The technical sector is a key player in the value chain in the environment, social governance and management (ESG), as a source of emissions as electricity consumption increases, and as a key factor in improving the efficiency and policies of the ESG through various services and the solutions they represent.
Listed below are the major technological trends affecting ESG performance identified by GlobalData.
Internet of Things (IoT)
The IoT will become a $ 1 trillion industry by 2024 due to the rapid growth in the number of connected devices in the corporate and consumer markets. Technical companies are using IoT in their plants and data centers to work with much greater efficiency and flexibility, allowing them to continuously monitor energy and water consumption.
While the IoT can achieve a number of sustainability goals for technology companies, the production of connected devices creates its own environmental challenges, such as generating large amounts of e-waste, especially in the consumer market. There are growing calls for regulators to increase the transparency of environmental audits to reduce the level of environmental clean-up.
Advanced data analytics allows companies to monitor their operations in real time and thus increase operational efficiency, including impacts on environmental factors such as declining unused reserves and overuse of energy and water. Analytics combined with new technologies such as augmented reality (AR), virtual reality (VR) and others can help reduce the environmental impact of companies in various fields.
Several IT service providers now offer broader sustainable development services that can help companies both measure and communicate strategies and roadmaps to track and measure sustainability initiatives. For example, Atos offers a number of digital solutions designed to help decarbonise corporate processes, while Capgemini notes artificial intelligence (AI) and analytics to help companies optimize energy consumption and logistics operations.
The growth of hyper-scale cloud data centers reflects the ongoing transition from on-premises enterprise data centers as computing resources move into the cloud. Multi-user data centers with common infrastructure and resources help maximize operational and energy efficiency.
The exponential growth of data and the shift to cloud trends, which have further contributed to Covid-19, raise questions about limiting energy efficiency efforts, even as giants such as Amazon, Google and Microsoft focus on renewable energy. In connection with the strengthening of control, a necessary condition for companies in this area, as well as for their key customers will be detailed disclosure of information on energy use and related emissions.
Lithium-ion batteries power most modern electronics and are increasingly becoming a vital resource for electric vehicles and electrical networks. Despite their ubiquity, lithium batteries cause significant concern for the environment. This is because lithium is a scarce natural resource, and the huge amount of water needed to extract it, and the damage done to the area around the mines is huge. There are also concerns about volatile working conditions.
Technical companies must act responsibly in relation to environmental and social factors related to lithium mining. This will require tighter management policies. Those who have become pioneers in the field of sustainable lithium mining will be better positioned in the eyes of investors, regulators and customers.
Adoption of 5G is growing worldwide, and operators are investing significant sums in deploying new networks and providing additional capacity to transport the vast amounts of data consumed by 5G devices. Operators are trying to emphasize the energy efficiency and data transmission of 5G networks, at least compared to previous generations such as 4G.
However, 5G networks are additional network builds, adding to the environment of existing networks. Faster networks and more advanced devices will power applications that need data such as video streaming and games, which will require additional networking investments over time. Operators will face constant monitoring of how they manage ESG exposure, from e-waste to energy consumption.
Software Defined All (SDE)
Software-defined networks (SDNs) and the associated trend toward SDE have important implications for security and broader ESG issues. The software-defined architecture provides the means to automate virtual security measures for networks and data centers.
In the SDE scenario, security features such as firewalls and intrusion detection are separated from proprietary hardware. This allows administrators of network operations or data centers to update and manage security from a central point using software tools.
If compliance with local regulations is a factor such as the EU General Data Protection Regulation (GDPR), appropriate security protocols such as encryption and read-only access can be applied specifically to relevant sensitive data if required.
This is an edited excerpt from ESG – Main trends by sector – Case studies report prepared by GlobalData Thematic Research.