42% of Indian Businesses Increased Their Sustainable Tech Spending in 2022: IDC

Elaborating on the increasing mindshare and awareness of sustainability among Indian enterprises, Sharath Srinivasamurthy, Associate Vice President, Enterprise Solutions & ICT Practice, IDC India, in a detailed interaction with Amit Singh, highlights how organizations are leveraging technology to reduce their carbon footprint and grow sustainability KPIs. He also underlined major government initiatives and private-sector innovations in India to promote sustainable technologies

Sustainability is about adopting new behaviors, practices, and ways of living to better support our planet’s health. What is the seriousness among the organizations toward sustainability in India?

We are seeing increased awareness and efforts toward sustainability among Indian enterprises. Sustainability is among the top 3 business priorities of Indian organizations according to IDC’s Future Enterprise Resiliency & Spending Survey.

However, the share of organizations that have translated their aspirations into action is not significant while the efforts are underway. What surfaced from one of our studies is that only 36 percent of Indian organizations we surveyed have annual CO2 emission reduction targets, irrespective of whether they have a specific net zero date. Furthermore, 62 percent of organizations indicated that they do not currently collect data and report on CO2 emissions.

The positive thing to note is that 42 percent of Indian organizations increased their spending on technology associated with their sustainability program in 2022 as compared to 2021.

Considering India’s ambition for faster GDP growth, energy consumption is set to increase which means more needs to be done by Indian organizations in terms of sustainability.

Despite the government’s attempts to achieve sustainable development goals through policies, Indian organizations are yet to address a few challenges that are hindering their progress in the sustainability journey. The lack of clarity from senior management, lack of in-house skills related to sustainability topics, and the collection of data distributed across the organization are the top challenges that Indian organizations are facing while striving to attain sustainability goals.

How are organizations tying sustainability to economic outcomes as they adopt sustainable practices, solutions, and technologies?

Implementing sustainable business practices has multiple business benefits while contributing to the larger cause. Businesses with Environmental, Social, and Governance (ESG) principles weaved into their strategy can mitigate risks better and prevent possible reputational, legal, and financial damages.

Sustainability initiatives help organizations in brand building leading to increased sales, profits, and ultimately market share. Through improved corporate governance, they can attract and retain talent as we are seeing a trend where employees are increasingly evaluating their employers’ sustainability-related initiatives.

How is technology critical in addressing sustainability challenges and creating sustainable businesses?

Data is critical in an organization’s sustainability journey. Increasing mandates and regulations related to energy consumption and emission reductions require monitoring, measuring, reporting, and verification of usage data. Increased use of technology and professional services can support tracking and analyzing operational performance on various Environmental, Social, and Governance (ESG) parameters.

Organizations can choose to opt for standalone off-the-shelf tools, third-party custom-built tools, in-house custom-built tools, or even use core enterprise business applications (such as ERP) for reporting their CO2 emissions, employee health and safety, governance, and other purposes supporting sustainability goals. Solutions that empower organizations with analysis, predictability, and data governance and security among others are most suitable for sustainability practices.

Identifying the right sources of data, identifying the right technology to monitor, record and transmit the data, and implementing the right technology to analyze the data is still a lingering challenge for Indian enterprises.

What are the government initiatives or private sector innovations you see in India to promote sustainable technologies?

Green investment and sustainability are part of the priority list in India’s public policy. Renewable energy, energy efficiency, and low-carbon transport initiatives are central to the public sector to tackle climate change. The Government has also implemented new sustainability-related reporting requirements for the top 1,000 listed companies (by market capitalization) by FY2023.

To achieve the net-zero carbon emissions goal by 2030, the government is taking several initiatives including the recent complete ban on single-use plastics. Additionally, the Indian Government implemented initiatives such as Green Corridors, Atmanirbhar Bharat, and Make in India supported by Industry 4.0 in a bid to encourage the private sector to utilize digital tools for meeting their sustainability goals.

The government also emphasizes and urges international companies to make use of the opportunities in the digital and technology space and invest in India. For instance, Bosch’s establishment of a smart campus in India which features multiple smart solutions based on sustainability, security, and user experience is a notable example of how the government welcomes futuristic companies with sustainable practices to invest in India.

There are a lot of initiatives by private sector firms as well. One of the largest banks in India reduced emissions by more than 10 percent by leveraging the right IOT solutions. World Economic Forum has recognized Hindustan Unilever for innovation at their facilities for technology solutions related to sustainability in manufacturing. Further, many other large Indian conglomerates are taking initiatives to reduce their carbon footprint which is a step in the right direction.

What are segments/industries which are leading the sustainable technology adoption in India?

Manufacturing, retail, government, telecommunications, and other industries betting high on digital transformation are making progress with their sustainability goals. However, progress across industries is uneven. According to a recent study published by RBI, amongst thirty-four leading Indian commercial banks, only 6 percent of banks either have an existing green product or intend to offer one shortly. Additionally, only 35 percent of surveyed banks have dedicated coverage on sustainability, ESG, and climate risks on the company website.

The telecommunications sector in India has rolled out many sustainability initiatives around ESG and green environment, with Airtel, Vodafone, and Reliance making notable efforts. The onset of 5G will aid sustainability benefits across industries as it supports several use cases that require connectivity such as logistics, fleet management, smart agriculture and smart meters/utilities, and smart manufacturing, among others. As the 5G ecosystem will effectively increase power requirements, telecommunication companies will be under immense pressure to embrace green energy to power their networks and data centers. The telecommunications industry, therefore, is likely to become aggressive with sustainable practices in the next few years.

Further, data center operators in India are looking to make a transition toward using renewable sources of energy to meet their power consumption needs, prioritizing sustainability and climate responsibility. As data center operators in India continue to cater to the increasing demand for edge services, they expect the average power provisioned for low-capacity racks (2–8kW per rack) in the core data center to be reduced to 9.4 percent in 2023 compared to 21 percent in 2021.

Sustainable manufacturing in India is also picking up, with organizations acting upon the material aspects (raw material and packaging material), machinery efficiency, and optimized energy usage.

Innovative implementation of advanced technologies is prevalent across industries such as agriculture, and forestry for purposes such as soil conditions, water usage, crop yields, erosion, weather monitoring, etc. While sustainability does not hold the same level of importance as in other industries (relatively) these sectors will be at the top of the mind when it comes to case studies where technology is applied to address the sustainability challenge.

Please brief us on the use cases of sustainable technologies in India.

Many of the technologies used for Digital Transformation (DX) initiatives are also used for sustainability. Organizations that are already further along on their DX maturity journey reported higher improvements regarding their sustainability efforts through additional investments in their digital transformation initiatives. IDC’s data shows that organizations globally see annual improvements of up to 74 percent in their sustainability KPIs based on their DX investments. In India, the average annual improvements were only around 24 percent, as per IDC’s FERS wave study.

Technologies that contribute to sustainability goals include data management (aggregation, management), data analytics/AI, cloud, IoT, blockchain, and 5G to name a few. For instance, data management platforms aggregate data from multiple sources and provide a centralized and contextualized view for organizations. These platforms address the data collection aspect for measuring and monitoring sustainability metrics.

Similarly, there are many other use cases across different industries including:

• Bengaluru’s water utility, Bengaluru Water Supply, and Sewerage Board (BWSSB) is planning to implement an AI-powered operational intelligence platform for Sustainable Water.
• A large private bank is going sustainable with an IoT-enabled solution. The AI-enabled IoT platform enabled the bank to monitor the energy consumption of their systems across branch networks and reduce energy consumption by 12.7 percent using predictive insights.
• Bharti Airtel, in partnership with Avaada, has commissioned a 21-megawatt solar power unit spread over 80 acres to supply clean energy to Bharti Airtel’s Nxtra data centers and switching centers in Maharashtra.
• Another leading data center provider CtrlS has announced the deployment of the Gas Insulated Substation (GIS) in Mumbai.

We are also seeing multiple hyper scalers like AWS, Azure, GCP, and other data center players like Equinix, Adani, etc. who are setting up massive data centers in India focusing on sustainability.

Technologies like AI/ML and blockchain are creating immense value for businesses; however, these technologies come with hidden costs including huge energy consumption. How are we making technologies more sustainable?

The rapid adoption of cloud, AI/ML, and other technologies as part of digital transformation in Indian contributes to the demand for energy-hungry hardware (such as servers, cooling equipment, power backup, generator, and networking equipment) across data centers.

Although data centers currently contribute to a small share of energy consumption in India, energy production will be burdened as the country is well-positioned to receive a larger share of global data center investments in the next few years.

However, Indian ICT companies are actively pursuing green/sustainable practices. The adoption of renewable energy resources for data center operations is a key priority identified by market players and is also encouraged by the government through various policies, such as the ‘Data Centre Policy’ 2020 draft. Some of the Indian ICT organizations consciously switching to renewable sources of energy include CtrlS, Sify, ST Telemedia, NTT, and Nxtra, among others.

Apart from energy sources, the adoption of innovative technologies and solutions, such as rainwater harvesting, close-coupled cooling, and the use of fuel cells for storing energy to improve energy efficiency, is increasingly picking up pace in India. An IDC study on Datacenter Operational Survey, Asia/Pacific (Excluding Japan) revealed that around 36 percent of respondents stated that they currently use rainwater harvesting technology to improve data center energy efficiency, whereas around 43 percent of respondents stated that they have plans to deploy rainwater harvesting technology by 2023. These findings validate that both enterprises and data center organizations are making conscious efforts and look forward to a more sustainable world.

Tech buyers are also acting towards sustainability in terms of selecting their service providers. In addition to the quality of service and cost, investments made by providers in renewable energy sources are also a key criterion affecting the selection of colocation service providers in the industry, as per IDC’s study.

Recent studies show that more than 60 percent of CXOs across industries focus on sustainability when considering a digital project. As businesses commit to science-based net-zero targets, how is this phenomenon impacting the growth of technology firms?

Sustainability is becoming a priority among organizations across all industries; technology spending in this space has opened new opportunities for technology and service firms. Several Indian IT service vendors (consulting and managed service providers) have rightly identified sustainability consulting as a major opportunity and are leveraging technologies such as AI, IoT, and digital twin among others to serve the purpose. They are executing sustainable practices and developing offerings to suit the organizations’ needs – in line with the vendor selection criteria identified through our surveys.

For instance, in February 2022, TCS announced a new suite of offering for sustainability solutions to help organizations gain insights into energy usage and reduce waste and emissions to accelerate toward their net-zero goals. In September 2022, NTT unveiled Sustainability as a Service to help organizations achieve Net-Zero Goals.

As per the IDC study, technology vendors that have developed a comprehensive cost justification model for pursuing a sustainability initiative can identify and address the transition risk associated with a sustainability transformation and is well versed with ESG reporting frameworks and standards are preferred by Indian organizations to partner to achieve their sustainability goals.

Sustainability is about more than just technology. To be sustainable, how do you think companies may look at the big picture and understand how their actions fit into the larger world?

Understanding best practices with an emphasis on governance and processes will give organizations a good start to evolve in their sustainability journey. Organizations need to realize or make a clear distinction between the monetary and non-monetary value of sustainability practices. Organizations can also create a road map for sustainability and digital use cases while taking note of regulations.

The role of leadership will determine organizations’ progress on sustainability. Decision makers need to make more conscious decisions (by assessing potential risks) when choosing technology for their sustainability purposes. But again, it is not just about technology, so the strategy needs to be stakeholder centric i.e., it needs to address the demands of investors, employees, and customers. Hiring the right skills (technology and social skills) while keeping in mind diversity and inclusion, creating sustainable products to keep up with the customer’s views, and finally satisfying the investors by demonstrating progress around sustainability will be the key.