11

Putting a Sustainable IT Strategy in Place

We may have a Plan B in life – but we indeed do not have a Planet B.

– Former United Nations Deputy Secretary-General, Jan Eliasson

This chapter will focus on putting a sustainable IT strategy in place. Sustainable IT is a collective name for the measures designed to reduce the environmental, social, and governance (ESG) impact with the aid of IT for three focus areas: sustainability in IT, sustainability by IT, and IT for society. This chapter will enable you to create a simple, sustainable IT strategy that can be used as a communication vehicle to take action toward a net zero future.

First, we will introduce the sustainable IT strategic planning process. Second, we will explore a real-world example from Siemens, a German automation company. Third, we will leverage the sustainable IT strategic planning process to assist you in creating your own sustainable IT strategy. Finally, we will create a high-level short-term, mid-term, and long-term roadmap for our sustainable IT strategy.

This chapter’s main objective is for you to create your own sustainable IT strategy and roadmap.

In this chapter, we will cover the following topics:

• Introduction to the sustainable IT strategic planning process
• IT and sustainability – part of the problem? Part of the solution!
• Creating your own sustainable IT strategy
• Setting your direction of travel toward a sustainable future

By the end of this chapter, you will have understood how to use the sustainable IT strategic planning process, which will enable you to create your own sustainable IT strategy and an IT sustainability roadmap. The examples and templates for this chapter can be downloaded from www.sustainableitplaybook.com.

Introduction to the sustainable IT strategic planning process

In this section, we will introduce the sustainable IT strategic planning process. This section will not focus on the business context, strategy, strategic objectives, or overall corporate sustainability strategy. However, some external inputs will be referenced, such as materiality assessment, enterprise sustainability goals and priorities, and enterprise sustainability strategy, to put the sustainable IT strategy into context. There are six critical areas to the sustainable IT strategic planning process to guide you on your path of creating your own sustainable IT strategy. Figure 11.1 illustrates the main building blocks of the framework:

Figure 11.1 – Sustainable IT strategy framework

Let us take a closer look at each key area.

Sustainable IT strategy (input)

There are two key input areas that you should include as part of your strategic planning process – the external environment and the internal environment.

External environment

Your external environment is an assessment outside the realm of your enterprise. When looking at your external environment, it is recommended to assess market trends, risks, and social pressure, as well as legal and compliance requirements.

These are some key questions to ask yourself:

• Market trends: How do market trends within your industry impact your organization? How impacted are you by a geopolitical crisis such as the war in Ukraine, raw material shortage, low-carbon material (for example, steel, cement, and wood), access to clean and affordable energy, and supply chain component shortages?
• Risks: What physical climate and transition risks are most relevant to your organization?
  • Habitat destruction: Ecosystem collapse, biodiversity loss, and agriculture depletion
  • Intensified weather events: Heat, storms, floods, droughts, and wildfires
  • Glacial retreat: Freshwater loss and rise in sea level (coastal submersion)
  • Droughts: Limited access to water, an essential resource for some industries
• Legal and compliance requirements: What is your impact on emerging legislation and compliance requirements such as the EU Corporate Sustainability Reporting Directive (CSRD) or SEC climate disclosure rule? Are there any industry-specific, regional, country, or state regulations you need to be mindful of?

Internal environment

Your internal environment should assess and consider critical areas inside your enterprise’s realm. Some key areas to consider are the business environment, materiality assessment, enterprise sustainability goals and priorities, and your enterprise sustainability strategy.

Business environment

You should assess and understand your business context, vision and mission, corporate strategy, strategic objectives, and priorities. These key attributes are usually listed under investor relations for publicly listed companies.

Materiality assessment

Materiality assessment is an excellent place to engage stakeholders to identify, assess, and refine potential ESG issues. It involves looking at several factors from two viewpoints – the importance to stakeholders and the importance to the business. Once the ESG issues have been identified, the importance should be determined from a stakeholder and a business perspective. A starting point for looking at your sustainability agenda is the international frameworks and institutions such as IPCC, UN Sustainable Development Goals (SDG), and UN Global Compact.

Enterprise sustainability goals and priorities

We can determine the enterprise sustainability goals and priorities with the materiality assessment. Since the ESG issues cover a broad spectrum, it is a good idea to group them into 4 to 6 goals, such as a climate goal, circularity goal, people goal, societal goal, and ethical goal, or group them by ESG in order of priority.

Enterprise sustainability strategy

Once you have determined your sustainability goals and priorities, it is time to formulate the enterprise sustainability strategy. As an IT leader, you should work closely with the relevant functions in the organization, such as sustainability, legal, compliance, operations, and more, to discover and determine broader goals. The enterprise sustainability strategy should encompass the whole enterprise, and the goals should be easily understood and adaptable to a specific function, such as the sustainable IT strategy.

The external and internal environment are valuable inputs to your sustainable IT strategic planning process. Naturally, both your external and internal environments depend on what region, country, industry, or company you operate within. In the next section, we will examine the sustainable IT strategic planning process, which is the core of the sustainable IT strategy framework.

Sustainable IT strategic planning process

The sustainable IT strategic planning process consists of five building blocks, including three focus areas – sustainability in IT, sustainability by IT, and IT for society – and two functional areas – IT GHG emissions and key focus areas. The process relies on input from both your external and internal environments. As we learned in Chapter 2, The Case for Sustainable IT, sustainability in IT directly impacts your CO2 emission reduction – your footprint. On the other hand, sustainability by IT indirectly impacts CO2 emission since it is embedded into a process or business function, such as deploying an IoT application so that you can monitor and reduce water usage on a farm – this is your handprint. IT for society is your heartprint – that is, your altruistic side where you positively impact your people, community, and society through employee engagement by educating children on computing or coding skills.

Your sustainable IT strategy should be a subset of your complete IT strategy and your enterprise sustainability strategy. We draw the guardrails regarding ESG targets and objectives from the enterprise sustainability strategy. From the IT strategy, we draw vital inputs such as strategic IT objectives, target state, governance structure, operating model, architecture, sourcing model, people, and culture. Most importantly, your sustainable IT strategy should not be built in isolation and embedded into existing strategies.

Sustainable IT strategy (output)

The sustainable IT strategic planning process should generate several outputs on how you should execute your sustainable IT strategy and the steps necessary to operationalize it. These outputs are governance, objectives and key results (OKRs), the IT sustainability roadmap, physical and transition risk and communication, training, and enablement.

Now that we have looked at the framework’s building blocks, let us focus on a real-world example from Siemens.

IT and sustainability – part of the problem? Part of the solution!

In this section, Rainer Karcher, former Global Director of IT Sustainability for Siemens AG, since October 1, 2022, Global Head of IT Sustainability at Allianz Technology, shares his experience from the sustainable IT journey.

For 175 years now, Siemens has provided innovative technologies with the aspiration to improve people’s lives worldwide, to transform the everyday. Judith Wiese, Siemens’ Chief People and Sustainability Officer and member of the managing board of Siemens AG, recently stated the following:

" Sustainability is in our very DNA. It is not optional. It is a business imperative. We are setting even more ambitious targets based on our successful track record. We will accelerate our efforts and raise the bar to create more value for all our stakeholders. Sustainable business growth goes hand in hand with the value we create for people and our planet."

With Siemens technologies and solutions, sustainable growth is driven. Environmental and climate protection are integral parts of the Siemens business, expressed in numbers and reflected in the aspects of the DEGREE sustainability framework (Siemens 2022), as illustrated in Figure 11.2. The strategic framework sets goals in ESG and follows clear and measurable ambition. The DEGREE framework includes six relevant fields of action, within which there are 14 defined sustainability indicators. The most significant and relevant focuses on sustainable IT and lies within the D part of the framework – decarbonization – and is therefore described in more detail here.

Not only do Siemens aim to be carbon neutral (“D” in DEGREE, reflecting decarbonization) in its operations (net zero in scopes 1 and 2) by 2030, but it also wants to reduce the emissions associated with operations, from supply to the use phase and beyond (Scope 3). In addition, the Siemens portfolio helps customers reduce their emissions and achieve their decarbonization goals:

Figure 11.2 – Siemens DEGREE framework

Requirements and demand

Besides Siemens’ ambitions, there is a growing demand for sustainable business for various stakeholders. These are the key stakeholders:

1. Legal requirements: Many new international sustainability legislations are currently under development or already in realization. A few examples are EU Taxonomy, Value Reporting Foundation, Corporate Sustainability Reporting Directive (CSRD), and other green deals.
2. Customer requirements: More and more customers require suppliers to comply with Ecovadis and NQC qualifications or individual surveys. More private customers are paying attention to sustainability credentials. In addition, enterprise customers increasingly incorporate sustainability-related criteria in RFPs/RFQs with accurate KPIs and contractual additions. This was covered in great detail in Chapter 2, The Case for Sustainable IT.
3. Investor requirements: Investors are increasingly focusing on ESG criteria, including building their reports and investing in tech tools that allow them to collect and compare sustainability data across their assets to allocate investments.
4. Employee requirements: Being a sustainability leader is relevant to attracting young talents and retaining current employees. The purpose is an added value for employee retention and influences engagement massively.
5. Public opinion: Sustainability is critical in many societies, and the public expects companies to do their part. It is a matter of reputation and trust.

None of these requirements can be ignored any further and touch every part of the company, IT, and other corporate functions and businesses.

Ecodesign and digitization

Digitalization and technology are often named as the solution for various aspects in the field of sustainability. New technologies that replace manual processes with fully automated data treatment, enhanced with machine learning (ML) or artificial intelligence (AI) functionality, open additional possibilities for redesigning circular business models regarding energy efficiency and ecological sustainability in a broader sense.

With a digital product passport containing relevant information such as material usage, water, and energy consumption through production, repairability, and recyclability, companies can record the recyclability of the products and the material used. Based on this data, environmental compatibility can be improved over the entire life cycle – for example, by using stored information to extend the product’s life, increase efficiency, or track substances of concern in the products or the supply chain.

As another example, the virtual image of a product, known as a digital twin, offers further possibilities. It seamlessly uses data from all the life cycle phases of products – from the original idea to production from suppliers and logistics partners. This means forward-looking, transparent, and reliable decisions can be made about optimizing resources, reducing waste, and lowering emissions as early as possible in the design process across the entire value chain. Therefore, digitally transformed and eco-designed products effectively combine the economic opportunities of increasing digitization and circular, environmentally compatible business models, referred to as the so-called twin transformation.

The role of IT

With all this in mind, Siemens launched the role of a sustainability lead within IT in May 2020. With a full-time dedication to sustainability within corporate IT, it focused on two areas: taking care of the environmental impact of Siemens’ IT services and supporting the business in achieving its ambitious targets defined within DEGREE, as well as serving society with digitalization experience and know-how.

Sustainability and IT mostly covered green IT aspects, focusing on their areas of responsibility. Not much was available from any other perspective, neither sustainability as a service/IT for sustainability nor societal aspects, besides the centrally driven CSR approach.

Bringing sustainability into the global IT strategy was a start. Therefore, they started by understanding the as-is and the ambition level within IT and the outside, starting with a so-called Digital Decarbonization Assessment (DDA). The DDA created a heatmap of various areas where the IT services provided by operations or partners can be used to influence environmental impact, based on scientifical criteria and sorted by impact. It also involved sustainability and CSR in the IT guiding principles. Still, it immediately raised the question of how success could be measured and how the companies’ ESG goals can be influenced through IT and with IT so that the effort would be seen as a good investment from a long-term perspective.

The initiation of a sustainability ambassadors group containing IT and digitalization experts from different areas, regions, and countries was enhanced when they joined forces with internal experts as well as external sustainability and IT enthusiasts. This created the motivation to deep dive into various opportunities to create lighthouses and best practice examples.

Therefore, one of the significant findings at the start of the journey was the need for a mindset shift, not only in the top management/C- Suite or within grassroots initiatives but to connect the dots between all parts of the company, translating science-based language into IT and vice versa. User journeys are a well-known instrument for explaining complex topics in a simplified way – and that’s exactly what was used. For example, in terms of sustainably procuring IT equipment and the transparency of its environmental impact, explaining how the end user equipment is used is more efficient (and safer in addition due to reducing the risk of battery problems due to permanent charging), as well as how refurbishment and donation are influencing the footprint of the company.

Today and the future

After 2 years, the team’s size increased after a second full-time employee was hired. Now, the support of various ambassadors and colleagues is implemented in most of the sustainability decisions and projects within Siemens.

Figure 11.3 illustrates a snapshot of what IT has achieved so far as part of the DEGREE program:

Figure 11.3 – Siemens accelerating DEGREE in IT, through IT, and to society

The basis for making decisions to achieve the company’s goals helps with understanding upcoming directive requirements and how to fulfill them. This is the main achievement and a changed perspective of IT within Siemens. From the former machine room and the pure need to operate infrastructure, the perception is now much different – recognizing IT as one driver of the ESG agenda.

With a clear focus and a comprehensive view of sustainability and the massively increased baseline transparency, IT became part of the solution instead of being or becoming part of the problem.

The following section will examine how you can formulate your sustainable IT strategy.

Creating your own sustainable IT strategy

This section will give you the tools to create a sustainable IT strategy. Just like in Chapter 10, Get Started Today, we will use a global process manufacturing model company with 10,000 employees. The examples you will see in this section have been compiled from companies with leading ESG ratings, best practices, wider research, and my experience. We will not focus on external environment input, such as sustainability trends, drivers for a corporate sustainability plan, or ESG considerations for IT since this was covered in detail in Chapter 2, Rise of Sustainable IT. Since the business environment is very specific to a particular company, I have decided to leave it out. Instead, we will focus on the internal environment and inputs from a hypothetical materiality assessment, enterprise sustainability goals and priorities, and the enterprise sustainability strategy. Hopefully, you already have an enterprise sustainability strategy you can leverage, but if not, the examples here can be modified as needed. Nevertheless, the central part of this section will focus on creating a sustainable IT strategy.

Let us get started!

Materiality assessment

Let us start with the materiality assessment. Figure 11.4 illustrates an example of a materiality assessment from our global process manufacturing model company:

Figure 11.4 – Materiality assessment example

As illustrated in Figure 11.4, the materiality assessment contains a broad spectrum of ESG issues that require various degrees of effort, from fundamental societal system changes such as climate change and water and energy security to inwards focused topics such as talent and development, culture, employee health, safety, and wellbeing. Depending on your environment, the materiality assessment may look a bit different.

Depending on how you have ranked the ESG issues, they should guide your enterprise sustainability goals and priorities. In the next section, we will look at how we can group our enterprise sustainability goals and priorities.

Enterprise sustainability goals and priorities

Based on the materiality assessment, we now have a long list of ESG issues. Since the ESG issues we’ve identified cover a broad spectrum, it is a good idea to group them into 4 to 6 goals, such as climate goal, circularity goal, people goal, societal goal, and ethical goal, or group them by ESG in order of priority, as illustrated in Figure 11.5. There is no right or wrong answer; the most important is that it should be easy for your audience to follow:

Figure 11.5 – ESG issues grouping example

As we can see, our grouping indicates that most ESG issues are sorted under environment.

Let us formulate our sustainability strategy goals. We will assume that the model company has committed or will be committing to a science-based targets initiative (SBTi) or similar initiatives such as Climate Pledge or Exponential Roadmap. Therefore, we need to formulate a climate goal to support that. Since the model company is a global process manufacturing company, circularity becomes a central theme in dematerializing and becoming more resource efficient. Hence, we need to formulate a circularity goal. To address our social and governance ESG issues, we must also formulate a goal for each category. This leaves us with the following four sustainability strategy goals:

• Climate goal: Support for 1.5°C targets to fight global warming with a focus on decarbonization
• Circular goal: Shift to circular business models through resource efficiency, focusing on circularity and dematerialization
• People, ethics, and society: Building a diverse, equitable, and inclusive workplace and society underpinned by a culture of trust and high ethical standards
• Governance: Responsible business practices in everything we do

If we summarize the four climate goals into one illustration, it will look like this:

Figure 11.6 – Sustainability strategy goals

Figure 11.6 illustrates a formulation of four sustainability strategy goals based on the model company. Your corporate environment may make your goal formulations look a bit different.

Now, let us look at the third step in how we can formulate an enterprise sustainability strategy.

Enterprise sustainability strategy

In Chapter 1, Our Most Significant Challenge Ahead, I referenced the Triple Bottom Line (3Ps), the most common framework referenced within business language today. The 3Ps framework defines three critical imperatives for sustainability to maximize benefits for people, the planet, and profit. When these three factors interact, you can maximize benefits and create a sustainable future. For our enterprise sustainability strategy, I have chosen a sustainability vision – Positive contribution to people, the planet, and profits – that resonates closely with the 3Ps framework. For each of the four sustainability strategy goals, I have formulated a strategic principle per goal and a set of strategic priorities. Let us take a closer look at the strategic priorities I have defined for each goal in Table 12.1:

Table 12.1 – Enterprise sustainability strategy goals, principles, and priorities

Since this chapter focuses on sustainable IT strategy, I will not detail how I defined the strategic principles or priorities. Let us say they are derived from best practices from leading ESG-rated companies.

Now that we have defined all the criteria, let us pull everything together and formulate a sustainability strategy house, as illustrated in Figure 11.7:

Figure 11.7 – Sustainability strategy house

So, there you have it – a hypothetical sustainability strategy formulated in the shape of a house for a global process manufacturing model company. In the next section, we will derive our sustainability IT strategy based on our defined sustainability strategy.

Sustainable IT strategy

So far, in this section, we have primarily focused on the business environment, which is essential for deriving your sustainable IT strategy and your IT strategy. A sustainable IT strategy cannot be derived in isolation. Therefore, it is imperative to understand the business environment, vision, strategic goals, strategic principles, strategic priorities, challenges, pain points, and opportunities.

As shown above in Figure 11.1, the sustainable IT strategic planning process consists of five building blocks. This includes three focus areas, which are sustainability in IT, sustainability by IT, and IT for society, and two functional areas, which are IT GHG emissions and strategic priorities.

GHG IT baseline and forecast

As input to the strategy, we will leverage the sustainable IT emission baseline and the target state simulation derived in Chapter 10, Get Started Today. The results from the previous chapter are illustrated in Figure 11.8:

Figure 11.8 – 10-year carbon emission waterfall summary

A quick refresher from the previous chapter – for the model company, we derived a yearly carbon emission baseline of 7,651 tons of CO2 emissions and a 10-year simulation where our target state emissions per year would be 2,553 tons of CO2 emissions, which are well under the corporate goal to halve the CO2 emissions by 2030.

Let us start with a sustainable IT value proposition. The value proposition consists of four key areas – sustainability goals and targets, challenges and pain points, capabilities and required step-change, and objectives and key results (OKRs). Throughout the value proposition, there needs to be a strong link between each area to ensure that sustainability goals and targets can be met within the specified time frame.

The sustainability goals and targets were defined in the previous section, but let us take a closer look at the other three sections outlined in Table 12.2:

Table 12.2 – Sustainable IT value proposition

Please bear in mind that this is a fictional sustainable IT value proposition, but it should be able to guide you through creating your own based on your business environment.

Now that we have defined all four critical areas in the sustainable IT value proposition, the summary is illustrated in Figure 11.9:

Figure 11.9 – Sustainable IT value proposition

Now that we have our sustainable IT value proposition, we can formulate our why, what, and how. Why do we need a sustainable IT strategy, what are we trying to address, and how are we trying to address it?

Why

Our why is our support for 1.5°C targets to fight global warming. Our shift to circular business models through resource efficiency focuses on circularity and dematerialization. We are building a diverse, equitable, and inclusive workplace and society underpinned by a culture of trust and high ethical standards. And finally, we must have responsible business practices in everything we do.

What

We aim to reduce our carbon footprint and handprint generated by our digital infrastructure while increasing our heartprint by building resilience and adaptability in our people and society. Our sustainable IT strategy is decomposed into three workstreams – sustainability in IT, sustainability by IT, and IT for society.

How

Our how describes the key focus areas within the three workstreams that will significantly impact our model company. These three workstreams were summarized in Figure 11.9 under Capabilities and required step-change. Each focus for sustainable IT has been covered in depth in previous chapters in this book, and sustainability by IT was covered in Chapter 9. Therefore, we will not discuss each key focus area here. Figure 11.10 illustrates our sustainable IT strategy on a page that describes our why, what, and how:

Figure 11.10 – Sustainable IT strategy on-a-page

Setting your direction of travel toward a sustainable future

A strategy is about execution, no matter what you try to accomplish. Now that we have a sustainable IT strategy, we must define the most challenging parameters – who and when. Who will execute the strategy, and what capabilities do you need, such as people, processes, and technology? When should you execute the different components of the strategy to move from your current state to your target state?

Creating a short-term, mid-term, and long-term plan and slotting your key initiatives into respective buckets is an excellent place to start. Figure 11.11, Figure 11.12, and Figure 11.13 illustrate each workstream sustainability in IT, sustainability by IT, and IT for society with examples for each key focus area. Given that your industry and environment will look different, these examples should be viewed as inspiration, not direct advice. Establishing your GHG emissions baseline should give you a good overview of what activities will significantly impact your context:

Figure 11.11 – Sustainability in IT – short-term, mid-term, and long-term plans

Figure 11.11 illustrates an example of sustainability in IT short-term, mid-term, and long-term plans. It encompasses all the critical focus areas of the sustainable IT strategy that were mentioned previously.

Figure 11.12 – Sustainability by IT – short-term, mid-term, and long-term plans

Figure 11.12 illustrates an example of sustainability by IT short-term, mid-term, and long-term plans.

Figure 11.13 – IT for society – short-term, mid-term, and long-term plans

Finally, Figure 11.13 illustrates an example of IT for society’s short-term, mid-term, and long-term plans.

For each initiative you intend to run, I recommend creating an initiative charter to describe expected results, objectives, activities, interdependencies/risks, key stakeholders, and benefits. Figure 11.14 illustrates a sample initiative charter for cloud migration:

Figure 11.14 – Sample initiative charter

Once you have created all the initiative charters, I recommend plotting them on a high-level roadmap.

So, there you have it – a sample sustainable IT strategy that provides details on roadmap activities, short-term, mid-term, and long-term. A strategy is no good unless you make people aware of it, involve them, and activate them. Sustainability is everyone’s job; it must be embedded into the organization’s fabric in all parts of the business.

Summary

This chapter’s main objective was for you to create your own sustainable IT strategy and roadmap.

First, we introduced the sustainable IT strategic planning process, which gives you a set of guardrails on how to drive the process from start to end. This process guides you through what type of external and internal input you should collect in your sustainable IT strategic planning process and what outputs you should deliver. Secondly, we explored a real-world example from Siemens, which gave great insights into their overall sustainability journey and DEGREE framework and how IT contributes in multiple ways. Thirdly, we leveraged the sustainable IT strategic planning process to create our own sustainable IT strategy. We started by leveraging an example materiality assessment, formulating our enterprise sustainability goals and priorities, and finally creating an enterprise sustainability strategy. Furthermore, we defined a sustainable IT value proposition that outlined our challenges and pain points, capabilities and required step-change, objectives, and key results. Once the sustainable IT value proposition was defined, we articulated the sustainable IT strategy expressed in terms of why, what, and how. The how section was expressed in several key focus areas sorted under three workstreams sustainability in IT – “footprint,” sustainability by IT – “handprint,” and IT for society – “heartprint.” Finally, a high-level short-term, mid-term, and long-term roadmap was formulated for each workstream. The examples and templates from this chapter can be downloaded at www.sustainableitplaybook.com.

In the next and final chapter, we will explore what prerequisites are required to set your sustainable IT strategy execution for success, the importance of delivering results quickly, and the criticality of having determination, grit, and perseverance to stay the course.

Bibliography

• Rare.org. 2022. Eight Principles for Effective and Inviting Climate Communication. Accessed September 04th, 2022. https://rare.org/report/eight-principles-for-effective-and-inviting-climate-communication.
• Siemens. 2022. Sustainability Figures. Accessed August 17th, 2022. https://new.siemens.com/global/en/company/sustainability/sustainability-figures.html#!/siemens/en/our-degree-framework/.
• Yale. 2021. International Public Opinion on Climate Change. June 28th. Accessed September 04th, 2022. https://climatecommunication.yale.edu/publications/international-public-opinion-on-climate-change/toc/3/#:~:text=Most%20respondents%20say%20they%20need%20more%20information.
• —. 2022. Yale Climate Opinion Maps 2022. February 23rd. Accessed September 04th, 2022. https://climatecommunication.yale.edu/visualizations-data/ycom-us/.