Leading business in a resource-constrained world

JUNE 26, 2019 • BLOG POST • CHRISTOPHER WELLISE, CHIEF SUSTAINABILITY OFFICER

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IN THIS ARTICLE

  • HPE released new Living Progress Report, setting forth the business case for sustainable innovation
  • Customer engagements on sustainable IT solutions are driving new revenue
  • A carbon-constrained market will offer new opportunities to apply HPE technology to deliver efficiencies

Sustainable innovation is critical to success in the 21st century economy

We often hear about the perils facing our planet and our economy: resource constraints and rising commodity prices, climate change and extreme weather. It’s easy to turn a blind eye, and with good reason. But while we often view these global challenges as an insurmountable crisis, what if we instead considered these threats as a source of opportunity. In the 21st century economy, the billion – or perhaps trillion – dollar question will be how to transition our economy to decouple economic growth from consumption.

It’s easy to be skeptical, but the evidence is clear. The Business and Sustainable Development Commission has estimated that meeting the UN Sustainable Development Goals could add some $12 trillion and 380 million jobs to the global economy by the end of the next decade; while Accenture estimates that the transition to a circular economy – one that promotes maximizing the value of resources and minimizing waste – could be a $4.3 trillion global growth opportunity by 2030. Similarly, embracing renewable energy could save $160 trillion in climate change costs by 2050.

For HPE, our latest Living Progress Report, HPE’s annual environmental, social, and governance (ESG) report, sets forth the business case for sustainable innovation by quantifying the short- and long-term financial opportunities of developing technology solutions that facilitate a transition to a more sustainable and circular economy. We are already seeing how enterprises that adapt their businesses to succeed in a resource-constrained world will gain the competitive advantage with innovative new products and business models that achieve transformative efficiency and open new market opportunities.

Generating revenue from sustainable IT solutions

As our customers accelerate their digital transformations, escalating demands for real-time insights are causing them to experience power, space, cooling, or resource limitations. We recognize the opportunity and imperative to innovate sustainable IT solutions that minimize the resource demands of IT, thereby cutting cost and reducing its environmental impact—both of which are priorities for our customers. For HPE, our expertise as a commercial partner, as well as the sustainability performance of our products, supply chain, and operations gives us a competitive advantage.

Last year, our customer engagements on sustainability and IT efficiency contributed to approximately $312 million in HPE net revenue – and we know that the sustainable attributes of our products enable access to markets anywhere in the world with certifications such as EPEAT and ENERGY STAR. But we have only just begun to scratch the surface. We believe an estimated 40% of HPE’s portfolio is differentiated from the competition on sustainability grounds, representing approximately $7 billion in revenue.

Since the 1990s, HPE has been embedding sustainability into our innovation pipeline, aiming to minimize waste and increase efficiencies through our Design for Environment program for product development, which has led to major efficiency innovations such as significant product per watt improvements, real-time thermal and power monitoring at the component level, and power proportionality.

And there are countless examples of how HPE combines efficient hardware and software that work together to eliminate inefficiencies, so our customers can do more with less. Take, for instance, the fact that most enterprises overprovision significantly: 59% for compute on average, and 48% for storage. That’s excess infrastructure that consumes energy, resources, and money, but isn’t doing any useful work. Solutions like HPE Composable Infrastructure or HPE GreenLake, both billion dollar businesses for HPE, are two solutions that help eliminate this – by allowing IT to operate from a single platform and automating the process of provisioning, or providing customers with consumption-based contracts, respectively. Ultimately, these innovative efficiency solutions enable our customers to lower resource use and equipment burden with fewer stranded resources. A win-win for sustainability and business.

Identifying long-term market opportunities in a carbon constrained world

But the reality is that, in a world of rising and volatile commodity prices and increasing environmental disruptions, these small efficiency gains won’t be enough in the long-term. Enterprises will need to proactively transform their business models to be far less energy- and resource-intensive throughout the value chain. And companies that anticipate and create solutions for a low-carbon world will have a huge advantage.

Although we recognize that climate change poses substantial risks to HPE’s business, the opportunities to develop technology solutions that accelerate a low-carbon economy are often underestimated. In 2018, HPE was among the first large IT companies to conduct a forward-looking analysis aligned with the recommendations of the G20 Task Force on Climate-Related Financial Disclosures (TCFD) to better understand the environmental and financial opportunities of enhancing current climate strategies. HPE’s findings predict numerous business opportunities, amounting to $14 billion over the next 5-15 years, if the global economy transitions to new low-carbon technologies and applies them to reduce operational energy demand.

For example, pursuing hardware and software innovations that enable more efficient industrial processes – which currently account for about 40% of global energy demand – would open new markets for technologies such as hybrid cloud, artificial intelligence (AI) and edge computing. Similarly, enterprises in sectors such as energy, transportation, and agriculture will increasingly demand technologies that make processes and systems more efficient and help them thrive in a carbon constrained market.

Advancements in technology could help solve our most pressing social and environmental challenges, yet despite this progress, our current economic model is flawed. Today, faced with dwindling resources and a climate emergency, the transition to a low-carbon and circular economy is seen by many as the only viable future – and we agree. As HPE CEO, Antonio Neri, recently said, “The task of combating climate change is a responsibility we all share, and as leaders in the tech industry, we occupy a vital role”. With so much to gain, and to lose from inaction, we must embrace sustainability as a driver for innovation and ask ourselves how our businesses can adapt to succeed in this new reality. This is not just a moral imperative, but a business imperative.

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