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Energy Efficiency as an Imperative Climate Strategy

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02 Feb, 2025

This post was originally published on Sustainability Matters

With mandatory climate statement disclosure rolling out in Australia, businesses need to start reporting on their emissions and sustainability plans for the future. As companies begin assessing the relevant risks and opportunities related to various climate scenarios, energy efficiency presents itself as an immediate climate-strategy with long-term benefits.

Commencing 1 January 2025, businesses that meet two of the three conditions — more than 500 employees, gross assets above $1 billion or $500 million or more in consolidated gross revenue — are required to lodge a climate statement, which discloses their climate-related plans, financial risks and obligations. As part of the gradual roll-out, by 1 July 2027, businesses that meet two of these conditions — more than 100 employees, gross assets above $25 million or exceeding $50 million in consolidated gross revenue — will also be required to report.

This climate statement will need to include the company’s sustainability governance, climate risks and opportunities, including those physical and transition related. They will also need to disclose their Scope 1 and 2 emissions, strategy to decarbonise, and conduct scenario analysis on the short, medium and long term impacts on the business. By the second year of reporting, businesses will also be expected to report on Scope 3 emissions.

Scenario analysis will be based on various assumptions of the state of the climate, one of which includes a possible future where global temperature has increased 2.5°C or more. They will be required to share their climate strategy and steps they are taking long-term in preparation for this scenario.

Common themes within climate strategies will include switching to renewable energy sources, electrifying fleet vehicles, purchasing carbon credits, and carbon capture and storage. Many of these methods look at reducing emissions through the energy source, or targeting the carbon aspect directly; however, climate strategies can also include reducing the amount of energy used. By investing in more energy efficient equipment, sites can maintain production whilst using less energy and producing less emissions.

When increasing energy efficiency and reducing energy consumption first, businesses will see short-term impacts; however, in the long term, they are also improving their foundation for an energy transition. Assuming no other changes, higher energy efficiency can lead to decreased energy demand, allowing for reduced system requirements when specifying and planning for self-generation or energy costs.

To understand what opportunities are available for upgrading to more energy efficient equipment, businesses can start with an energy audit to understand how energy is being consumed across site. Energy audits, like the ABB Energy Appraisal, can provide a roadmap for where and how equipment can be upgraded for the best energy saving potential. An energy audit identifies areas that can be immediately improved with existing equipment on the market, so there is no need to wait for the commercialization or development of more sustainable technology. Going beyond just changing all lights to LEDs, efficiency recommendations may include areas where variable speed drives can be added to control motor speed or upgrading from an IE3 motor to an IE5 ultra-premium efficiency or IE6 hyper-premium efficiency motor to reduce energy losses by 40% or more. This area can often be overlooked on sites as the Minimum Energy Performance Standard (MEPS) in Australia for motors is just IE2.

Mostly used in pumps, compressors, conveyors and fans, motors may seem like a minor part of a site; however, with 45% of the world’s electricity converted into motion by industrial electric motors, there are many opportunities for energy savings. In fact, a recent survey commissioned by ABB IEC Low voltage motors, showed that 92% of surveyed businesses in Australia recognize the important role of electric motors in achieving sustainability targets. In this same survey, participants ranked a reduction in operating cost as a more important driver for investing in energy efficiency than lowering their organization’s emissions. This is because upgrading to newer, more efficient equipment provides benefits beyond just emission reduction. For example, ABB’s Synchronous Reluctance (SynRM) Motors, available in IE5 ultra-premium efficiency or IE6 hyper-premium efficiency, use no rare earth metals or magnets. Running quieter and with bearing temperatures reduced by up to 15°C and winding temperatures by up to 30°, SynRM motors have longer maintenance periods, superior reliability, and contribute to a better operational environment.

Looking ahead, upgrading to an IE5 SynRM motor also provides more visibility into Scope 3 emissions, as SynRM motors meet ABB’s circularity criteria and transparency on environmental impact is provided through Environmental Product Declarations (EPDs).

By requiring companies to disclose their climate information, these new legal requirements are opening the door and facilitating more internal discussions on environmental impact and emission reduction. Whilst mandatory climate reporting is only required of large business entities this year, the progressive roll-out and Scope 3 emission reporting requirements mean that businesses of all sizes in Australia will be impacted by these new requirements. As businesses become more conscious of how sustainability should be integrated into their operations and finances, there is no better time to start investing in energy efficient solutions.

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Image credit: iStock.com/denizunlusu

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Embedding environmental stewardship into IT governance frameworks

Embedding environmental stewardship into IT governance frameworks

Integrating environmental stewardship into IT governance frameworks has become essential as businesses increasingly prioritise sustainability. IT operations contribute significantly to carbon emissions, energy consumption and electronic waste (e-waste). Organisations that embed environmental responsibility into their IT governance can reduce their ecological footprint, improve operational efficiency and strengthen their brand reputation.

Erica Smith, chief alliance officer and environmental, social and governance lead, Blue Connections IT, said, “Environmental stewardship supports financial performance, risk mitigation and brand differentiation. With rising energy costs, increased consumer demand for sustainable products and services, and growing pressure from investors and regulators, companies can no longer afford to overlook their environmental responsibilities.

“Poor sustainability practices in IT can lead to high operational costs, supply chain risks and reputational damage. Conversely, a proactive approach improves efficiency, attracts environmentally conscious customers and helps future-proof businesses against evolving policy and regulatory changes.

“Integrating environmental responsibility into IT governance integrates sustainability initiatives into decision-making systematically. Organisations can reduce waste, lower energy consumption and extend the lifecycle of technology assets while positioning themselves as responsible leaders in an increasingly climate-aware market.”

There are four key areas that present opportunities to embed environmental stewardship into IT governance frameworks.

1. Device lifecycle management

A structured approach to managing the lifecycle of IT assets ensures devices are deployed efficiently, maintained properly and retired responsibly at the end of their useful life. Embracing a circular economy model, where equipment is refurbished, reused or ethically recycled, can significantly reduce e-waste and resource use. Companies that adopt this approach lower their environmental impact and unlock financial value by extending the lifecycle of IT assets.

Smith said, “Effective asset recovery strategies further support sustainability efforts. Integrating secure data erasure and refurbishment into IT governance policies lets businesses repurpose functional devices within the organisation or resell them to external buyers. Responsible e-waste recycling also supports companies to process materials ethically in instances where resale is not viable, reducing landfill contributions and preventing environmental contamination. The adoption of industry-certified data sanitisation methods also safeguards compliance with security and privacy regulations.”

2. Sustainable procurement

IT governance frameworks should prioritise the selection of technology vendors and partners committed to sustainable manufacturing, responsible sourcing and energy-efficient product design. This includes favouring IT hardware with a high percentage of post-consumer recycled materials and using minimal packaging. Additionally, employing Device-as-a-Service (DaaS) models optimises IT asset utilisation while reducing upfront investment and unnecessary hardware purchases.

Partnerships with sustainability-driven IT service providers can further enhance an organisation’s environmental impact. Working with partners that offer end-to-end IT asset management solutions, encompassing secure device deployment, certified data sanitisation and ethical recycling, simplifies the process of aligning IT operations with sustainability goals. Companies that prioritise environmental stewardship in their IT governance framework gain a competitive advantage by demonstrating their commitment to responsible business practices.

3. Energy consumption

Data centres, cloud services and enterprise networks require substantial energy resources, making green IT practices essential. IT governance frameworks should include policies to reduce consumption by optimising server efficiency, reducing redundant infrastructure and using renewable energy sources. Cloud providers with strong sustainability credentials can support carbon reduction initiatives, while virtualisation strategies can consolidate workloads and improve overall energy efficiency.

4. Employee engagement

Educating staff on sustainable IT practices, such as energy-efficient device usage and responsible e-waste disposal, creates a culture of accountability. Organisations that implement green workplace initiatives, such as responsible end-of-life disposal programs, reinforce their commitment to sustainability at all levels.

“IT governance must also align with corporate environmental, social and governance commitments. Companies can contribute to broader sustainability objectives by embedding environmental stewardship into IT policies, such as net-zero emissions targets and responsible supply chain management. Clear reporting mechanisms and regular sustainability audits aid transparency, letting businesses track their progress and demonstrate accountability to stakeholders,” Smith said.

Government regulations and evolving industry standards are increasingly shaping the sustainability expectations for organisations. Aligning IT governance frameworks with best practices for environmental stewardship keeps companies ahead of regulatory requirements. Proactive adoption of sustainable IT practices positions businesses as industry leaders in environmental responsibility.

Smith said, “Integrating environmental stewardship into IT governance frameworks is not just about meeting compliance obligations; it’s about futureproofing company operations and prioritising the broader environment. Taking a proactive approach to sustainability lets organisations drive efficiency, reduce long-term costs and contribute to a healthier planet. Businesses that lead in sustainable IT governance will be well-positioned for long-term success as environmental concerns continue to shape consumer and corporate priorities.”

Image credit: iStock.com/Petmal

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