Businesses realise value of going green

Just about everyone is going green. And with financial services IT at the forefront of emerging trends, current ethical working practices within the sector are set to define technology’s role as either culprit or saviour of the green generation.

Working practices established with environmental factors in mind have been driven by the October 2006 Stern Report into the economic effects of climate change and The European Union Emissions Trading Scheme (ETS) that became effective in 2005 – a precursor of the global trading scheme scheduled to start in 2008.

Under the ETS, firms are obliged to match their greenhouse gas emissions with equal volumes of emission allowances under a system of carbon trading. Technology will play an increasingly important role in the tracking of carbon credits, says Gartner analyst Steve Prentice.

‘Carbon credits need to be monitored and essentially it is like putting in another accounting level – it is going to be like introducing value added tax all over again,’ he says.

Investment in IT is more relevant for financial services than any other sector, says Prentice. ‘The financial services sector has always been a very heavy IT-using sector. Most retail banking services are essentially provided electronically and become commodities in a competitive market.’

It is this competitive market that has cottoned on to the business case for appearing to be green, according to Prentice.

‘Visible symbols of greenness are now crucial marketing tools, probably more significant than actually being green,’ he says.

‘Customers make emotional choices, so it will take longer for business decisions on the investment side to be affected.’

Amid all the marketing messages, Prentice asks if businesses, such as HSBC which claims to be carbon neutral, can ever really track the carbon usage of all their suppliers and partners.

‘I do not know any firms that are even able to track their own carbon usage, let alone their suppliers’, so the claims and pledges about being carbon neutral are interesting to say the least,’ he says.

Leaving aside the debate on whether carbon neutrality is actually ever achievable, HSBC group chief information officer Ken Harvey says the bank has been making IT decisions based on its pledge to be carbon neutral for years.

‘IT is obviously the largest consumer of energy and so we have been engineering our buildings to be more energy efficient,’ he says. ‘Solar power and low heat absorbing glass are just simple things we can do.’

Harvey says the firm was ahead of the green computing curve by procuring energy efficient machines when they were more expensive and energy was cheaper.

‘The bank was focusing on environmentally aware strategies before I even joined five years ago,’ he says.

According to Harvey, the biggest single strategy for energy efficiency is the reduction of paper use. For example, HSBC’s business is completed via email and there are only two shared printers on an entire floor. But Harvey believes a drive to get customers to accept forgoing paper statements is where the biggest benefits lie.

He says consumer take-up of electronic statement delivery ranges from eight to 18 per cent, and is far too low.

‘The energy and environmental cost involved in printing and delivering statements is a huge deal,’ says Harvey.

‘We make years worth of statements available to customers online in real time so it is actually far better than the thing we mail out.’

It is not just the customer-facing high-street banks that are integrating environmental concerns into their business strategies. Last July, Lloyds TSB Financial Markets opened its new London building at 10 Gresham Street, which is the first building built to new environmental specifications of insulation and energy use.

Financial Markets IT director Tom Walker delivered the project on time and on budget, just 13 months after signing the lease. He says it is one of the biggest achievements of his 30-year professional life to-date.

‘It is the environmentally conscious IT innovation we have put into 10 Gresham, coupled with going live in July 2006 just 13 months after signing the lease, which is the real achievement,’ he says.

Whereas Walker probably would not have thought about energy consumption a few years ago, it has now become a limiting factor. ‘You cannot fill a rack with servers now, we are only filling them two-thirds full – which is about six or seven kilowatts – because that is all we can traditionally air cool,’ he says.

At 10 Gresham Street, the data centre room is built on a traditional air cooling system, but Walker has made provision for water cooling in case it needs to pack the cabinets more densely – meaning the building had to have a pre-strengthened floor and specialist plumbing system.

‘We are water cooling ready if we need to, but we have not needed to up our capacity so far – everyone is facing the same problem,’ he says.

According to the International Energy Agency, 50 per cent of the available power in a data centre goes to air-cooling, and there are no industry-wide standards on energy use in data centres

As well as watching energy consumption in the data centre closely, Walker is looking at cutting energy use in other areas of the building. ‘Most dealing rooms at midnight are lit up, whereas ours shuts off at night – we automatically shut down the new trading floor at night,’ he says. Each 25-watt screen is now switched off at least 50 per cent of the week.

In an additional energy saving strategy, the new trading floor has been built around a system of 255 blade workstations. ‘By taking the technology out of the dealing room and putting it into a computer room, with racks, it is a more efficient model because heat and cooling is concentrated in one place,’ says Walker.

Financial services firms can also encourage customers to help in efforts to become green, says Arthur Amos, head of IT planning and governance at Nationwide.

‘Our members can do their bit too by choosing to cancel their paper statements and view them online instead,’ he says.

Holders of Nationwide’s FlexAccount and card-based savings accounts have been able to suppress their statements from June 2005, and this option is now available to all Nationwide credit card customers. Since the initiative was launched, more than 200,000 customers have opted to view their statements online, helping the company to save a huge amount of paper each year.

Of the paper the organisation does use, 92 per cent comes from recycled or renewable sources. The programme is just one example of how environmental concerns have become part of the organisation’s business strategy.

‘Improving energy efficiency by reducing wastage creates savings, which means less carbon dioxide going into the atmosphere and less cost going onto the bottom line,’ says Amos.

Nationwide is continuing to find ways to improve the energy efficiency of its buildings and equipment. Its headquarters, Nationwide House, has lighting controls installed throughout the building: controls that reduce total electricity consumption by more than 15 per cent.

‘The equipment for the control of heating and cooling in our branches is also being improved,’ says Amos. ‘And our computing equipment is being made more energy efficient by exploiting new low-power technologies and enabling power saving features.’

The company, meanwhile, has started to purchase energy from renewable energy sources – such as wind, new hydroelectric and biomass – causing its carbon dioxide emissions from energy use to decrease by more than 85 per cent, to fewer than 5,000 tonnes. But saving energy is just part of Nationwide’s green strategy. And Amos says green concerns have become part of the decision-making process in the procurement of new hardware.

‘IT hardware purchases are closely evaluated, taking into account the whole life costs, ensuring equipment is deployed to meet the needs of users efficiently,’ says Amos. ‘We take all factors into consideration when buying IT hardware, such as air conditioning, power consumption, usage patterns and unit life.’

Nationwide recently selected AMD processor-based desktop units over Intel, because of their lower unit power consumption when using standard office applications. ‘We are exploring ways to maximise PC hibernation periods,’ says Amos.

The company has also largely eliminated CRT screens throughout the firm and replaced them with LCD screens, keeping large-size displays – either LCD, data projector and plasma – to a minimum.

All energy-saving strategies cut costs, which is something Chris Smith, consultant for industry working group The Corporate IT Forum, says has sparked interest.

‘The realisation that going green can boost productivity has taken the green issue right into the boardroom,’ he says.

‘Our members are telling us that there is a business case for going green, so it is not just something that is nice to have, it has become a business issue.’

Smith is keen to point out that environmental concerns are not all doom and gloom and actually represent an opportunity for IT to become more visible. There is, he says, a role for IT in helping to reduce greenhouse gases through hardware hibernation, monitoring energy use, asset management and better control of heating systems.

‘Adopting collaborative working technologies can actually help improve productivity and cut travel costs,’ says Smith.

‘IT departments are examining paper use, data warehouse energy consumption, and cutting down travel by exploring collaborative working technologies like instant messaging – all these technologies cut costs and help the environment. It is a win-win situation.’

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