Reference no: EM131230395

NORDEA GOES GREEN WITH IT

One early morning in the fall of 2007, Dennis Jönsson was reading the latest reports on global warming and thought that someone ought to do something about it. Then he realized that he and his fellow coworkers at Nordea, all with airline gold cards and access to the airport lounges, were part of the problem-especially since Nordea employees occupied many of the seats on the 7:10 flight between Copenhagen and Helsinki every morning. Nordea is the largest bank group in the Nordic countries and the Baltic region. It has around 10 million customers, 1,400 branch offices, and a leading online banking position with 6.1 million e-customers. The bank has about 34,000 employees in 23 countries. Since its foundation in 1820, the organization that is now Nordea has incorporated some 250 banks, including Danish Unibank, Finish Merita, Swedish Nordbanken, and Norwegian Christiania Kreditkasse. The history of mergers has resulted in a geographically distributed organization that requires extensive travel between national branches. Carbon dioxide emissions caused by one person traveling by airplane between two of the Nordic capitals is in the order of 200 kg-twice the amount a car with four passengers emits over the same distance. In total, short- and long-haul air travel makes up about a third of Nordea's total carbon dioxide emissions. Reducing travel is not only desirable from an environmental perspective, but from a cost-saving perspective, too. Every year a substantial amount of money is spent on air travel. In addition, for many Nordea employees who must travel frequently a reduction in travel days would mean more time home with friends and family. In early 2008, Dennis Jönsson was himself one of the Nordea employees on the 7:10 flight to Helsinki. He had been called by the IT management group to give a presentation on "Nordea and Global Warming," focusing on what actions Nordea could take. The underlying question in the presentation was whether Nordea could use technology more efficiently to save costs and reduce its environmental impact at the same time. The presentation focused on two areas that the IT department was accountable for. The first was air travel between different Nordic branches. The second area was computer power consumption, which accounts for a substantial part of the total power consumption at IT-intensive organizations such as banks. In the spring of 2008, Jönsson was appointed the green IT manager at Nordea. The initiative to use technology to reduce air travel consisted of two parts. First, meeting rooms at Nordea branches were equipped with special-purpose, high-quality videoconferencing equipment. Second, desktop and laptop computers with Web cameras, headsets, and software were provided to enable two-party video calls. It was hoped that videoconferencing and video calls would reduce travel needs as well as improve the quality of collaborative work at Nordea. In the area of computer power consumption, Nordea works on both limiting the power needed to run the computer park and on innovative ways of cooling down computers in use. After launching a new component in its property management system that could document power use in the Nordea offices, Nordea discovered that power usage was surprisingly high at night. The reason was simple: many computers were never turned off. The PowerOff project resulted in power management software being installed on 23,100 computers at Nordea, forcing shutdown at night if the computers were not in use. Settings for turning off monitors and putting computers into sleep or standby mode were also fine-tuned. This saved 3.5 million kKh annually, which is equivalent to 647 tons of carbon dioxide. On the server side, the IT department worked with server virtualization to reduce the number of physical machines consuming power. For an IT-intensive organization such as Nordea, the cooling of computers is a significant cost. The organization must pay to cool down its computer rooms at the same time it spends money heating other areas. The solution was to locate its computer halls in places where the excess heat could be used for heating purposes or to use a cooling method with a reduced environmental impact. Today, one of Nordea's major computer halls is located next to the sea. Cold, Nordic seawater is used to cool the hall. By lowering the power consumption for cooling, Nordea saves money and reduces its environmental impact. Nordea has noted that cutting costs and reducing its environmental impact often go hand in hand, because lowering the firm's environmental impact frequently means consuming fewer resources, and resources cost money. In other words, it is difficult to find the downside in the business case for green IT. The biggest obstacle to green IT is changing people's behavior and well-established practices. Corporate social responsibility, of which low environmental impact is a part, is now an integrated part in Nordea's strategy to attract and retain both customers and skilled personnel. Guided by the European Union directive on energy use, Nordea has set out to reduce energy consumption by 15 percent, travel by 30 percent, and paper consumption by 50 percent. The directive suggests that 2020 would be a feasible deadline for achieving these goals, but Nordea has set itself a deadline of 2016. If the organization is to be successful in this, then IT in its various forms will definitively play a key role-both as part of the problem and as part of the solution.

Cash Study Question

1. What business, personal, and social costs are involved when traveling by airplane between Copenhagen and Helsinki?

2. How can IT be both the culprit and the solution to environmental problems?

3. What are the arguments against corporate social responsibility?

4. Why should firms be engaged in making the world more sustainable?