Sustainability Practices Driving Business For Solution Providers

Solutions providers say a focus on sustainability is helping close deals with customers who are concerned with everything from a company’s carbon footprint to getting a handle on soaring power and cooling costs in the data center.

Erik Stromquist, chairman and CEO of Portland, Ore.-based custom system builder CTL, says that building out a sustainability practice is simply good business.

In fact, the sustainability focus and a certification from B Corp., a nonprofit that audits a company’s social and environmental performance, is helping CTL close deals as more customers make sustainability a requirement in requests for proposal (RFPs).

“We’re seeing it help in RFPs and public response and dealing with the government and school districts in particular,” Stromquist told CRN. “That resonates well with our customers’ priorities.”

Ultimately, the B Corp. certification shows CTL is “committed” to sustainability rather than just talking about it, he said.

Sustainability has a broad range of definitions that refer to everything from a company’s carbon footprint to getting a handle on soaring power and cooling costs in the data center.

When it comes to IT, businesses have over the past couple of years taken on a sense of urgency, which springs from the fact that they are increasingly concerned about the environmental and human impact from production, generation and disposal of e-waste, and pollution caused by their IT activities.

Government regulations are also a major driver of sustainability. In this area, Europe is a leader with such regulations as the European Union Deforestation Regulation, which is focused on ensuring that imports and exports of several agricultural products do not lead to deforestation.

In the U.S., the Securities and Exchange Commission this year adopted new rules forcing companies to disclose climate-related risks with potential material impact, as well as processes for managing and mitigating those risks.

The more practical factor, however, is the rising costs of power and cooling, as well as the need to get rid of obsolete equipment. Average U.S. electricity costs reached 17.8 cents per kilowatt-hour in July 2024, up from 13.4 cents in early 2020, according to the U.S. Bureau of Labor Statistics.

The increased adoption of AI is also impacting power consumption. The nonprofit Conference Board said in June that current AI models like ChatGPT already consume 500,000-plus kilowatt-hours per day, and that the projected doubling of AI computational power every 100 days could increase global energy demand from AI by up to 36 percent annually going forward.

Furthermore, if the European experience with sustainability is any indication, U.S.-based companies will need to make sustainability a part of their business, said Belinda Fjord, director of ESG and global partnerships at Egiss, a Birkeroed, Denmark-based solution provider.

“I expect that as more and more companies in the European Union start to have some kind of sustainable solutions as a mandatory part of their RFPs, that will eventually also be the expectations of suppliers in the U.S.,” Fjord told CRN. “The U.S. is the biggest market for a lot of companies, but making global terms for your suppliers only in Europe doesn’t make any sense. There are new regulations in the EU laws to require companies to report non-financial data including ESG data, and those companies with entities in the U.S. will need to report the same numbers as well. So while this starts in Europe, it will definitely be affecting the U.S. as well. And most of these rules are based on the Green House Gas Protocol, which was actually developed in the U.S.”

Sustainability Beyond The Data Center

While the amount of power required to run and cool growing IT infrastructure is exploding, power is only one factor behind the increased interest in sustainability.

That growth has come as businesses are increasingly concerned not only about power consumption, but about meeting new regulations and reporting requirements, said John Mennel, managing director and the data and assets leader in Deloitte’s sustainability, climate, and equity practice, part of the New York-based $65 billion global systems integrator behemoth.

“Deloitte has a very significant sustainability practice that has grown a lot over the last three to five years,” Mennel told CRN. “A big part of that is the economics of sustainability have really flipped, and for most of our clients, sustainability now makes or saves money. So there’s a pretty good business case for it overall. Our services include working with clients on regulation, reporting and disclosures.”

Cognizant, the Teaneck, N.J.-based $20 billion global systems integrator, No. 8 on the CRN 2024 Solution Provider 500, works with customers’ sustainability initiatives in three ways, said Manoj Mathew, global head of sustainability engineering: consulting advice, system design to deliver on what it calls “pathways of change,” and efficient management of IT and non-IT infrastructure.

“Power is just one of the areas of criticality to a client, but for many of our customers the focus is on sourcing and material usage: Are there better ways of making products which are more acceptable to customers?” Mathew said. “Another focus is the decision-making process. If a customer decides to release a product, where do they source from? How do they ensure it has the least impact on the environment? The base tenet on which we try to design systems ... is that the least impact [comes] if you produce less, if you use less raw materials and if you ensure there’s less landfill or waste in the whole process.”

Sustainability conversations are on the rise, particularly as businesses look to modernize their environments to be more efficient in their data and AI practices with new workflows, asset management and so on, said Laura Tuller, senior systems engineer at Mainline Information Systems, a Tallahassee, Fla.-based solution provider that was named to the CRN MSP 500 list this year.

“How can they leverage the data and assets they have?” Tuller said. “That leads to discussions with their executives on visibility and observability, which leads to financial discussions and to cloud and hybrid cloud and what they’re doing with their data centers. Some customers are moving out of the data center, saying they don’t want to own the assets or worry about the power, the cooling, the people, nothing. Other customers are back from the cloud because of AI or security or unrealized cloud savings that they anticipated.”

Sustainability can be either a customer-led or partner-led conversation, said Jeff Ehrenhart, director of sales engineering at C1, a Bloomington, Minn.-based solution provider, No. 40 on the 2024 CRN Solution Provider 500.

“Sometimes you’ll have a customer that brings it up from the beginning, or it becomes part of the conversation as you get deeper into a project plan,” Ehrenhart told CRN. “And then other times it’s us bringing it up. While Europe is definitely heavier with the sustainability conversations, when we come back stateside it’s definitely picking up more traction, especially in areas like California and Texas that have known issues with the power grid. So it’s becoming a little bit more front of mind for a lot of organizations, I believe, even in the United States now.”

A Business Driver

World Wide Technology, the $20 billion technology powerhouse, which was No.7 on the 2024 CRN Solution Provider 500, has for the last two and a half years had a sustainability practice based on three pillars, said Brendan Walsh, principal for ESG. The first is around sustainable technology, primarily helping businesses understand their base-level carbon footprint. The second is combining that footprint to an energy reduction target, whether it is a science-based target or a net-zero target, to develop what WWT calls its “pathway to energy reduction.” The third is to bring visibility to data center life-cycle management.

Sustainability is not always a straightforward process, Walsh said. For instance, he said, while customer data center power has become more efficient, the significant rise in AI power requirements is already having an impact. Furthermore, there are hundreds of software applications for assessing carbon footprints, of which 25 or 30 are commonly used.

“There’s a plethora of data out there, and typically that data is housed in very disparate locations, disparate systems, different platforms around an organization,” he said. “So we look at how can we help customers bring that data into one central repository, like a data lake, and then build AI models that can really drive business insight. Now you suddenly move this from a reporting compliance kind of tool to one driving business insight and business value.”

Mike McElravy, director of sales engineering at C1, told CRN that sustainability drives additional business opportunities with customers.

“If a customer has a sustainability initiative, they’re going to be looking for ways to make their operations more efficient,” McElravy said. “That’s going to drive additional scrutiny on their existing operations and their requirements, not just in the data center, but at the edge as well. As they’re moving things out of the cloud and trying to process things locally via IoT devices or things like that, I think that’s going to be driving additional business.”