Undeterred by the harsh economic climate, banks continued to announce green IT initiatives throughout the crisis, but are these projects motivated more out of concern for the bottom line than the environment?

In the mid-2000s, the concept of 'going green' made its way into the public consciousness with an almost faddish rapidity, and became a buzzword perceived as necessary to every business plan. The banking sector was no different, and power and resource-hungry financial institutions responded to the public desire for more environmentally conscious operations with company-wide sustainability programmes, most of which included a sizeable green IT component.

The advent of the global financial crisis meant that, in much of the world, banks were left with more immediate concerns than their carbon footprint. As technology budgets constricted and personnel numbers were slashed, it would be understandable to expect that green IT projects would follow other non-essential IT initiatives to cancellation or a limbo of postponement.

Regular announcements continued to emanate from the financial industry, however, with just about every institution continuing to declare their new green technology initiatives. The reason for this, most banks will admit, is that saving the planet often coincides rather nicely with saving energy, IT resources and, ultimately, money.

A cynic might suggest that many green IT initiatives are little more than cost-cutting measures, routine or otherwise, dressed up for PR purposes. And, indeed, technology projects undertaken solely for the sake of the environment have been rare, says Simon Mingay, research vice-president with research and advisory firm Gartner. "The nature of most, if not all, that has been done in the name of green IT over the past few years has been about cost saving, cost avoidance, relatively short-term return on investment [ROI] and low risk," he says. "In a downturn that looks pretty attractive, and that's why green IT has held up very well."

Certainly, saving the planet does not appear to be at the top of most firms' lists of reasons for implementing greener computing strategies. According to a recent multi-industry survey by market research and analysis firm IDC, the cost of energy, growth in IT infrastructure and data were the most pressing reasons reported by respondents for their company's adoption of green technology and sustainability measures.

Regardless of the motivation, however, the arguments for introducing at least some greener IT policies are strong, says Vernon Turner, senior vice-president of IDC's enterprise infrastructure, consumer and telecoms research. "Sustainability should be inside every CIO's profile because it's going to make them much more efficient as an organisation, and that way it's easy to justify." He adds that because the banking sector tends to have large, expensive IT infrastructures, there is tremendous opportunity for them to take advantage of sustainability initiatives.

"There are good commercial and business drivers for green IT projects, which are as relevant in good times as during a financial crisis," says Francis Sullivan, HSBC's deputy head of group corporate sustainability. "And some of them are actually very mainstream objectives, such as security and cost reduction."

Dealing with datacentres

Whatever the motivation, a bank cannot fabricate green benefits where none appear, and radically reducing energy usage will have an equally dramatic effect on a bank's carbon footprint as its bottom line. Reducing the amount of power most banks dedicate to running and maintaining their mammoth datacentres in particular is an area that would appeal to environmentally conscious and thrifty CIOs alike. HSBC's Mr Sullivan identifies datacentres as a priority and says the bank is in the process of consolidating a large number of datacentres it accumulated through rapid, acquisition-led growth, and is identifying where best to place these operations to avoid excessive power usage for electricity and cooling.

HSBC is also in the process of virtualising a number of its IT operations. Whereas in the past, every time a segment of HSBC wanted to set up a new IT system it would order its own servers and datacentre space, resources are now shared across the entire company, says Mr Sullivan. "It was an incredibly inefficient way of doing things because you had lots of partially utilised servers. Now, through virtualisation, we are getting to the stage where we will be able to turn off more and more of these servers. We will start to see a peak in our energy use, which means a peak in our costs and our carbon footprint."

Eric Schwartz, president of datacentre provider Equinix's European operations, says his banking clients have been increasingly interested in more efficient datacentre usage, although he acknowledges that it is not likely to be the first factor in attracting clients to the firm. "Efficiency is important to us on two dimensions. It helps us lower our costs and it is an issue customers raise and want to understand," he says. "They are concerned about efficiency and performance. They understand there is a trade-off between the two, but they still want the best possible efficiency given the performance expectations they have."

To achieve this the firm has implemented a number of what Mr Schwartz describes as "incremental investments in efficiency", for example, using outside air cooling in a number of its sites (which Mr Schwartz says "generally pays for itself"), installing variable-use fans that work harder depending on the level of heat being generated by the servers, and putting barriers over servers to keep cool air from dispersing so easily.

Beyond these measures, some of Equinix's datacentres run purely on power generated from green sources. However, Mr Schwartz concedes that Equinix is usually restricted by whatever the local grid provides. He adds that while the firm can source power from cleaner sources if a client requests, appetite for such a service is limited.

Slimming down

Away from power-hungry, high-performance datacentres, many banks are cutting down on the number of desktop PCs used by installing thin client computers - small terminals that rely on a main server for much of their computing power - delivering significant power savings.

For example, TD Bank - which claimed to be the largest US bank to achieve carbon neutrality in February 2010 - has begun the process of converting some of its 84,000 desktop devices to thin client systems, says Dave Codack, head of employee technology and network services at the bank. "We are going to install 5000 thin client devices next fiscal year (which begins on November 1 for the bank) and 5000 the following," he says. "This gives us a reduced cost of manufacture and reduced environmental impact in manufacturing." Mr Codack adds that they will also last significantly longer than a "fat client" device - seven years, in comparison to a laptop or desktop's respective three- and four-year typical lifespans.

TD Bank is also employing technology to cut down on a lower-tech source of carbon emissions - business travel. It has invested in Cisco's 'telepresence' technology, which creates a more realistic video conferencing experience thanks to features such as high-definition video and 3-D audio output.

"We have gone heavily into video conferencing using things such as telepresence," says Mr Codack.

"We have put six sites into North America as part of a collaboration between TD Bank's technology, environmental and real estate groups, and they will be used as a central hub for large meetings where we would usually use video conferencing. The driver is to decrease travel and improve the employee experience, because you miss the rich interactions from people's body language."

Cutting E-Waste

Upgrading to less power-hungry IT infrastructure will render old equipment surplus to requirements, and this electronic refuse is a huge and growing problem. According to a UN report released in February 2010, the amount of e-waste generated across the globe is increasing at a rate of about 40 million tonnes per year, and concerns about the hazardous materials this generates are mounting, too.

The flagship for proper disposal of e-waste, says Mr Mingay, is certification from Seattle-based charity Basel Action Network's e-Stewards programme, which ensures e-waste is disposed of using the highest possible standards for recycling, disposal and refurbishment.

The scheme is currently extremely US-centric, so thus far members from the financial world have included Wells Fargo and Bank of America. "We want to do everything we can to make sure our hazardous e-waste is properly handled, and the point of it is that we want to make sure that it doesn't end up in the hands of children in emerging countries," says Stephanie Rico, vice-president environmental affairs with Wells Fargo.

Nevertheless, Ms Rico says Wells Fargo has been concerned with the proper disposal of its e-waste for several years now, albeit not from a strictly environmental perspective. "We started this process 10 years ago, and it related to information security. When we were disposing of our hardware and electronics and looking at it from an information security perspective, our technology group started looking at where things went, because we wanted to make sure the information was completely annihilated," she says. "That then raised issues about how it is being properly disposed from a social and environmental perspective."

Mr Mingay cites disposal of e-waste as one of the few parts of a good green IT strategy where, if done right, it will not save money. "When an organisation says it is recycling, what that usually means is it is handing it to an organisation qualified to deal with it, and beyond that it does not care," he says. "If it goes down the e-Steward route, that would come at a cost."

Ms Rico is reticent on the topic. "We can't put an exact figure on how much extra we pay for making sure the information is secure," she says. However, she adds if reputational risk and negating environmental impact is factored in, a longer-term view may make more economic sense. "If you look at cost in relation to the long-term costs and risks associated with improper disposal, I would guess that what we pay is probably a lot less than doing it the other way round."

Although it is not an e-Steward member, TD Bank says that by making the extra effort to dispose of its e-waste, it is actually saving money as the equipment is broken down and sold for parts. "We only go through vendors who will treat the products in such a way that it won't hurt the environment," says Mr Codack. "We've teamed up with a vendor who deals with the disposal to our standards and the cleansing of the data for privacy reasons and sells it on. The proceeds are split 50/50, and we donate our portion to charity." TD Bank disposed of 38,000 pieces of equipment in 2009, and all but 1100 were broken down and sold for parts, says Mr Codack.

Low-hanging fruit

While the banks will admit there is a good business case for most of the green measures introduced so far, Mr Mingay says that for any further progress to be made, the ROI will be less clear-cut. "Some 15% to 20% of organisations have now got to the point where they've grabbed the low-hanging fruit, they've done all the stuff with the obvious and easy and positive returns and are asking what's next. There are a lot of potential options, but they don't always have a strong ROI - or at least not a clear one."

Mr Mingay says there are many energy-efficiency measures open to banks which are not being taken because they do not currently make economic sense. In particular, he points to datacentre infrastructure management - including dynamic energy management - whereby power consumption is modified to more accurately reflect the amount of work being done by powering down parts of the IT infrastructure and datacentre that are not being used.

However, financial institutions are generally unwilling to make these changes, he says. "That's not where the industry is at the moment. The attitude in datacentres remains: 'If it aint broke, don't touch it'. They want everything fully powered up so that when the peak demand comes, it's there."

Similarly, he suggests that organisations generally massively over-provision their data centres, server and storage capabilities. "It's a behavioural and process issue, but organisations need to get better at provisioning the right capacity," he says.

In the current economic climate, however, banks may not be so keen to pursue technology projects with less obvious returns. And, in any case, banking with a green firm may not be a pressing priority for all customers right now, says HSBC's Mr Sullivan. "For a minority it's really important, but others couldn't care less. All they really want is something that is fit for purpose, which they can understand and is reliable. When it comes to green initiatives, it's important we do things for the right customer reasons and not broadcast what we're doing to all customers, because they're just not going to be interested. They just want a bank account that works or a credit card that does what it says on the tin."

However, TD Bank's Mr Codack sees customer expectations of environmentally friendly behaviour on the part of banks as crucial. "There are greater expectations from the customer that we are doing what is right for the environment. It is expected and it's almost table stakes now to be in the game. You have to do it - not as a differentiator but because it is the right thing to do."

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