Integrate Sustainability Into Your Technology Strategy

The time to act is now: Advance your utility sustainability journey through technology leadership and practices.

Analyst Perspective

Take a proactive role in shaping utilities' sustainability journey.

According to the United Nations' Sustainable Development Goal 2024 progress report, only 17% of the SDGs targets for 2030 are on track to be achieved, while the rest show minimal progress and are stalled or have regressed. There is an urgent need for all of us to double down our efforts to achieve transformative progress toward our goals.

Sustainability is a strategic imperative for utilities, deeply intertwined with their long-term success. While the importance of technology is acknowledged, technology leaders often find themselves on the sidelines of sustainability strategy development.

Technology is becoming increasingly important in achieving a utility's sustainability goals. To drive meaningful impact, technology leaders must take a proactive stance from passive observers to active leaders building toward their utility's sustainable future. By integrating sustainability into technology strategies with actionable initiatives, technology leaders can deliver tangible results through collaboration with key stakeholders as well as leading by examples within their own departments.

This trends report provides a comprehensive overview of sustainability trends within the utility sector. By leveraging proven framework and prioritizing high-impact initiatives, utilities can effectively integrate sustainability into their technology strategies and enhance existing practices.

Jing Wu
Principal Research Director
Info-Tech Research Group

Executive Summary

Your Challenge

The technology leader's role in sustainability is not clear, although sustainability has become a corporate imperative for many utilities.

Technology leaders are unclear how to achieve the organization's sustainability goals. Technology leaders across IT and OT within utilities are uncertain how they can contribute to achieving often-aggressive sustainability goals.

The challenge of tracking and reporting sustainability KPIs is substantial and continually expanding in scope.

Common Obstacles

Technology leaders are not seen as thought leaders in helping organizations to develop their sustainability strategy.

Technology teams are often not fully engaged in the utility sustainability strategy, despite playing a critical role in enabling sustainability efforts.

Technology leaders lack an effective approach to integrate sustainability holistically into existing strategy, governance, workforce develop, and data management.

Info-Tech's Approach

• Use this trends report to educate yourself on utility sustainability factors and its boarder impact on technology leaders within utilities.
• Leverage and enhance Info-Tech business-aligned IT strategy methodology to embed sustainability in your technology strategy and tactical roadmap.
• Discover initiatives that technology leaders can start doing immediately to contribute to your utility sustainability plan.

Info-Tech Insight

Utility technology leaders must proactively integrate sustainability in their technology strategy, leading by example in developing efficient, resilient, and sustainable technology operations that enable and contribute to the organization's goals.

Utilities' GHG emissions remain significant, but growth has slowed down

Electricity generation and heat production have been the largest contributors of greenhouse gas emissions (GHG) worldwide across all industry sectors since record-keeping began in 1990.

Highly populated and less populated countries consistently rank electricity/heat as the leading emitter of GHG.

However, the emissions from this sector have slowed down since 2013. Between 2014 and 2019, the energy sector saw a 4% increase in emissions, in contrast to a sharper 204% increase in emissions from industrial processes over the same period.

Source: World Resources Institute, 2023

MtCO2e = "Metric tons of carbon dioxide equivalent"

Various perspectives formulate utility sustainability imperatives

Utilities are making sustainability one of their strategic priorities.

1. Global regulators progress toward stringent sustainability measures.
2. Customer participation is lacking in advancing sustainability.
3. Investors demand strong sustainability commitments from utilities.
4. Technology vendors take a proactive stance on sustainability.
5. Workforces expect their organizations to act as sustainability ambassadors.

Global regulators progress toward stringent sustainability measures (1/2)

United States

The Securities and Exchange Commission (SEC) issued final rule 33-11042, titled "Enhancement and Standardization of Climate-Related Disclosures for Investors," in March 2024. These rules will require registrants to provide annual reports on climate-related information in audited financial statements and registration statements. The enhancement is to facilitate more consistent, reliable, efficient, and effective disclose of climate-related risks for both the investors and issuers.

California became the first state to pass bills on environmental, social, and governance (ESG) disclosure as of October 2023. The Climate Corporate Data Accountability Act (SB-253) mandates greenhouse gas emission (GHG) disclosures from both public and private business with over $1 billion annual revenue. Starting from fiscal year 2026 and utilizing data from fiscal year 2025, these organizations will be required annual disclosures through a digital reporting platform. In addition, the Climate-Related Financial Risk Act (SB-261) mandates all US companies with businesses in California with over $500 million annual revenues to disclose climate-related financial risks and mitigation measures on their websites biennially on or before January 1, 2026.

Canada

The Canadian Securities Administrators (CSA) published NI 51-107 Disclosure of Climate-related Matters in October 2021. In their latest update as of March 2024, CSA has issued statements on proposed sustainability disclosure standards and plans to conduct ongoing climate consultation on disclosure standards.

In March 2023, The Office of the Superintendent of Financial Institutions Canada (OSFI) published Guideline B-15: Climate Risk Management to provide a framework for Canada's financial system to recognize and manage the impact of climate change risks.

Global regulators progress toward stringent sustainability measures (2/2)

Europe

In January 2023, the European Union issued the Corporate Sustainability Reporting Directive (CSRD), which mandates many companies above a certain revenue threshold to publish annual sustainability reports in addition to their financial statements, starting with reports available in 2025. The Commission adopted the European Sustainability Reporting Standards (ESRS), first published in December 2023, making a major step forward toward fostering a sustainable EU economy.

In 2023, the UK government launched its Sustainability Disclosure Requirements (SDR), aiming to establish a unified framework for sustainability reporting. This new regulation enhances transparency and consistency in sustainability disclosure requirements, compared to previous regulations such as the Streamlined Energy and Carbon Reporting (SECR) implemented in 2019. Detailed implementation timelines of SDR are available in its published policy paper Sustainability Disclosure Requirements: Implementation Update 2024.

Australia

In March 2024, the Australian Government introduced Treasury Laws Amendment Bill 2024, outlining new climate-related financial disclosure, which includes annual financial reports and a new sustainability report. The legislation is based on IFRS S2 (climate-related disclosures) issued by the International Sustainability Standards Board, with phased-in reporting requirements starting on as early as July 1, 2025.

Customer participation is lacking in advancing sustainability

Significant improvements are required from US electric and natural gas utilities on sustainability efforts.

J.D. Power has conducted annual sustainability index surveys against both electric and natural gas utilities in the United States. Three factors are used to measure utilities' sustainability performance.

• Awareness
• Engagement
• Advocacy

Utilities must enhance transparency and increase customer awareness to engage them on their sustainability initiatives.

Investors demand strong sustainability commitments from utilities

Sustainability investors are driving utilities to commit.

The top four Sustainable Development Goals (SDG) most invested in by global ESG exchanged-traded funds (ETFs) in US dollars, out of the 17 goals developed by United Nations.

Global investors prioritize ESG factors in decision making.

Global institutional investors such as pension funds, endowments, and foundations value the following top three ESG elements in their investment decisions.

• Governance
• Climate Risk
• Diversity, Equity, Inclusion

Technology vendors take a proactive stance on sustainability

Partnering with technology vendors committed to sustainability becomes crucial when utilities expand their environmental assessment to include indirect emissions.

A recent global ranking of the world's most sustainable companies highlights the progress made by technology vendors in adopting green solutions and broader sustainability scope.

Source: Corporate Knights, 2024

Technology vendors not only enable utilities' sustainability agenda but should also provide transparent, reliable, and easy access to data and APIs to support utilities' reporting needs.

Amazon has integrated a free Customer Carbon Footprint Tool in their Cloud Infrastructure Cost & Usage Reports since 2022 to assist organization meet their sustainability goals. Alongside the tool, Amazon has provided a fine-grained sustainability proxy metrics to help organizations manage workload efficiency.

Microsoft has recently launched an Azure Carbon Optimization Service, offering granular emissions data, recommendations, and integration for reporting to assist organization in measuring and reducing their Azure carbon footprint.

There are no commercially available tools to measure the carbon footprint of Gen AI. Major LLM providers have not publicly provided detailed energy usage data yet, but progress is anticipated in this area. Within the open-source community, tools like ML CO2 Calculator published on Hugging Face have been developed for assessing the emissions of Machine Learning Models.