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Interview with Chris Wellise: Chief Sustainability Officer at Hewlett Packard Enterprise

“Right now there’s an explosion of data. Every two years we create more data than we have throughout human history. From the factory floor to autonomous vehicles and the doctor office, smart technology is everywhere in a way we’ve never seen in history before.”

By: Leah Kinthaert, Contributor

There is steadily growing consensus that corporate sustainability is a business imperative. Audrey Choi of Morgan Stanley tells us: “In one meta-analysis, 88% of studies found that companies that adhered to social or environmental standards showed better operational performance, and 80% of studies showed a positive effect on stock price performance.” Indeed sustainability has been shown to bolster reputations, improve profit and allow companies to be “better positioned to anticipate and react to economic, social, environmental, and regulatory changes as they arise.” Investors are standing up to take notice, because, as HPE Chief Sustainability Officer Christopher Wellise writes: “ESG-related issues are integral to fiduciary responsibility, and they offer another data point for investors looking to better understand risk in the companies they may wish to add to their portfolios.” This point is well proven by 2017 research from Bank of America Merrill Lynch, “investors who only bought stocks with above-average Thomson Reuters’ Environmental and Social scores five years ahead of a company’s bankruptcy would have avoided more than 90 percent of the bankruptcies that have occurred in the S&P 500 since 2005.”

A 2016 Accenture report found that “59% (of CEOs) say their company is able to accurately quantify the business value of their sustainability initiatives, up from 38% in 2013.” This is great news. But questions remain: What sustainability initiatives are working, and for which corporations? How exactly are organizations improving profits by incorporating sustainable business practices? Real-life case studies are difficult to come by, there’s not a lot of explicit information out there. ESG expert Pamela Styles came to a similar conclusion after researching sustainable companies: “it is still very hard to find companies that are bold enough to connect the dots specifically with clearly stated ROI correlation in absolute dollars or proportion.” Luckily for me, I was able to sit down with Christopher Wellise, the Chief Sustainability Officer of Hewlett Packard Enterprise (HPE) and get firsthand insight into how they are making sustainability a core part of their business.

I first came across HPE when writing about sustainability in 2019. An interview Wellise did with Bloomberg News gave the impressive statistic that sustainability-related practices brought $240 million in new revenue in the first three quarters of 2018. HPE informed me that those numbers have increased dramatically since, which we’ll get into in our chat. They also declare that they “have only just begun to tap this opportunity—in 2018, an estimated 40% of their portfolio was differentiated from the competition on sustainability grounds, representing approximately $6.9 billion in revenue.” The proof is in the pudding: HPE recently placed on Corporate Knights’ Global 100 list of the world’s most sustainable corporations at #15, and #1 in the IT industry.

Leaders In: “Your sustainability-driven revenue numbers are impressive. How did HPE move sustainability from a cost center to a revenue generator?”

Chris Wellise: “Sustainability at HPE has been an evolution. Around fifteen years ago we were getting high sustainability rankings, and our peers wanted to know if we could share best practices, how did we get such high ratings, what exactly were we doing? So these discussions moved from sharing high-level best practices to specifics related to our products. The question became: how do we help our customers with their sustainability goals through use of our products and services?”

“We’ve invested in a team of sustainability technologists, who are engineers by training, to participate in our customer engagements. They work with the C-Suite, sales teams, IT purchasers, and other teams to educate customers and prospects on the benefits of energy-efficient IT. Their goal is: ‘How can we help our customers and partners achieve their business and sustainability targets, as they are increasingly moving towards purpose-driven agendas?’”

“Looking across their products and services, customers know that IT is going to play an increasingly important role. They want to understand how do they then apply the most sustainable tech during their digital transformation as they are moving away from legacy infrastructure. Our customers consider our sustainability capabilities to be a strategic differentiator, and we’ve been seeing an increasing demand for our solutions as enterprises increasingly factor sustainability into purchasing decisions, similar to what we’ve long seen in the consumer space.”

“We track customer wins from these engagements, and as a result have measured that sustainability was an important factor in wins representing $312 million in revenue in fiscal 2018. This past year, our sustainability-driven revenue has risen to $585 million for fiscal 2019—a dramatic 87.5% year-over-year increase. Capturing this data is valuable in demonstrating the ROI of sustainability, enabling us to advocate for more resources and investment in ESG within HPE. Whereas sustainability has traditionally been seen as a cost center for businesses, we’re demonstrating that it can drive new revenue.”

Leaders In: “We read so much about how the data center, AI, blockchain, etc. are guzzling energy around the world. Given that, how do you ensure you’re balancing sustainability with tech innovation? How does HPE design its technology for energy efficiency?”

“Right now there’s an explosion of data. Every two years we create more data than we have throughout human history. From the factory floor to autonomous vehicles and the doctor office, smart technology is everywhere in a way we’ve never seen in history before. This all requires huge amounts of energy. Although estimates vary, some research shows that information and communications technology (ICT) could use as much as 20% of all global electricity and emit up to 5.5% of the world’s carbon emissions by 2025. What’s even more concerning is that a lot of this electricity spend is unnecessary. For example, most servers are underutilized by more than 80 percent, yet still consume considerable amounts of energy while doing nothing. The aggregate cost of these comatose servers (or “zombie servers”) is estimated to be $30 billion in unused data center capital globally.”

“At HPE, we are tackling this problem from the very start of the product lifecycle, designing our technology for optimal efficiency. In fact, since the early 1990s back at Hewlett-Packard (before our split from HP), we implemented a Design for the Environment program, which is an engineering-based approach to product development that focuses on the environmental impacts of our products, processes and facilities. This practice is still alive and well at HPE today. Through this program, we build considerations like design for reusability and recyclability, materials innovation, and energy efficiency right into our products to improve sustainability throughout their lifecycle and ensure they use the least energy and resources. So we bake sustainability into our products from software to firmware to hardware.”

“Some examples of this: our servers and supercomputers are counted as some of the most efficient, green hardware in the world, with 70 HPE supercomputers ranked on the 2019 Green500 ranking of the most energy-efficient supercomputers in the world. And our software solutions HPE OneSphere, InfoSight, OneView and our iLO technology all work to drive greater IT efficiencies across storage, servers, and in the data center by eliminating overprovisoning—meaning allocating more IT capacity than is actually needed—optimizing usage and capacity, and predicting consumption and performance.”

“These are just a few examples of many in our portfolio, and the work doesn’t ever stop for us. We are continually working to increase the energy performance of our products, with the goal of increasing product energy effectiveness by 30X by 2025 in order to minimize environmental impacts and innovate sustainably in a resource-constrained world. In 2018, we increased product energy performance to 1.6X from our 2015 baseline.”

“We have an advantage because we’re a technology business; there is a strong ROI for a shift to energy efficient tech. Enterprise technologies typically have a 3-5 year natural refresh cycle, when you shift from legacy applications to newer, more efficient IT, you can cut costs associated with energy, which is often the single largest line item in a company’s IT budget.”

Leaders In:  “That actually leads to my next question. I was just at a conference and heard the sobering stat that we are only managing to recycle 30% of our plastic bottles. And these single use bottles account for 40% of all plastic trash every year. Americans can’t even get what should be simple plastic bottle recycling done right. So how are you being so successful at it?”

Chris Wellise: “Waste is certainly a big problem today, especially since human consumption already outpaces the resources available on our planet. And the rapid pace of change and innovation in the technology sectors often renders the previous generation of hardware quickly obsolete, generating an estimated 50 million tons of e-waste worldwide in 2018.”

“At HPE, we strongly believe that because of this, we must rethink our traditional linear economy and transition to what is known as the circular economy – a model in which the value of natural resources are maximized and waste is minimized. When it comes to our products, we build in durability and design out waste from the very beginning, right at the design stage, creating our products for longer lifecycles and easy upgrades, disassembly, and recyclability.”

‘We also take back IT products – regardless of manufacturer –when they are retired to extend their lifecycles. We believe that just because one customer is done with a product, doesn’t mean that the product has reached its end-of-life. We’ve developed the largest IT manufacturer refurbishing facilities anywhere in world with our two Technology Renewal Centers in Erskine, Scotland and Andover, Massachusetts. We handle huge volumes of equipment, from laptops to servers; in 2019, our centers processed more than 50 million pounds of IT equipment. We upcycle our own products as well as competitors’ products. 88% of this technology equipment is refurbished and remarketed and 12% is recycled.”

“But this process doesn’t only reap value for us, we also return value to our customers by sharing profits from putting their assets back on the market, allowing them to fund their next innovation projects and digital transformation initiatives. Last year, we launched a Circular Economy Report that provides our customers with information about the carbon, energy, material, and landfill savings achieved by returning retired or end-of-use assets to our Technology Renewal Centers for processing. This is important information for organizations to share, especially as investors and customers increasingly request the disclosure of a company’s environmental impacts. But even more important is the message behind it: That we have the capability to find new ways to manage the explosive demand for data by using far less space, materials, and energy, and by challenging traditional notions of business models, and waste.”

Leaders In: That’s an interesting point you bring up. Can you expand on this idea of rethinking business models? How can new business models enable a more sustainable economy?

Chris Wellise: “The biggest business opportunity right now is to completely rethink business models. Over the years, as-a-Service has been on the rise in the technology world, and at HPE. We really see the move to offering products as a service being the biggest opportunity from an environmental perspective, from lightbulbs to cars and computers. We need to shift the psychology of the transaction, from selling as much stuff as possible to delivering the outcome the customer needs – all while reducing costs.”

“In fact, in June, our CEO Antonio Neri announced a major pivot for HPE: that we will  deliver our entire portfolio as-a-Service by 2022, whether that’s high-performance-computing-as-a-service or edge-computing-as-a-Service – enabling customers to shift to an operational cost model and pay for only what they use, allowing customers to reap the benefits of on-premises performance and security and the flexibility of the cloud. This will be enabled through our HPE GreenLake model, which gives customers a choice of subscription-based, pay-per-use, and managed IT-as-a-Service offerings that provide customers with a consistent cloud experience for managing all their workloads.”

“As-a-Service models enable customers to bring existing equipment to the highest levels of utilization and to avoid depreciating equipment that’s idling, eliminating the need for overprovisioning and wasted energy and equipment. And because we will maintain chain of custody of the equipment, we ensure that returned assets are handled in the most sustainable, economical manner when it comes time to retire them—rather than simply being tossed.”

“This is a circular model of doing business. We collaborate instead of compete with peers and competitors. This is a new paradigm shift, and right now no other IT company has these capabilities. In addition, our service-based offerings provide the added benefits of metering, monitoring, and capacity management – providing our customers with insights, often for the first time, which will enable the optimization of their IT infrastructure. This also reaps economic value for customers: According to a HPE-commissioned Forrester report, customers benefit from a 30 percent CapEx savings due to eliminated need for overprovisioning. This helps customers right-size and optimize their IT to meet their own environmental sustainability targets, while getting the latest technologies to support core business activities and innovation.”

“We’re seeing this new paradigm in other industries, for example Phillips’ Signify offers lighting as a service, with products that are designed for repairability. Material performance indicators will evolve over the next 3-5 years. Hedge funds are shorting companies that are greenwashing. What we’re doing is focusing on increasing levels of transparency.”