CIOs get serious about sustainability - CIO

Momentum had already been building around environmental issues and corporate sustainability efforts, but over the past few years — fueled by pandemic, global conflict, and a greater understanding of the impact of climate change — these initiatives have kicked into high gear. Once considered nice to have, today 90% of companies are adopting ESG solutions, marking a significant increase in corporate interest in environmental, social, and governance concerns, according to a 2022 global study by Capital Group.

“Sustainability has always been important,” says Brian Kirkland, CIO at Choice Hotels International. “The thing that has recently changed is the level of awareness environmental, social, and governance topics have received with everything going on in our world.”

At the heart of these efforts are data and the technologies capable of analyzing large volumes of information to empower companies to understand and better manage their impact. As a result, CIOs are emerging as key figures in sustainability and ESG initiatives.

“Impactful ESG programs require collaboration among both IT and the business, much like any other successful solution,” says Andrew Santacroce, vice president and deputy CIO at Tokio Marine North America Services. “As we look at ESG opportunities, technology leaders may be best positioned to drive the efforts.”

Notably, these IT chiefs aren’t waiting to be recruited to the sustainability front by their bosses or boards — or for readymade solutions to their organization’s sustainability challenges. These are largely self-styled sustainability leaders, sometime banding together, to work out new ways to advance sustainability within the IT function and throughout their businesses.

“We believe that sustainability has been ‘someone else’s problem’ for too long, and it is time for IT leaders to stand together and drive change,” Kirkland says. Earlier this year, for example, a veritable who’s who of CIOs joined new nonprofit SustainableIT.org to work together on defining best practices and standard metrics to increase transparency and progress around sustainability programs. “[We’re] looking to set the standard and north star for IT leaders to follow on their ESG efforts,” says Kirkland, a founding board member.

IT leaders, whether working within SustainableIT.org or beyond, find they share common challenges in advancing their sustainability agendas and recognize clear business value in investing in solutions. To a person, they’re more likely to tell you not about their sustainability problems but about the opportunities they envision for their IT functions, companies, industries, and larger communities.

“When I’ve shared what we’re doing [with other IT leaders], it’s amazing how much positive feedback I’ve gotten — ‘Tell me more,’ ‘How can I get involved,’” says Bryan Muehlberger, CIO at Vuori Clothing, who is also on the board of SustainableIT.org. “There’s an increased appetite for information around sustainability. CIOs see it as an opportunity to drive change.”

Sustainability: A spectrum of opportunity

ESG has been a strategic priority at Morgan Stanley for more than a decade, having been one of the first Wall Street banks to launch a global sustainable finance group in 2009. In recent years, however, urgency around sustainability has increased, says Katherine Wetmur CIO, Technology Risk, Firm Resilience, Cybersecurity, at Morgan Stanley, “especially with weather events across the globe driving home the daunting impact of climate change.”

There are always key variables IT must consider, whether it’s evaluating a modernization effort or delivering a new business system or feature, and sustainability is now a key variable. “We’re seeing more and more how we as CIOs can bring that variable to light,” says Wetmur. “The role I have is the ability to give people the data and information [to consider that variable].”

The opportunities for CIOs to improve sustainability within IT and throughout an enterprise are wide-ranging. That’s “mainly because the CIO has so much control over the technology that underpins sustainability,” says Vuori’s Muehlberger. IT can impact sustainability by how developers write code for an ecommerce platform or how IT operations gathers data more efficiently rather than duplicating it. It also has a foundational role to play in companywide sustainability efforts, from raw materials sourcing to last-mile delivery.

“Having a tech leader that understands all those facets is valuable,” Muehlberger says. At Vuori, sustainability is key in the decision-making calculus when procuring technology and building software. The IT group is also building the infrastructure to collect, analyze, and share data in support of the apparel maker’s sustainability goals around the raw materials it uses, reduction of waste, offsetting 100% of its carbon footprint, social responsibility, and community leadership.

Choice Hotel’s Kirkland likely speaks for most CIOs when he says the biggest challenge that he faces in the sustainability area is time. “There’s not enough time in the day to do everything we want to do,” Kirkland says, “and if you believe the data around ESG happening in companies around the globe, we’re running out of time to reverse our carbon footprint.”

But rather than being paralyzed by the pressure, IT leaders are leveraging the urgency to make progress. Coming together to develop some common frameworks and metrics will help. Just as importantly, says Wetmur, is “picking some things to focus on.”

Let sustainability begin with IT

One of the easiest — and most impactful — areas to begin to address sustainability is IT itself.

“Within my role as CIO, I can have a direct and measurable impact within all technology for the entire enterprise,” says Kirkland. “What we control in IT was where we started because it is important to get that right. It is a huge part of Choice’s impact on sustainability.”

Choice Hotels was the first hotel company to go all in on public cloud, shifting more than 1,000 software applications to Amazon Web Services over a three-year period. “Committing to going all-in with the cloud was an easy decision to make for many reasons,” Kirkland says. “Everything we do in technology needs to tie back to business value; that is why we exist. That decision has had positive impact on business outcomes and sustainability at the same time.”

Running in the cloud results in higher server utilization, which means Choice can run three times the workload with three times more carbon emissions avoidance, according to Kirkland before even calculating the increased energy efficiency of public cloud data centers versus on-premises. “And it’s not just cost avoidance and efficiency,” adds Kirkland. “Running in the cloud has provided countless benefits to the business, especially during the pandemic where reaction speed and ability to pivot quickly were so critical.”

Vuori Clothing, a company some 75 years younger than Choice Hotels, heavily invested in cloud from the start with just two on-premises servers to support tasks such as printing. “Everything else is SaaS and PaaS and IaaS,” says Muehlberger. “As we build APIs and connectivity layers, we’re moving toward a serverless environment so we won’t be wasting any CPUs or environmental resources until they’re actually needed.”

Within most IT functions, cloud migration is often the first order of sustainability business. But infrastructure is only part of the equation when it comes to a true calculation of technology’s carbon footprint. “The question about ‘what else?’ is where it gets more complicated,” says Kirkland who plans to close the company’s final data center in 2023. The focus is shifting to streamlining testing data environments and maximining engineering efficiency while minimizing infrastructure costs. That’s a big area of focus for the CIOs involved in SustainableIT.org.

At Morgan Stanley, IT has focused heavily on driving efficiencies in the data center, re-evaluating refresh rates through an environmental impact lens. In some cases, it may make sense to modernize sooner to take advantage of new equipment offering more computing and a smaller carbon footprint.

“It’s easier to measure the impact of a data center and compute power,” says Wetmur. “The next thing to consider is how do you measure the impact of running something. How do you measure the carbon impact further down in the organization and get to a stage where you understand the impact of what you’re building.”

One of Wetmur’s biggest challenges is reducing costs while delivering new, more agile solutions for Morgan Stanley’s business clients. Being able to integrate sustainable development into IT culture will address that challenge as well. “This will help us address the carbon footprint of our applications as part of the software development lifecycle, improve measurability and transparency, reduce unnecessary or excess cycles, and better leverage our hardware,” says Wetmur. “We’re constantly looking for new solutions and learning more sustainable ways to manage those applications, looking at them from a cost to compute and environmental standpoint.”

Data drives business sustainability progress

Parallel to their internal sustainability efforts, CIOs are working hand-and-hand throughout the business to advance enterprise sustainability goals. Investors, regulators, customers, and supply chain partners are demanding greater transparency into climate and sustainability reporting and results. So, too, are business leaders. They are looking for data quality and accuracy to measure carbon footprint, supply chain optimization, and green revenue in real-time.

At Choice Hotels, the IT organization is partnering with a new vice president of ESG charged with spearheading efforts internally and with franchisees to manage the impact of more than 7,000 hotel properties around the world. “We’ve started with gathering and measuring the data,” says Kirkland.

The company is working with Schneider Electric to install monitors at all hotels to gather data from their utility providers and aggregate it into a dashboard. “Using that data, we can find opportunities to improve profitability for our hotels while at the same time improving sustainability,” says Kirkland. One hotel discovered abnormally high water consumption, ultimately traced back to a leaking pool to the tune of tens of thousands of dollars in lost profits and wasted water.

At Morgan Stanley, Wetmur’s IT organization works with the enterprise ESG function to ensure it has the data and applications necessary to achieve the firm’s sustainability goals. IT is also working more directly with Morgan Stanley’s global sustainable finance group, launching a global sustainable finance technology group that partners with business units to meet ESG goals from a technical perspective. They work closely with Morgan Stanley’s sustainable insights lab, which provides centralized ESG data and quantitative analysis. The aim is to use data to identify use cases; guide future decision-making and prototyping of sustainable solutions; and offer sustainability advisory services for application and product development. In addition, Morgan Stanley IT has begun working closely with the company’s corporate services group as it architects new buildings to ensure they are integrating sustainable solutions and technology into the company’s expansion efforts. 

One of the biggest challenges in sustainability is “defining the value of this work,” says Lesley Salmon, senior vice president and global CIO at Kellogg. “As an industry we know this needs to be done and it’s important that we show our shareholders how this investment will drive growth, not just mitigate risk.”

Data plays a leading role in that effort at the multinational food manufacturer. “Data management, automation, analytics is critical to reviewing our progress in ESG. As data is a key pillar in IT, we play a significant role in influencing what we can report and how we report it,” says Salmon.

Leveraging data for measuring and managing sustainability in the supply chain, however, can be challenging, Salmon says. Kellogg has committed to the EU’s Farm to Fork Strategy, which aims to accelerate the transition to a sustainable food system that has a neutral or positive environmental impact and reverses biodiversity loss while ensuring food security, affordability, and fair trade. “We have a complex supply chain and many farmers particularly smaller local farmers do not have access to technologies for us to truly utilize blockchain or APIs to track,” Salmon explains.

A sustainability platform for the future

Automating more of this work, however, is the way forward. “As you look toward the future, companies are going to start building APIs and exposing information about what they do so that others can consume it, analyze it, and share more broadly,” says Vuori Clothing’s Muehlberger. Part of the mission of SustainableIT.org is to build those frameworks that will define what data should be capture, how it should be captured, and standards for publishing and sharing it. “We want to build a standard and a playbook so CIOs don’t have to reinvent the wheel,” says Muehlberger.

At Vuori Clothing, where the mission is grounded in ethical manufacturing using sustainable materials, being able to automate more of the data collection from suppliers will streamline what is now a labor-intensive process, and it will help and deliver richer insights.

“From a materials acquisition standpoint, we’re already way ahead of any competitor in terms of what we’re doing with our mandates for suppliers,” says Muehlberger. “Automating the reporting and capture of that will enable us to report it on a more consistent basis versus just stating our policies and producing an annual report.” Instead of having suppliers fill out a form indicating how they’ve adhered to Vuori’s requirements, they would write that into exposable APIs so Vuori (or others) can then collect and use that data. Muehlberger envisions a time when he could do this with logistics partners and technology vendors providing carbon emissions data and other sustainability data in an automated, consumable way as well.

While sustainability is core to the mission at Vuori, “this is a problem everywhere, in one, way, shape, or form,” Muehlberger says, “How can we publish and showcase what we’re doing from a sustainability standpoint, whether it’s a central website or something more automatic and native. One of my goals is to see where we can push to create change in that regard.

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