The Evolving Science of Managing for Sustainability: Using ICT to Optimize Environmental and Economic Outcomes

For households, businesses, and public-sector organizations of all types, the implications of managing energy, greenhouse gas emissions, and social responsibility are significant. First, there is the moral and regulatory imperative to operate in an environmentally responsible manner. Second, there are dramatic cost savings to be gained by reducing resource consumption and waste.

And third, there are pressures from suppliers, customers, communities, and other stakeholders that place more and more importance on “green” practices. In a contentious global debate full of finger-pointing, there seems to be consensus on only one key point: managing for sustainability is an important issue that requires action now, even if the world economy is in upheaval. This chapter discusses the role of information and communication technologies (ICT) in driving sustainability efforts—for measuring the impacts of organizations’ activities, reducing negative impacts, optimizing outcomes, and extending visibility deeper into an organization and across the greater value chain.

The good news is that existing analytic, performance management, and activity-based costing methodologies, which have already proven effective for other business problems, can bring new levels of intelligence to sustainability issues as well. Financial and operational leaders would do well to adopt and adapt best practices that are readily available with today’s technologies.

This chapter presents current research that highlights the challenges and opportunities for those organizations undertaking a business strategy that requires careful management of greenhouse gas emissions, followed by a discussion on the current adoption of sustainability practices worldwide and how ICT enables organizations to be effective at each stage of the maturity curve.

Emerging sustainable business priorities In spite of current economic conditions, organizations have not curtailed their emphasis on sustainability initiatives, according to research, sponsored by SAS, conducted by the MIT Sloan Management Review (MIT SMR) and published by the Massachusetts Institute of Technology (MIT) in collaboration with the Boston Consulting Group.1 In fact, many organizations have accelerated their efforts as they seek the cost and efficiency improvements that can be gained in the process. Fewer than 25 percent of respondents said their organizations had decreased commitment to sustainability during the downturn (see Figure 1).

The business case goes far beyond regulatory compliance and corporate conscience. Sustainable business practices pay off in financial and brand benefits.3 For organizations that find the “green sweet spot,” the results speak for themselves—and pay for themselves.

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For example, GE announced last year that its ecomagination program to reduce environmental impact generated a US$17 billion revenue stream and reduced costs by more than US$100 million dollars since 2005.4 The US Army has said that 80 percent of its construction meets Leadership in Energy and Environmental Design (LEED) standards, which has reduced energy costs by 8 percent.5 For an example from another industry, BMW took the stance that it is responsible for its cars’ environmental impact throughout the life cycle, from cradle to grave.6 As a result, the auto maker is designing cars around recyclable components.At the end of the car’s service life, it doesn’t go into a trash heap. It goes back to BMW, and they recycle the parts.The company recovers and reuses valuable assets in the process of being environmentally responsible.

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