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Market opportunities are driving green technology

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PricewaterhouseCoopers has released the fifth volume in its Technology Executive Connections Series which shows that forty percent of technology executives believe the green movement creates significant market opportunities for their companies.

The report examines how the world’s accelerating concern over climate change is affecting technology industries and their plans to meet growing consumer demand for environmentally friendly products and services. Not surprisingly, notes the report, the majority of executives feel impelled to react to a rising demand for not only green products, but for greener operations as well.

But while protecting the environment is a fine objective, it is the promise of profits and an aversion to rising energy costs that is driving this desire to change. To achieve both goals, companies are re-examining the entire value chain of their products and services - from suppliers to sales and marketing. Whether it’s end-of life issues for hardware manufacturers or excessive packaging of software, all segments of the technology industry are facing environmental challenges and opportunities.

'The growing demand for more sustainable products and services could translate into one of the biggest new markets in recent memory,' says Bruce McIntyre, leader of PwC’s sustainable business solutions practice in Canada. 'Yet Canada is behind the eight ball on implementation. While the European model may not be ideal for our marketplace, our Canadian technology companies should be more proactive and seize this opportunity to drive growth while ensuring their green initiatives are in line with their business strategy.'

According to the survey, 61% of executives feel it is very important (29%) or important (32%) that their companies take steps to reduce their environmental impact. This shift towards green products, services and business operations is having a direct impact on the level of collaboration and innovation found throughout the entire technology value-chain, including marketing, human resources, research and development processes, manufacturing, and supply chains.

As organizations continue to evaluate their own business practices, they are paying closer attention to the actions of their partners and suppliers as well. According to the survey, one in five technology executives (18%) claim their companies practice environmentally preferred purchasing, where organizations select products and services that have a lesser effect on the environment than competitive products and services. The study suggests that this figure will rise to over half (53%) within the next two years.

Globally, technology organizations are also taking steps to safeguard themselves from future stringent government legislation and regulations by proactively imposing their own green-oriented controls. Twenty percent of survey respondents say their companies maintain a formal and widely distributed environmental policy. The study suggests this figure will increase significantly over the next two years, jumping to 48%.

A number of technology companies are also issuing Sustainability Reports. Within an organization, the reported information can be used to drive continuous improvement in environmental performance, as well as minimizing risks. Externally, technology companies can use these reports to highlight their environmental advantage in the marketplace with competitors, regulators and consumers.

While global organizations across all sectors are striving to become more environmentally responsible, the effects of the green movement on hardware manufacturers compared to software companies varies substantially. The statistics demonstrate greater interest and associated activity from hardware manufacturers compared to service-oriented businesses, such as software providers and content developers. According to the survey, 60% of technology manufacturers are developing green products and services, compared to only 33% of non-manufacturers.

'Technology manufacturers are taking aggressive steps to expand their portfolio of green products and services by pursuing energy efficiency, implementing designs that reduce or eliminate the use of hazardous materials, using recycled or recyclable materials, building products that last longer, and creating packaging that meets or exceeds global environmental standards,' comments John Delucchi, national leader of PwC Canada’s technology practice. 'A growing focus on reducing the weight of products and improving their capacity for recycling is also helping manufacturers better address 'end of life' issues such as the recovery and disposal of products that have run their course.'

The green movement also presents software and service-oriented technology companies with sizeable growth opportunities. The need for green technology consulting services and software aimed at helping organizations conduct business virtually, thereby reducing travel and thus the carbon footprint will increase substantially in the coming years.

'The pendulum swing towards green technology is unleashing a creative disruption within the global technology market. The pressure is on companies to respond quickly, make the most of new opportunities and manage their own environmental risk,' adds McIntyre.

The quantitative findings presented in the PricewaterhouseCoopers 'Technology Executive Connections: Going Green: Sustainable Growth Strategies,' report are based on a survey conducted by the Economist Intelligence Unit (EIU) in September 2007. The survey garnered 148 responses from senior executives based in five principal regions: 28% Asia; 31% Europe; 35% North America; 5% the Middle East and Africa and 1% Latin America.

In addition to a full copy of the report, a podcast, featuring PwC professionals, including Bruce McIntyre, leader of PwC’s sustainable business solutions practice in Canada, discussing sustainability issues can be accessed here.

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