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Environmentally sound business practices go by many names such as green, corporate social responsibility, environmental excellence, sustainability and more. I prefer the term sustainability — "meeting the needs of the present without compromising the ability of future generations to meet their own needs" — for its emphasis on taking a short-term and long-term perspective. Although many companies incorporate employee welfare and corporate philanthropy into their definition of sustainability, Manufacturing Insights focuses on issues that relate specifically to the environment, because we believe this is the area in which the most dramatic change will occur over the next 10 years, and where we believe information technology (IT) can play a significant role.

To some extent, sustainability is good business sense, as it can lead to revenue generation and cost savings, and regardless of company location or size it will increasingly represent the minimum cost of entry to a market and become part of a company's competitive dynamic. Yet for many businesses, going green starts with legal regulations and compliance (Figure 1), perhaps with industry-specific requirements such as RoHS and WEEE in electronics, TREAD Act in automotive, REACH in the chemical industry, corporate accounting regulations such as Sarbanes-Oxley and more. And customer mandates are driving change with just as much force, with companies like Wal-Mart taking leadership roles with a Packaging Scorecard created to drive suppliers to reduce packaging by 5 percent by 2013 and HP releasing its list of suppliers that represent 95 percent of its direct spend in procurement (expenditures on materials, manufacturing and product assembly) to increase the amount of transparency in how products are manufactured and by whom.

Figure 1: Evolution of Sustainability (Source: Manufacturing Insights, an IDC Company, 2008)

Although companies must satisfy the legal requirements of sustainability and customer mandates, few stop there. Increasingly, companies produce documents full of their achievements in corporate social responsibility reports with sections devoted to environmental achievements, or they develop marketing campaigns about green processes, products and services. Again, companies are making strides at this level, but the focus is more about promotion and advertising campaigns based on identifying themselves as the greenest companies.

Fortunately, we are seeing a shift in the way manufacturers' view sustainability beyond a one-dimensional view in which they conform to a single regulation or requirement or consider it a marketing necessity to satisfy consumer or customer demand. Rather, manufacturers are examining their internal and external operations and applying sustainability in the context of the entire product lifecycle with a longer-term view in the way they design and deliver the next generation of their products and services. This is tricky business to say the least. While many companies claim to have green products and services, a significant number of those are what we would call "superficially green."

For a company to produce truly green products and services, a manufacturer must take a value chain and product lifecycle perspective from "cradle to cradle." We are in no way close to being able to do that, but companies are making progress. In their own operations, manufacturers are implementing energy and water efficiency programs, encouraging telecommuting and changing their indirect spend in ways that are as simple as buying recycled paper. Looking outward, manufacturers are working with suppliers to reduce or change packaging to recycled plastic or biodegradable materials, replacing ingredients or components with those that are more environmentally-friendly, going back to the design process, and even changing suppliers and processes when necessary. We can't even begin to list all of the ways that manufacturers are making green improvements, but the idea is to look at the big picture from the very beginning thoughts of a product design through its delivery in the supply chain and use in the hands of a consumer, to making decisions about how to manage a product's end-of-life.

The difficulty still remains that if truly green products and services are the goals, how exactly should you reach them? Despite the fact that sustainability is a very talked about subject these days, it is still a moving target. I see manufacturers defining their sustainability initiatives as green programs related to redesigning products and services; redefining supplier requirements; re-evaluating energy and water consumption; minimizing greenhouse gas emissions; identifying options across "reduce, reuse and recycle;" and finally determining the company's current environmental footprint, defining goals and measuring against those goals.

I want you to notice how many times I have to use the prefix "re-" to describe green programs. Basically, there is a lot of re-thinking that needs to happen in order to change the way products are created, delivered, used and decommissioned. And to support that decision-making process, Manufacturing Insights relates sustainability to five basic categories (Table 1). As many of you know, Cisco Systems is no stranger to regulatory and compliance issues as a member of the high-tech electronics industry. In my table, I've highlighted some of the techniques and initiatives Cisco is taking in each of those categories as it executes in its operations and supply chain management.

Table 1: Five Categories of Sustainability (Source: Manufacturing Insights, an IDC company, 2008)

Let's come back to the issue of determining the company's current environmental footprint, defining goals and measuring against those goals. Given that most executives agree that green needs to be part of their overall business strategy, few know how to value or prioritize their initiatives, recognize the appropriate trade-offs and, even more importantly, measure success. Many companies, without clear environmental guidelines (combined with the absence of regulations or customer mandates), struggle with the "going green" business case, waiting until outcomes (or even the path to green) can be predicted and defined more reliably. In the meantime, companies still need to move ahead. Here's my advice: Invest with confidence in any sustainability initiative that satisfies what I would call the most basic of business goals: profitability and customer service, both from a short- and long-term perspective. That can be anything as simple as improving energy efficiency by turning out the systems and lights in unoccupied facilities, or something as complex as Caterpillar's creation of an entire refurbished product line that attracts a new customer base and reduces waste.

A large part of the challenge of going green comes from the fact that we have no authoritative way to easily or accurately measure a carbon footprint (or any other type of environmental footprint). You can calculate your own footprint with oversimplified models found on the Internet by answering questions such as how many miles do you drive your vehicle in a month; what type of gas mileage you get with that vehicle; how much electricity, oil and gas your home consumes; and how often and far you fly. It's not a perfect system, but it helps individuals identify how they can improve, and that's effectively what we need for businesses — some model that allows a company to understand what they need to improve and then track those improvements, not to mention the competitive side of the issue (is my company or product improving faster than those of my competitors and in the way that my customers will appreciate?).

While companies need to conduct quantitative environmental audits of their own products, processes, relationships and more, I remain skeptical of carbon footprinting at the same time I acknowledge we need a measurement process of some sort. As this process evolves, companies can take advantage of some of the publicly available information available such as the U.S. Department of Energy (DOE)'s program to certify industrial plants for energy efficiency (www.superiorenergyperformance.net).

Another great source of information is the Environmental Protection Agency (EPA). On its Web site, the EPA provides a wealth of information through two programs — SmartWay (www.epa.gov/smartway) and the Climate Leaders Program (www.epa.gov/climatechange/). In partnership with the freight industry, the EPA's SmartWay program has developed a way to quantify a fleet's environmental performance using details such as the number of trucks in the fleet, gallons of fuel consumed and mileage accumulated. The information becomes the basis for evaluating the effectiveness of a company's fuel savings and emission reduction strategies in its fleet operations.

The EPA's Climate Leaders program has produced the Climate Leaders GHG Inventory Guidance, based on an existing protocol developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). Climate Leaders Partners develop their GHG emissions inventory by documenting onsite fuel consumption and energy use, industrial process-related emissions, onsite waste disposal, onsite air conditioning/refrigeration use, indirect emissions from electricity/steam purchases, and mobile sources.

Although the Global Reporting Initiative (GRI), like many organizations, uses a combination of social, economic and environmental performance in its definition of sustainability, the GRI's charter is to encourage companies to consider sustainability reporting as routine as financial reporting. Its publicly available information includes detailed Sustainability Reporting Guidelines to encourage companies to present information in a uniform manner so results may be compared across companies globally.

But where does IT come in to going green? First, there is the more obvious "Green IT," changing IT asset management and the data center to be more energy efficient and more responsible in recycling. "IT for Green" is much broader, considering how IT resources can contribute to greener supply chains, greener products, greener operations and more. Here are a few examples of how existing applications can play a role in sustainability:

• Reporting and analytics: Creating a knowledge center on company policies and applicable regulations as well as a measure of how well the company is performing against its green requirements
• Procurement and supplier relationship management: Incorporating evaluation criteria related to recycling-friendly materials, processes or packaging, as a few examples
• Product lifecycle management: Understanding tradeoffs at any point in the product lifecycle, with visibility into compliance (or compliance gaps) and the ability to create "what-if" scenarios such as "how much will it cost to make the packaging green" and more
• Transportation management: Evaluating and optimizing transportation options related to different weights such as fuel consumption vs. arrival time, mode comparisons

And just as we can't even begin to list all the ways manufacturers are incorporating green into their businesses, we can't reference how every IT resource will change the processes and the products. But we can identify a few ways that Cisco is using IT, including the implementation of a systematic accountability approach with ISO 14001, an international specification for an environmental management system that includes environmental objectives, measurable targets and management review. Cisco also uses a Web-based information management tool developed with funding from the EICC and the Global e-Sustainability Initiative (GeSI), of which Cisco is also a member, that enables suppliers to complete capability and performance reports on their green and social responsibility programs. Cisco's Supplier Information Management platform supports supplier communications during the RoHS validation process and supplier surveys on material content and other metrics. And Cisco is actively replacing air travel, increasing productivity and strengthening collaboration with new collaborative platforms such as Cisco TelePresence. By rolling out TelePresence to Cisco sites with supply chain employees, major contract manufacturer locations as well as supplier sites, Cisco is now using TelePresence to conduct many supplier design and business reviews among other functions. This year TelePresence will enable Cisco's supply chain organization to reduce its travel 25 percent less than the previous year.

To conclude, I'd like to share some of the guidelines we've developed during our research on how companies can develop their sustainability strategy:

• Your company may need to rethink its business model: Energy companies clearly face this, with their shift away from a model where revenue increases with demand. For manufacturers, this means new products, new combinations of products and services or even new customers or new partners.
• Make it easy for your customers to go green: Create greener product alternatives, and take the complexity out of going green with new services and product combinations.
• Don't change your ROI requirements for green operations, products and services: But recognize that regional cost differences may make projects more appealing in some manufacturing sites over others. Then use more successful projects to fund those that have lower (or more long-term) financial benefits.
• Reduce and reuse are the first steps, and then comes recycling: Apply this across a broad spectrum — raw materials, packaging, energy, water and more.
• Make public commitments, including your targets, and report on your progress: This not only benefits your reputation but also makes sure everyone is living up to the same standards. And don’t lose sight of the fact that it's not just about carbon or carbon dioxide.
• Ask for participation from employees and suppliers: The important component in that statement is the need for voluntary participation, with manufacturers commenting that once employees and partners know the goals, the task becomes much easier. One caution: With suppliers, it often requires a 1:1 connection.
• Take advantage of government programs and knowledge in your peer group: That includes many of the examples we discussed earlier, such as the EPA and DOE.
• Data matters: We can't emphasize enough that this is about a shift from the qualitative to quantitative in goals, performance metrics, identifying improvement opportunities and more. One key point: Efficiency improvements will put a company in a good place for any carbon or environmental regulation, as long as you have the data to demonstrate those efficiencies.

Manufacturing Insights will continue its exploration of IT and sustainability with more reports over the upcoming year. I'd like to hear more from you on the topic of what you need from IT to support your sustainability efforts. You can email me at kknickle@manufacturing-insights.com.

About the Author: As a practice director, Kimberly Knickle is responsible for research and analysis on emerging applications related to the supply chain, RFID, sensor networks and more. Knickle contributes continuous analysis and data compilation for the annual industry spending guides, as well as hardware, software, and services strategy guides for the process industry sector, including consumer packaged goods and chemicals. Knickle is a graduate of Boston University's School of Management, where she earned her MBA degree. She also holds a bachelor's of science degree in electrical engineering from Cornell University. www.manufacturing-insights.com.