This guest blog from Douglas Farquhar first appeared on the Capping IT Off blog on the 7th June…

The 2011 US Energy Information Agency’s Annual Energy Outlook clearly articulates some of the energy challenges facing business today – increased competition for energy from developing countries and a time lag between demand and supply resulting in commercial energy costs increasing by 45% by 2035.

Add in the impact of localized issues (like the recent problems with nuclear power in Fukushima that have reduced the supply of electricity to Japan by 30%) and it’s clear that businesses must have an approach to energy management that supports business performance. Energy management should reduce costs for a business, secure energy supplies required and provide opportunities for growth.

And what role does ICT play in energy? Well, ICT can account for a significant portion of a company’s energy consumption – which is not surprising considering the proliferation of devices, rapidly growing data volumes and an “always-on” requirement to support customers in a global environment.

But ICT is also offers the most opportunities to reduce energy consumption whilst boosting business performance. For example, cloud computing uses significantly less hardware and associated energy to provide services to more people, with greater flexibility and speed.

So how should businesses approach energy reduction whilst improving business performance?

Firstly, by focusing on reducing energy costs. This can be achieved with little capital expenditure by implementing procurement practices and operational policies that prioritize energy efficient products & services, optimize asset utilization levels and utilize revenue generating forms of asset disposal. For example, with ICT this may mean specifying Energy Star™ laptops, restricting laptops/desktops to a 1:1 ratio with users and identifying disposal agents that data cleanse assets for re-sale with a share of the profits being passed back. By reducing costs businesses directly improve profitably.

Secondly, by implementing transparent management practices that are industry leading. Research by Goldman Sachs shows that companies that lead in management of energy and sustainability create sustained competitive advantage that enable them to outperform the stock market by 25% – and 72% of these companies will outperform their peers.

Additionally, sustainability is becoming an increasing factor in attracting the best talent – people have become used to applying sustainability practices at home and expect the companies they work for to have a similar commitment to reducing environmental impact.

A lot of lip service has been paid to environmental practices by organizations – increasing energy prices will reward the companies that back up good intentions and words with clear objectives and diligent execution whilst exposing businesses guilty of “greenwash.”