With its Big Green initiative, IBM is parlaying its computing, data and networking expertise into environmental services. Green Wombat last week chatted with Peter Williams of the company’s Big Green Innovations group, and Drew Clark of its Venture Capital Group, about Big Blue’s burgeoning environmental business.
The company has its hand in everything from designing Stockholm’s congestion traffic pricing system to deploying weather forecasting systems to help utilities better manage the electricity grid and make more efficient use of renewable energy like wind power. It’s also creating data networks to monitor water quality and building better membranes for desalinization plants.
But Green Wombat was particularly intrigued by IBM’s (IBM) move to add carbon consulting to its huge global business consulting operation. "Weíre working with customers that want to take carbon out of their supply chain," says Williams, the CTO for IBM’s Big Green Innovations group. "Itís like taking waste out of supply chain. We have a very large capability for computer modeling and we allow companies to optimize supply chains to take out carbon."
Demand for such services is being driven by competitive pressures to be seen as green as well as by all-but-inevitable caps on greenhouse gas emissions. IBM itself faces such pressures. "We had to submit a bid the other day where the customer requested the carbon content of our computers," says Williams, who works at IBM’s offices in the Bay Area suburb of Danville.
Adds Clark, who is director of strategic insights at IBM’s Venture Capital Group in Silicon Valley: "It becomes a competitiveness issue when everyone else is doing it and you look like the ogre of the block if you don’t." He says the pressure is particularly intense in Silicon Valley, where companies like Google (GOOG), Advanced Micro Devices (AMD) and Sun Microsystems (SUNW) increasingly compete on carbon. "Thereís incredible pressure to toe the line here and be more proactive by reducing the carbon content in product design or whatever you do."
The presents an opportunity for IBM to help clients calculate their carbon footprint and then re-engineer their manufacturing processes, supply chains and other systems to minimize their contributions to global warming. The goal is to manage carbon just as a company would manage the cost of electricity, raw materials or any other aspect of its business.
Williams says the biggest demand for carbon consulting currently comes from retail and consumer goods companies under the gun from consumers to be green as well as by the pressure Wal-Mart’s (WMT) is putting on its suppliers to make their products more environmentally friendly.
"There are some humongous pitfalls in working out carbon footprints," notes Williams. "There is no agreed protocol for calculating carbon footprints. Youíre going to have people make all kinds of claims." He says figuring out the carbon content of transportation and packaging is comparatively easy while calculating the carbon content of an individual product "is a tough nut to crack."
Says Clark: "We think the added value is being able to integrate carbon accounting with the rest of your business. You manage your supply chain to a set of parameters and one of those is carbon. And of course as you get carbon trading coming in, businesses want to know what their carbon position is."
"We see it as a huge growth area," he adds.
IBM Moves into Carbon Consulting