11 November 2008 Features

 

Not just a lot of hot air ...

Tom Groenfeldt

Banks are going green, and they aren't shy about telling the world.

Although green initiatives have the markings of a fad, and vendors are tripping over themselves to tout their own particular technologies as environmentally friendly, environmental concern is a business trend that will continue to grow, aided by regulators from around the world including Australia, California and the EU, according to Gartner.

"We can expect to see a flurry of climate change legislation during the next two years. Cuts in greenhouse gas emissions of 25% by 2020 and 60% to 80% by 2050 are likely targets. One thing is certain - the ‘business as usual model' is now widely accepted as being completely unsustainable and will not continue," said the firm in a report on the environment and business.

Banks are among the leaders in the field, at least according to their publicity machines, but it does make sense - as they are among the largest users of IT, and they have a lot of real estate,

HSBC has opened a carbon-neutral branch in upstate New York. The building uses geothermal heating and cooling from a pipe that goes 400 feet into the earth and its electricity comes from solar panels or wind farms.  The bank figures that intelligent indoor lighting saves 25% on energy.

Its new 440,000-square foot North American headquarters outside Chicago was also designed for energy efficient operation. It uses rainwater for flushing toilets, has natural landscaping that doesn't require extensive irrigation, makes use of natural lighting and has windows that reflect heat out during the summer and in during the winter to reduce demands on heating and air conditioning.

Meanwhile Bank of America is touting its new headquarters building on 42nd street in New York, a 54-story building it expects to receive Platinum LEED (Leadership in Energy and Environmental Design - a green rating system) certification.

Unlike most large buildings, the tower will generate a significant portion of its power on site through a 5.1 Megawatt cogeneration system. It also will save about half the energy used by most buildings its size and will use less expensive night-time power to produce ice used to cool the building during the day. Citi has won awards for its new data centre outside Frankfurt which will save a projected 25% on electrical energy consumption compared to conventional data centres. The financial firm's largest data centre outside the US, it will serve operations in EMEA.

"This data centre shows that we take seriously our commitment for the environment. We were able to create a green facility within the same capital cost as that of a conventional data centre. In addition the lower operating cost over the life cycle of the building is significant", said a Citi spokes woman. The bank has a goal to reduce its greenhouse emissions by 10% by 2011.

Data Centres

Data centres are one of the largest users of energy in banking, and banks are taking steps to reduce their consumption. Some of these are obvious:

Turn off servers that aren't doing anything: London-based Tideway Systems scans networks to find inactive servers. It places them on watch status for 30 days and if they haven't done anything in that time they can be unplugged. The company says it routinely finds about 5% of servers in large server farms are inactive.

Keep just one copy of data: storing more than one copy not only takes up computer resources, electricity and cooling, it can lead to confusion over which version is the true information.

Centralise data in a well-managed database or data warehouse and control access to it to protect data integrity. Donald Feinberg, a Gartner analyst, told a recent Teradata conference that one client of his had 80,000 Microsoft Access databases:  the good news was that 40,000 of them were inactive. Auditors are demanding that financial services firms move mission critical information off Excel spreadsheets and Access databases into enterprise databases such as Microsoft SQL Server, Oracle or Sybase where the information can be controlled.

Duplicate data is also prone to theft. Verizon Business Services in a survey of data breaches found a high percentage of incidents occurred when outsiders accessed second or third copies of data that organisations had filed and forgotten. Often they didn't learn of the breach until months after it occurred.

Virtualise: servers are often running at 10-20% of capacity. Using virtualisation software and running multiple applications on a server reduces operating costs.

Improve disk utilisation in storage:  Patrick Eitenbichler, director of marketing for HP's StorageWorks division says HP can help firms move from 60% disk utilisation to 80 or 90%. Some of this comes from simply examining existing disks for unused capacity. In new projects or applications, users often build in a safety margin. If they expect to have 500 gigabytes of information they request two terabytes to cover expected growth. If the project uses less, the extra capacity often just sits there unused. Intelligent data management will also move data from high-speed disks to slower disks after a specified period when it is accessed less frequently.

Moving archival data to tape is another way to reduce energy consumption. Sun estimates that moving data from an EMC storage array to tape reduces power consumption by 13% and storage requirements by 70%.

Measure power consumption: place smart electrical meters around your operations and in branches, says Lucy Fitzgerald of IMServe, Europe. These can show users just how much their area is using. Banks can set up competitions between branches to encourage energy savings.

"The smart meters gives users instant access to energy data, what they have used and when they have used it," she says.

Consolidate: Elaine Heyworth, head of environmental management for global retail banking at Barclays, says the bank has been working with HP to reduce the number of servers it has and upgrading to newer processors which are faster and more powerful while reducing power consumption and generating less heat. HP, like other providers such as Sun and IBM, has dramatically changed the way data centres are cooled with multiple sensors to direct cool air where it is needed.

"Dynamic smart cooling is the cleverest things I have seen," says Heyworth. "Sensors at the end of our sever rack allow us to put our air conditioning where we need it rather than cooling free space."

HP's Eitenbichler says the company's smart cooling creates a three-dimensional view of the data center and can cool a specific rack rather than the entire room. HP also recommends running at 77 F, rather than the 60 F in most centres, he adds.

"Processors are designed to run up to 90 F; everybody is so used to thinking data centres have to be cool." He estimates most have twice the air conditioning capacity they really need. Smart cooling can pay for itself in a few months, he adds.

Barclays, which runs about 70 data centres around the world, now brings together the facilities team with the IT people in the design phase to determine what cooling will be needed. The banks will shut down some of its data centres as it builds new, larger facilities for its processing.

Barclays has raised IT awareness of energy issues by billing internal users for the power their systems use. "We have changed the model and our IT people are far more aware of their energy costs than they were before," adds Heyworth.

Reduce flights: Cisco, HP and Microsoft are all active in teleconferencing. Cisco has high-definition, and expensive equipment it calls telepresence.  A banking executive at Cisco swears the systems are so lifelike that users have broken LCD monitors trying to hand a cup of coffee to a person on the screen. On a more mundane level, the company reports that a Canary Wharf client saved 250 flights amounting to 500,000 miles in a single month by using video links rather than planes to bring people together.

Lending

Matthew Robinson, head of group sustainable advisory team at HSBC, told a recent conference that the biggest environmental impact that banks can make is in their lending. Among the groups that he expects will be transformational in sustainability are wind and solar power, biofuels, and energy and transportation efficiency.

"HSBC is pushing for investment in energy efficiency," he added. "It just makes commercial sense."

Bank of America last year announced a $20 billion, 10-year initiative to support environmentally sustainable businesses through lending, investing, philanthropy and the creation of new products and services.  Like HSBC, it will look for businesses that are developing environmentally friendly practices in areas such as residential and commercial construction, transportation and energy. In its green mortgage programme it offers homebuyers a reduced interest rate of $1,000 back for buying a home that meets Energy Star specifications. The bank has a program to reimburse employees $3,000 for buying hybrid cars and has committed $100 million in energy conservation measures for its company facilities.

Environmental planners contend that banks, even those promoting sustainability, have often failed to look at what incremental climate change can mean for them. Climate change is underway and it won't stop even if carbon emissions were cut to zero tomorrow.  Rising sea levels will have an impact on cities, yet few banks have looked at their real estate portfolios to see which facilities are at risk from more frequent flooding or rising waters.  In some organizations, the focus on the environment risks missing some of the larger issues by containing the concern in a single department of the bank or looking at extreme events rather than evolving change.

Banking environmental experts praised the Stern report in 2006 because it treated climate change as an economic issue. "Get climate change out of the environmental box and into core decision making," urges John Killey, head of realty services EMEA, at Citi. "Climate change is underway and will probably continue for 40 years no matter what we do. Centuries of sea rise are built in the system." Other changes will be a 20% reduction in agricultural yields in sub-Saharan Africa by 2020, higher commodity prices and geopolitical risk.