A Framework for Voluntary Reporting

IT Sustainability Indicators for the IT Industry

10 juli 2015
In dit artikel:

Reporting on IT sustainability is not mandatory under the accounting regulations. This means that companies that do report on IT sustainability, do so voluntarily. It is not obvious how this reporting can be done, because there appear to be no worldwide practical guidelines available in this area. For example, the Global Reporting Initiative (GRI), the organization that sets out the principles and standard disclosures which organizations can use to report their economic, environmental and social performance and their impacts on a sustainable global economy, does not include IT indicators.

This article is written to contribute to the IT auditing and advisory profession by introducing a framework for the IT industry that can be used as guidance for voluntary reporting on IT sustainability.

Different organizations and authors have defined IT sustainability differently. There are, however, significant commonalities between them. Each definition expresses the idea that IT sustainability is about minimizing the negative impact of information technology use on the social, economic and environmental aspects of sustainability, and using information technology to help solve sustainability issues. In this article, this common ground is adopted to define IT sustainability.

The next sections touch upon the relationship between corporate and IT sustainability, sketches an overview of the IT industry and summarizes the related IT sustainability issues that are included in the proposed framework. Finally, motives for disclosing non-mandatory information are explained.

Relationship between Corporate and IT Sustainability

Sustainability is a broad concept that refers to the aim of striking a balance between the need for economic growth on the one hand and environmental protection and social equity on the other. Corporate sustainable development helps set out the aspects which companies should focus on: social, economic and environmental performance (‘People, Profit and Planet’). Corporate managers have an ethical obligation to consider and address the needs of society, not just to act solely in the interest of the shareholders or their own self-interest. [WILS03] IT sustainability is positioned within the interwoven whole of environmental, social and economic aspects of corporate sustainability. For instance, while saving on energy costs (economic aspect) by deploying a Green IT strategy, the environment is spared because CO2 emissions are being reduced (environmental aspect), while at the same time reducing the dumping of poisonous and difficult to handle waste in developing countries (social aspect). [TURN09]

Ethical obligation to consider and address the needs of society

Overview of the IT Industry

The South African Information Technology Industry Strategy defines The IT industry as ‘The industries that produce the products (goods and services) that support the electronic display, processing, storage and transmission of information’. [JAME14]

A widely cited figure in Information Technology circles is that the IT industry is responsible for approximately two percent of worldwide carbon emissions, which is roughly equivalent to the carbon emissions attributed to the aviation industry. [ONEI10] Although this percentage is open to interpretation and observers would question whether the current situation requires any substantial attention, it is unquestionable that IT, because of its omnipresence in every sphere of society is in a unique position to influence the other 98 percent. In fact, it is hard to think of one organization or set of circumstances where IT does not have any influence. Therefore, the potential for the IT industry to deliver sustainable products and services is enormous. It is no exaggeration to say that IT and the related telecommunications have revolutionized the way in which businesses operate and individuals lead their lives. [ONEI10]

Schermafbeelding 2015-07-07 om 17.14.57

A proposed Reporting Framework for IT Sustainability Indicators

A comprehensive framework for voluntary reporting on IT sustainability indicators for the IT Industry is presented in table 1.

The proposed framework consists of three aspects, thirteen categories and forty four indicators to help companies with their voluntary reporting on IT sustainability’s social, environmental and economic aspects. For each indicator a description is given to provide companies with guidance on what should be taken into consideration when reporting on this indicator.

The IT sustainability indicators are developed according to the criteria for financial statements that are set out in the International Accounting Standards Committee (IASC) framework: comprehensibility, relevance, reliability and comparability.

3x-Tabel-DEF!

These criteria are widely used, internationally focused and the standards are developed as a result of an agreement between accountancy bodies in different countries. [CAMF07]

The GRI Reporting framework was adopted as basis for the development of the proposed framework, because it is the world’s most widely used sustainability reporting framework. Most of the core GRI Reporting framework indicators are included in the proposed framework. However, for simplicity, the framework does not distinguish between core and additional indicators. The GRI framework was extended with IT sustainability indicators.

Table 2 provides a high level comparison between the GRI Reporting framework categories and the proposed framework.

The set of IT sustainability indicators in the framework was designed to include both qualitative and quantitative indicators, as appropriate. They can be locally, regionally or globally focused, thus affecting a wide range of stakeholders. The indicators reflect not only the key IT sustainability issues as such but also the scale of magnitude of the impacts. They consist of both absolute measures (e.g. total weight of waste by type and disposal method or total number and volume of significant spills per year) and normalized units (e.g. weight of waste per year relative to peers). Normalized units also enable comparisons between companies of different sizes, particularly if they are expressed per tons of product. [AZAP04] These thoughts were taken into account in the development of the indicators.

The potential for the IT industry to deliver sustainable products and services is enormous

The IT Sustainability Indicators

The IT sustainability indicators translate IT sustainability issues into quantifiable measures of social, economic and environmental performance with the ultimate aim of helping address the following three key aspects. [AZAP04]

Social aspects – The demand for IT sustainability products and services from both an individual and an organizational perspective is growing. This demand is generated from an increased reliance on IT to provide solutions for both business and personal challenges. The sector is highly innovative and subject to constant technological development. This can present a significant challenge in ensuring businesses and their staff are able to adapt to constantly changing technological requirements. The fast moving nature of parts of the IT industry and the continuous growth of the sector means that many employers are experiencing significant skills demand. The social dimension of IT sustainability concerns the impact organizations have on the local communities in which they operate and the risks that arise from the IT sustainability initiatives and operations. In particular, social issues are associated with human rights, political rights and other social rights. [AZAP04], [PROS15]

Economic aspects – In the current global economic situation, businesses are operating in a climate of uncertainty and this makes companies reluctant to make major investments. Infrastructure and technology upgrades are not always a priority. [PROS15] The economic dimension of IT sustainability concerns the organization’s impacts on the economic conditions of its stakeholders and on economic systems at local, national, and global levels. Financial performance is fundamental to understanding an organization and its own sustainability. However, this information is normally already reported in financial accounts. What is often reported to a lesser extent but is frequently desired by users of sustainability reports, is the organization’s contribution to the IT sustainability of a larger economic system. [GLOB15]

Environmental aspects – Recent studies have shown that the electricity consumption of PCs is growing globally by five percent year on year. In an average small-to-medium-sized enterprise, electricity consumption accounts for ten percent of an IT department’s budget, alarmingly rising to over 50 percent in some extreme cases. [ONEI10] The total electrical energy consumption by servers, computers, monitors, data communications equipment and cooling systems for datacenters is steadily increasing. This growth in energy consumption results in increased greenhouse gas emissions. Each PC in use generates about a ton of carbon dioxide every year. Computer components also contain toxic materials. Increasingly, a large number of old computers, monitors and other electronic equipment are being discarded, mostly ending up in landfills, thus polluting the earth and contaminating water. The growing number of computers and their use, along with their frequent replacements, make the environmental impact of IT a major concern. [MURU08]

Between 2000 and 2005 the amount of electricity consumed by data centers worldwide doubled

Perhaps the most worrying consideration is that between 2000 and 2005 the amount of electricity consumed by data centers worldwide doubled. [ONEI10] Data centers consume a significant amount of energy. That makes them not only costly to operate, but companies’ data centers contribute the most to the overall corporate carbon footprint. The increasing reliance on electronic data is driving the rapid growth in the size and number of data centers. This growth results from the swift adoption of Internet communications and media, the computerization of business processes and applications, legal requirements for retention of records and disaster recovery provisions. [HARMO09]

In the proposed comprehensive framework these social, economic and environmental issues are translated into quantifiable measures of IT sustainable development indicators.

Theories for Voluntary Reporting of IT sustainability Performance

Finally, why would organizations choose to voluntary provide information about their IT sustainability performance anyway? There are two theories that can explain this: the legitimacy theory and the stakeholder theory.

The legitimacy theory relies upon the concept of a social contract between the organization in question and the society in which it operates. The social contract is a concept used to represent the multitude of implicit and explicit expectations that society has about how the organization should conduct its operations. Failure to comply with these social expectations may lead to sanctions being imposed by society.

The other theory, the stakeholder theory, exists in two versions, namely an ethical or normative version and a positive (managerial) version. It is the positive version (and not the ethical or normative version) that explains why organizations may choose to voluntary disclose IT sustainability, because this version, and not the ethical version, predicts that management is more likely to focus on the expectations of powerful stakeholders. The powerful stakeholders will be those who have the greatest potential to influence the company’s ability to generate maximum financial return. [DEEG08]

Literatuur

[AZAP04] Azapagic, A. (2004). Developing a framework for sustainable development indicators for the mining and minerals industry. Journal of Cleaner Production, 12, 639-662.


[CAMF07] Camfferman, K and Zeff, S.A., 2007, Financial Reporting and Global Capital Markets; A History of the IASC 1973-2000, Oxford University Press.


[DEEG08] Deegan, C. and Unerman, J. (2008). Financial Accounting Theory. McGraw-Hill Education. United Kingdom.


[GLOB15] The Global Reporting Initiative (GRI), website,
https://www.globalreporting.org/Pages/default.aspx, geraadpleegd op 20 april 2015.


[HARMO09] Harmon, R. and Auseklis, N. (2009). Sustainable IT Services. Assessing the Impact of Green Computing Practices. PICMET, 2, 1707-1717.


[JAME14] James, T. (2014). Towards a Better Understanding of the IT Sector in South Africa: Problems and Opportunities for Strengthening the Existing Knowledge Base.


[MURU08] Murugesan, S.(2008). Harnessing Green IT: Principles and Practices; Adopting a holistic approach to greening IT is our responsibility toward creating a more sustaining environment. IT Pro, 1520-9209/08, 23-33.


[ONEI10] O’Neill, M. (2010). Green IT for Sustainable business practice: An ISEB foundation guide. British Informatics Society Limited, United Kingdom.


[PROS15]
www.prospects.ac.uk/IT_and_information_services_sector_overview.htm, geraadpleegd op 20 april 2015.


[TURN09] Turner, V. (2009), Sustainability, Green IT and Climate Change Management. Bringing Together Opportunities Within IT.


[WILS03] Wilson, M. (2003). Corporate sustainability: What is it and where does it come from? Ivey Business Journal, March / April 2003.

D.C.J. (Denice) Albertoe MSc EMITA

Denice Albertoe voert bij verschillende financiële instellingen werkzaamheden uit op het gebied van IT-audit en advies. Zij heeft verschillende artikelen over sustainability gepubliceerd. Denice is een alumnus van de ITAA-opleiding van de EUR.