “Reporting is going well, and we need to move on to phase 2.”

The firms agree on the basics of reporting, said Metcalfe, including the use of financial control or operational control, and the standard GHG protocol. Ten of the firms have had their emissions reports audited, by a third party, he said.

All fourteen firms disclose Scope 1 and Scope 2 greenhouse gas data – the emissions they produce directly by burning carbon and indirectly by using electricity. Few of them report Scope 3 emissions which are produced by the supply chain, and other things such as business travel, but their reasoning here is due to the individual context of the companies, said Metcalfe.

“For a company like Accrenture, air travel may be 80 percent of its emissions,” he said, “While for IBM or Fujitsu, air travel may be insignificant.”  The report describes Fujitsu, Hitachi, HP and IBM as “carbon heavyweights” with big manufacturing divisions that dominate their emissions reporting.

Different countries’ regimes have an effect on carbon strategy, says Verantix. For example, in its home territory of France, Orange has little scope to switch to lower-carbon elecricity when nuclear-rich French electricity already has low carbon emssions.

Those headquartered in Britain, like BT and CapGemini, have an extra incentive to sustainability, the report says, as its “carbon policy agenda is more advanced than any other country in the world”.

Eight of the firms – BT, Fujitsu, HP, IBM,Orange, Accenture, Logica and Capgemini – report on 100 percent of their global emissions, but the others deivide them up by geographical location. Five more report on 75 percent of their emissions or more, but only one – CSC – reports data for less than fifty percent of its business.

Over-optimistic targets

Overall, some firms may be struggling to meet targets which were set in over-optimistic times before the recession.  “Many GHG targets were set in the pre-recession market without accurate data to validate commitments,” said Verdantix director David Metcalfe. “The carbon and energy management strategies of global IT services firms are at different stages of maturity.”

Firms also have vastly different targets, ranging from reductions of five percent to 100 percent of their emissions, over timescales from three to 22 years.  Fujitsu and Hitachi get kudos for using 1990 as their baseline, instead of a more recent year.

The Verdantix Carbon Strategy Benchmark compares Accenture, Atos Origin, BT Global Services, Capgemini, CSC, Fujitsu Services, Hitachi, HP, IBM, Infosys, Logica, Orange Business Services, TCS and Wipro.