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Let’s talk about climate change and the IT channel supply chain

Let’s talk about climate change and the IT channel supply chain

Can partners put a price on carbon consciousness?

Credit: Unsplash

The 2021 United Nations Climate Change Conference – known as COP26 – kicked off on 31 October, bringing to the fore, yet again, the sometimes-thorny topic of climate change mitigation and the role that curbing carbon emissions can play in it.

One of the big focus areas for COP26 was to underscore the Paris Agreement, the legally binding international treaty on climate change that was signed in 2015, and review progress made thus far by signatories to the accords.  

At the core of the Paris Agreement was the goal to limit global warming to well below 2 degrees Celsius, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.  

Countries that are signatories to the Agreement are expected to reach a global peak of greenhouse gas emissions as soon as possible to achieve a climate neutral world by mid-century.

COP26, held in Glasgow, has certainly made the issue of emissions reduction seem more prominent and urgent than it usually is – and it’s almost always bubbling away in the public discourse.  

And major players in the global tech industry appear to be responding in droves.  

The two-week event has arrived amid a year in which an increasing legion of prominent IT firms have either ramped up, or pledged, their commitment to net zero, also known as carbon neutrality – a state in which carbon dioxide emissions are either balanced by their removal from the atmosphere or are simply not produced in the first place.  

In September, for example, cloud customer relationship management (CRM) software vendor Salesforce claimed that it had become a net zero company across its entire value chain and had achieved 100 per cent renewable energy for its operations.

Salesforce also unveiled something called ‘Sustainability Cloud 2.0,’ an offering designed to accelerate its customers’ path to net zero by giving organisations the ability to track and reduce their carbon emissions and become a sustainable business.

“Climate change is one of the most pressing crises we face as a planet and each one of us has a responsibility to help,” Salesforce chair and CEO Marc Benioff said at the time. “I'm proud that Salesforce is one of the few companies to have achieved net zero and 100 per cent renewable energy, but we can't stop until we embrace every solution and get every business on board.  

“Together, we can sequester 100 gigatons of carbon by restoring, conserving or growing 1 trillion trees; energise an ecopreneur revolution to develop innovative climate solutions and accelerate the Fortune 1000 to reach net zero,” he added.

The move saw Salesforce join a chorus of tech players, particularly large global cloud and software vendors, clamouring to outdo each other in their race to reach net zero.

The energy production parlay comes as many of the world’s largest cloud services vendors are getting in on the action. Indeed, some have been on the path to net zero for years, while others claim to have already contributed towards the change.

In 2019, Amazon Web Services (AWS) parent Amazon, together with Global Optimism, co-founded The Climate Pledge, a commitment to be net zero carbon by 2040. Signatories to The Climate Pledge agree to measure and report greenhouse gas emissions on a regular basis and implement decarbonisation strategies in line with the Paris Agreement through business changes and innovations.  

AWS alone claims to be making progress towards powering its operations with 100 per cent renewable energy by 2025.

On 20 September, a day before Salesforce announced its net zero milestone, Amazon announced that 86 new signatories had joined The Climate Pledge, including HP and Salesforce, bringing the total to over 200.  

Microsoft has also been focusing on the issue for years and, in early 2020, made a pledge to be carbon negative by 2030. By 2050, Microsoft hopes to remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.

“We recognise that progress requires not just a bold goal but a detailed plan,” Microsoft president and vice chair Brad Smith said in a blog post published on 16 January last year. 

“We are launching today an aggressive program to cut our carbon emissions by more than half by 2030, both for our direct emissions and for our entire supply and value chain.  

“We will fund this in part by expanding our internal carbon fee, in place since 2012 and increased last year, to start charging not only our direct emissions, but those from our supply and value chains,” he said.

Now, Microsoft is working to support its customers on the path to net zero, with the vendor announcing in late October this year – just in time for COP26 – the public preview of its Microsoft Cloud for Sustainability offering, aimed at helping organisations to effectively record, report and reduce their carbon emissions.

And Microsoft isn’t the only vendor extending its climate initiatives to customers, with a number of cloud providers and software-as-a-service (SaaS) vendors making similar moves.

Indeed, it seems that pledges of net zero and overt climate-related initiatives have been rife primarily among those vendors that sell cloud services or supply much of their wares via the cloud.  

Certainly, just about all of the world’s major hyperscalers are getting in on the action, meaning that any other SaaS vendors that tap into those hyperscalers’ infrastructure can draw upon their upstream cloud suppliers’ carbon emissions reduction efforts in order to make their own offerings a little cleaner.

But it’s not just cloud providers that are pushing the climate agenda, plenty of hardware vendors are getting in on the action as well.  

Dell Technologies, for example, has made a commitment to reach net zero greenhouse gas emissions across Scopes 1, 2 and 3, as laid out by the Greenhouse Gas Protocol (GHG) – a widely used greenhouse gas accounting standard – by 2050.

Scope 1 emissions, as defined by the GHG, are direct greenhouse emissions that occur from sources that are controlled or owned by an organisation.  

Scope 2, meanwhile, refers to indirect emissions associated with the purchase of electricity, steam, heat or cooling, according to definitions outlined by the United States Environmental Protection Agency.  

Scope 3 is a somewhat trickier proposition, relating to emissions that are the result of activities from assets not owned or controlled by a reporting organisation but which can indirectly impact the value chain.

“Operational GHG emissions are only part of the story,” Dell claimed in a statement on its corporate website. “The largest parts of Dell Technologies’ carbon footprint occur upstream in our supply chain and downstream as our customers use our products.

“So, we are partnering with our direct material suppliers to meet a greenhouse gas emissions reduction target of 60 per cent per unit revenue by 2030,” the vendor noted.

And herein lies the crunch for many players in the technology industry: it’s all about emissions occurring up the supply chain.

The same applies to consumers of technology, particularly enterprises, many of which are adopting their own climate goals and carbon emissions pledges – this is especially true at the big end of town and is often incorporated into organisations’ broader environmental, social and governance (ESG) policies.

So, is this prioritisation of environmentally progressive policies affecting the decisions that enterprises make about which IT vendors and partners they engage for technology products and services?

Well, yes and no.  

Counting carbon as a competitive differentiator?

Given that the upstream supply chain seems to account for a fair proportion of an organisation’s carbon emissions footprint, it would make sense to think that the emissions footprint of IT providers and their vendor partners would be a major factor when companies decide which partners and vendors to engage.  

Anecdotally, however, this doesn’t seem to be the case – at least not in the cloud software and cloud services game. Cloud and SaaS-focused channel players on the ground in the region suggest that such conversations rarely come up, if at all.  

Which is strange, because it is software and cloud services vendors that seem to be making the biggest show and dance about their pledges of net zero and other environmental initiatives.  

Perhaps this has something to do with where their investment dollars are coming from rather than broad stroke trends in demand from customers.

Read more on the next page...

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Tags MicrosoftGartnerSupply Chainclimate changeNeil McMurchy

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