The importance of network sustainability data and how to capture it
With ESG funds outperforming the competition in a pandemic-driven bear market, Gordon Smith, CEO of Sagent explains how to boost – and leverage – corporate sustainability
Corporate sustainability programs are getting their moment in the sun. Investors and consumers are spending more time investigating companies’ environmental impacts and making their choices accordingly.
Companies are being heavily criticized for greenwashing – simply touting a brand as “eco-friendly” isn’t enough anymore. Today’s shareholders and customers are savvier than ever, and they expect companies to demonstrate their environmental street cred with real data.
Documenting ecological progress is no small undertaking for digital enterprises, but those that succeed in capturing the right information—and using it to drive sustainability improvements—have much to gain. A key to success: don’t overlook the network.
Why Sustainability Data Matters
The old saw among business consultants, “what gets measured gets managed,” holds true with sustainability overhauls. To reduce costs and realize environmental targets, it’s essential to peg current performance, set quantifiable goals, and monitor and steer by real-world results.
But sustainability data is about more than corporate decision-making, as important as that is; it’s also a matter of reporting. Thousands of companies now provide ESG—environmental, social, and governance—information to investors, and ESG scores are having a growing impact on stock performance and market valuation.
“A company’s ESG score will increasingly determine if trillions in global institutional and retail capital will flow toward them or away from them,” according to Corporate Board Member.
And that statement was made before Covid-19. Since the public health crisis began, ESG funds outperformed the competition in a pandemic-driven bear market, per a Morningstar analysis. And their relative stability, paired with an urgent and ongoing reassessment of shareholder priorities, has many experts predicting a surge in values-based investing.
The Circular Economy
For operators of large digital networks, IT hardware is a significant contributor to the environmental footprint, and ESG scores specifically take waste into account. And for good reason—e-waste comprises 70% of toxic waste in US landfills despite making up only 2% of volume. Moreover, equipment manufacturing relies on a wide range of inputs, from energy and freshwater to plastics and rare earth elements, which businesses aim to manage more sensitively.
Diverting physical hardware from the e-waste stream must, therefore, be included among any company’s environmental objectives in order to reduce carbon footprint, enhance water sustainability, slash pollution, and achieve other positive impacts. Although recycling has its place, implementing a “resale first” strategy better aligns with the environmental credo to reduce and reuse, and only when full value has been extracted, recycle the components.
This is where the circular economy comes in. Sometimes referred to as the “green market,” the circular economy involves repairing, refurbishing and reselling used IT hardware to customers for which it still holds value, thus extending the lifecycle. And the results are typically impressive.
For example, a green market initiative by a prominent cable MSO that Sagent works with resulted in the refurbishment and resale of 1.1 million devices over just three years. This represented nearly three million pounds in weight of networking hardware that gained new life, delaying components’ entry into the e-waste stream and reducing overall manufacturing inputs.
A Matter of Motivation
Unfortunately, many companies overlook the vital resale phase of the product lifecycle and push functional hardware directly to reclamation facilities—and the underlying problem is usually lack of data.
Many network operators simply do not recognise the revenue-generating potential residing in equipment that no longer meets their needs, and most companies fail to track progress on e-waste diversion. By remedying these oversights, corporate leaders can provide the financial and ESG motivation to engage with the circular economy.
A solution will generally include:
Monitoring green market pricing to set values for all equipment in service, identify hardware appropriate for resale, and strategise resale targets and timing to maximise revenues
Tapping network operator relationships to match used hardware with customer demand and establishing a repair and refurbishment capability to prepare the equipment for market
Capturing full detail regarding e-waste diversion by product and type of waste (e.g., circuit boards, plastics, highly refined glass, precious metals, and other commodities) and incorporating such granular data in internal and ESG reporting structures
Closing the loop by educating stakeholders regarding the value of the program and guiding acquisition decisions based on reuse, resale, and commodity recoverability potential.
Given the complexity of this challenge, there are outsourcing providers offering full-service alternatives to take hardware from decommissioning through resale and return actionable data and insights for corporate decision-making. Whether a company avails itself of such services or builds internal capacity to leverage the green market, making data the foundation of the strategy is sure to enhance results.