Climate change has emerged as one of the biggest problems that humanity faces today. Taking into account the severity of the challenge, Singapore recently declared climate change a global emergency and called upon the private sector and civil society to take stronger action. It’s also a local emergency for Singapore: According to Singapore’s National Climate Change Secretariat, “as a low-lying island, the rise in sea level poses the most immediate threat to Singapore”.
Singapore is not alone. Awareness is on the rise throughout Southeast Asia on addressing climate change, including in the manufacturing industry that can have a great impact.
How Singapore is reshaping the data centre for climate change
Singapore’s industries and academia are already active in responding to this threat. For example, ST Engineering Geo-Insights and the National University of Singapore’s Centre for Remote Imaging, Sensing, and Processing (NUS Crisp) are joining forces to research, develop, and commercialise advanced remote-sensing technologies and geospatial imagery analytics. These solutions can help in the monitoring of greenhouse gas emissions and the quality of coastal waters.
However, the overall discourse in the industry has been “on the impact of the energy reset/carbon tax for manufacturers and supply chain partners,” said Stephanie Krishnan, a research director for IDC Manufacturing Insights.
A good example of this impact at play is Singapore’s data centre moratorium, which is forcing many businesses to rethink their data infrastructure strategy, favouring solutions that are more compact and energy-efficient in a bid to reduce energy consumption and data centre sprawl, said Matthew Oostveen, Asia-Pacific CTO at data centre hardware vendor Pure Storage.
“This moratorium, along with other elements of the Singapore Green Plan 2030, will drive a wave of technology investments as businesses move away from legacy technologies towards newer solutions that help them manage their energy and resources better,” he said. “Businesses need to note that many of these investments must focus on long-term objectives that not only meet new targets for carbon emissions or green building standards but can also cater to the future demand for computing power and data infrastructure that support the mass adoption of new technologies such as 5G and IoT [internet of things].”
Climate change, manufacturing, and supply chains in Southeast Asia
Beyond Singapore, governments, CIOs, and other tech leaders in the ASEAN region are responding to the challenges of climate change and what kind of technologies can help in this fight.
While broad national policies and targets around sustainability are already in place in several countries such as Thailand and Malaysia, their impact on IT strategies and investments still varies across the region, Oostveen said. “At the moment, having the right Infrastructure and talent still remain major concerns for businesses. However, conversations have already begun, and more enterprises are looking at adopting a greener digitalisation footprint as sustainability objectives become more aligned with business goals. For instance, Indonesia and Vietnam have both ventured into building their first green data centres, with more in the pipeline.”
For ASEAN manufacturers, IDC’s 2020 supply chain survey revealed that sustainability is the No. 2 focus area for risk mitigation in ASEAN supply chains, behind overall supply chain visibility. “This was further emphasized in our most recent COVID-19 impact survey, which indicated that 53% of companies overall are spending between 10% and 30% on sustainable products and services related to IT,” Krishnan said.
IDC believes two perspectives are driving this trend: efficient resource usage that reduces costs for the business, and market pressure from suppliers, customers, and stakeholders.
Data and analytics could help organisations address the sustainability question. “The focus on sustainability across manufacturing businesses is based on having data across all processes. And when organizations have data, they can manage the processes,” Krishnan said. “This results in the ability to manage efficiency programmes that ensure effective resource usage and sustainable outcomes.”
She cited the example of IoT analytics and intelligence, technologies coming to the fore both in energy use in the organization and driving supply chain efficiencies. “Market pressure from stakeholders is resulting in proactive programmes that address remanufacturing, reconditioning, and product recycling, requiring sustainability to be built into product design. The visibility into supplier ecosystems is necessary to assure that environmental, social, and governance policies are enforced, which is essential to ensure future business,” Krishnan said.
But the commitment is often lacking. DD Mishra, a senior research director at Gartner, says his firm’s clients often discuss profitability and revenue targets without serious focus on sustainability. “The focus is often to create short-term shareholder value,” he said. “In addition, many organizations have CEOs who have commitment toward sustainability goals, but the same levels of commitment does not percolate down. We also do not see a significant increase in sustainability commitment as a business priority.”
Still, like IDC has found, Gartner’s research has indicated that leading supply chains are increasingly pursuing the ‘circular economy’—where reuse, recycling, and reduction are the norm—to reduce environmental impacts, improve customer engagement, and build resilience.
In Gartner’s 2020 CEO Survey, 50% of the respondents said that climate change mitigation had a significant impact on their organizations, while only 5% considered it a top-three business priority. However, when asked for their top five business priorities, open and unprompted, 11% of CEOs mentioned something to do with environmental sustainability (a sharp rise from 2% in 2019). “It only indicates the exponential rise of importance of sustainability as an important business priority, mostly driven by CEOs,” Mishra said.
What CIOs can do to improve sustainability
Southeast Asian CIOs and CTOs can support business sustainability efforts in several ways, IDC’s Krishnan said. “The first is to directly assess IT infrastructure impact on sustainability and drive programmes to reduce that impact,” she said. “CIOs and CTOs can get commercial support for these initiatives by linking benefits to potential cost, workload, and internal resource optimization. The second is through supporting line of business outcomes and accelerating IT programmes that will improve resource and energy usage and enable processes that will assist with capabilities such as closed-loop product design, efficient reverse logistics, and recycling.”
From Gartner’s point of view, the climate change crisis and the ongoing sustainability debate will create a second major wave of business transformation over the next decade. It will be forced by consumers with a new set of expectations of the businesses they transact with. Therefore, “CIOs should align with the overall organisational mandate on sustainability goals and start working for climate change,” said Mishra. “CIOs should also look for executive sponsorship for driving sustainability,” Mishra said. “It is more of an opportunity, and CIOs can either align themselves to organisational goals or create their own goal post.”
Here are some action points that Gartner recommends CIOs consider:
- Choose suppliers that have strong sustainability commitments. Make sustainability an evaluation criterion.
- Carefully consider what can be reused and what needs to be disposed of.
- Reduce unnecessary buying decisions by optimizing your current environment.
- Identify carbon-intensive categories and drive programs to reduce the organisation’s footprint.
- Create reporting and governance around sustainability.
- Make sustainability part of every decision-making process.
- Start new initiatives around sustainability; for example, energy saving through better data centre Power Usage Effectiveness (PUE)
- Conduct training and awareness sessions. Link rewards for driving sustainability.
- Create metrics for measurement in scorecards around sustainability.
- Work with your legal team to change contracts to include sustainability-related commitments and build penalties for suppliers for not meeting them.
- Conduct sustainability audits and maturity assessment from time to time.
“As catalysts of change, CIOs and CTOs need to rethink existing systems and processes to achieve the immediate measurable improvements needed to address this urgent issue. Two overarching goals should be to optimise and reduce energy consumption and to incorporate cleaner sources of electricity in their energy mix,” said Pure Storage’s Oostveen.