Sustainability was a key theme during the recent Leasing Life Conference 2022 in Paris. We asked Charles Garity, Senior Vice-President, International Asset Manager of CSI Leasing, to offer the key points from his ESG presentation, entitled Lifecycle Management: Implementing Sustainability in Business.
Climate change is the theme of our times. In recent years, issues involving plastic waste, water conservation and threats to wildlife have hit the headlines with frequent regularity prompting individuals and companies to discuss how to make changes to improve our situation.
How do IT assets contribute to corporate emissions?
Business IT can be a significant part of an organisation’s environmental impact. However, investment in new technologies is crucial for a company to grow and remain agile in a modern, fast-paced environment. So how can businesses address both issues?
According to the Shift Project, digital technologies account for 3.7% of total global greenhouse emissions and this figure is expected to double by 2025. In addition, with hybrid working on the rise, business IT spending has become a significant contributor whose impact is only expected to increase.
Alongside the pressing challenge of reducing carbon emissions, IT also contributes to the generation of e-waste. In fact, according to the UN-supported Global E-waste Monitor, less than 20% of e-waste was properly recycled in 2020, meaning the majority of waste ended up in landfills, releasing harmful toxins into the land and atmosphere. E-waste is expected to reach a whopping 74 million metric tons by 2030.
Furthermore, today’s workloads, business requirements and security concerns are shortening technology replacement cycles. According to business intelligence provider IDC, a business’s average energy consumption increases by up to 60% after 3.5 years. Furthermore, compounding the problem, IT equipment loses efficiency after this period.
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Considering this new scenario, it is incumbent on businesses to evaluate how IT investments and disposal strategies can impact environmental, social, and governance (ESG) goals.
The key to investing in technology in a sustainable way is to replace the traditional linear approach of ‘acquire, use, and dispose’ with a circular approach to IT lifecycle management that maximises the value of resources and reduces e-waste.
IDC’s European Enterprise Infrastructure Survey 2021 has indicated that 64% of organisations are exploring new models, such as service or operational leasing, that allow them to dispose, renew and recycle existing infrastructure, thus entering circular economy principles.
Technology leasing is based on end-to-end asset lifecycle management, which is not only good for the environment but also makes business sense from a total cost of ownership and data security perspective.
In fact, leasing models enable companies to meet six UN Sustainable Development Goals.
Leasing models lead companies to consider the useful life of the asset. In contrast, cash purchase solutions tend to put depreciation before efficiency, leaving the company with ageing equipment (or infrastructure) with lower performance and energy efficiency, making it more difficult to comply with ESG principles.
Recycling and data security
IT leasing (or other OpEx models), such as what CSI Leasing provides, includes secure equipment disposal at the end of the lease period, ensuring its sustainable reuse or recycling.
This not only helps to meet the environmental and social aspects of ESG objectives but also governance, as these services often include secure destruction of data, ensuring it is protected against data breaches and complies with GDPR guidelines.