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How IT services companies are using sustainability as a differentiator

JUN 02, 2023 | Suruchi Dhingra
region: ALL vertical: ALL technology: ALL

Early this year, Transforma Insights’ published a report, ‘Which technology vendors are leading the charge on providing sustainability services?’ which examined the capabilities of fourteen leading IT services and systems integration companies in delivering products and services to help enterprises on their sustainability journeys. The report analysed capabilities of Accenture, Atos, Cognizant, Capgemini, Deloitte, EY, Fujitsu, HCL, IBM, Infosys, Oracle, SAP, TCS and Wipro.

Incorporating sustainability considerations into the corporate strategy is becoming essential to meet consumer demands, investor pressure, and regulatory requirements. In response to the growing business demand , consulting firms, system integrators and IT service companies are jumping on the bandwagon to offer end-to-end ESG and sustainability service support. System integrators can bridge the gap that is often missing in sustainability initiatives since they are experienced in interconnecting and integrating information from disparate sources for efficient planning and ESG reporting. Often, they also specialise in organisational digital transformation using new technologies such as AI, RPA, IoT, Distributed Ledger, Data Sharing, and others to realise maximum advantage in sustainability.

What are IT services companies offering in sustainability?

Sustainability services from IT services vendors/systems integrators can be divided into three main categories. The very first step on the sustainability path is baselining; many system integrators have put up a consulting offering to support the net-zero roadmap. Some of them also have pre-built frameworks in place to help identify hotspots and set targets.

The second part of their offering is solutions that help customers meet their targets, which typically include the development of new business models and products, circular economy initiatives (such as sustainable packaging), sustainable supply chains, sustainable investment, and many more.

The third major bucket is reporting, and many IT service firms are supporting with ESG reporting, based on standards such as CDP, GRI, and SASB.

These service offerings are often coupled with software solutions and emerging digital technologies to realise maximum benefits. Software offerings range from energy management software (such as TCS’s Clever Energy) to real-time data collection ESG reporting software (such as Infosys’s EcoWatch, SAP’s Sustainability Control Tower, Cognizant’s Sustainability Accelerator).

Using digital expertise to complement sustainability offerings

IoT, AI, Blockchain and RPA are often incorporated into sustainable supply chains, circular economy, and ESG measurement and reporting . For example, EY’s SusTrack tool leverages RPA technology to collect non-financial ESG-related data from various ERP systems, workbooks, and other sources. Digital Twin technology can be used to virtually test new products for carbon emissions. Accenture, in partnership with Dassault Systèmes, has found five digital twin use cases that it claims can deliver benefits of USD1.3 trillion of economic value and 7.5 Gt carbon emissions reductions between now and 2030. Distributed Ledger particularly finds its application in sustainable supply chains, as it supports transparency and visibility by ensuring that actors in the supply chain follow ethical and fair labour practices and record carbon emissions generated at every step.

IT services companies are focussing on which verticals?

Sustainable IT and Sustainable Finance are the key focus areas for many of the IT services companies. They have built offerings around ‘Green IT’ or ‘Green Cloud Computing’ to help customers further reduce the sustainability footprint of the manufacturing, distributing, operating, and end-of-life management of IT services and hardware. Such initiatives can have significant impact since data centres alone are estimated to account for 3% of total electrical energy consumption in a year. To cite an instance, IBM’s Turbonomic Application Resource Management (ARM) solution analyses applications to view data centre energy usage to measure carbon impacts and identify ways/measures to improve sustainability parameters by proactively delivering the most efficient use of compute, storage and network resources. A second related focus area is ‘Sustainable Finance’ which is considered to be a billion-dollar opportunity; it refers to taking ESG criteria into consideration when making financial decisions such as investment, acquisition or funding decisions.

Concluding remarks:

IT service companies are repositioning themselves to be end-to-end sustainability partners and combining their software, IP and consulting led approach. Given the current focus on sustainability, such capabilities are likely to be competitive differentiators (or table-stakes) when seeking to win new clients.

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