Despite the down economy, A new study by Frost & Sullivan indicates that reveals that companies in the ICT sector have actually paying more attention to environmental initiatives -- to save cost and improve competitive differentiation as well as enforce brand loyalty. However, given the tighter budgets and higher stakeholder expectations, such initiatives need to demonstrate a positive ROI.
In its third annual edition, Frost & Sullivan's study "Sustainability in Telecoms: Return on Environmental Investments," focuses on a selection of companies that have adopted a longer term, measurable and sustainable way of doing business. This study identified further best practices and discussed measures for returns on eco-investments.
While the first section of this study profiles certain service providers (British Telecom, France Telecom, Telefonica and Swisscom) and vendors (Alcatel-Lucent, IBM, NSN, Ericsson and Huawei) based on their notable efforts in the sustainability space, the second section discusses positive versus negative environmental investments and reflects on the fraught notion of conflicting commercial versus environmental priorities.
Frost & Sullivan says it is encouraging that most of the companies that participated in the research have started to develop their own frameworks and even gone ahead to seek accreditation from various industry bodies. Unfortunately, none of the companies interviewed were willing to share the measurement models used.
"IBM seems to be the most advanced in its measurements of environmental investments while British Telecom should finalize its ROI models for a range of solutions in the run up to the 2012 Olympics," said Frost & Sullivan Principal Analyst Sharifah Amirah. "In the longer term, social and environmental investments will start to feature in a company's financial statements/audited reports, similar to the triple bottom line accounting approach."
However, even companies with very advanced environmental strategies are only just beginning to develop measurement frameworks for their green investment. The reasons behind this include the lack of standard measures, the difficulty in measuring non-tangible benefits, and the fact that eco investments tend to be perceived either as a marketing or corporate social responsibility (CSR) exercise.
Further, greater scrutiny over environmental investments does not necessarily suggest that companies will only invest in initiatives that demonstrate positive returns. Nonetheless, at the company level, greater commitment and concrete initiatives need to take place. Given the growing need to justify these investments, formal measurements too have to be designed, standardised and adopted.
"The amount of environmental investments in the ICT sector should at least double in the next 2-3 years," says Amirah. "Despite the lack of concrete frameworks at the 2009 Copenhagen summit, individual governments, stakeholder and consumer pressure will continue to drive businesses to adopt more sustainable operations."
In fact, a cross vertical enterprise survey conducted by Frost & Sullivan at the end of 2008 revealed that close to 600 business leaders expected to increase their environmental investments by 67 percent over 2009-2010. A majority of them saw it not only as an ethical obligation but also as being critical to growth.
by Mark Cox