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I am former editor of The Banker, a Financial Times publication. I joined the publication in August 2015 as transaction banking and technology editor, was promoted to deputy editor in September 2016 and then to managing editor in April 2019. The crowning glory was my appointment as editor in March 2021, the first female editor in the publication's history. Previously I was features editor at Profit&Loss, editorial director of Treasury Today and editor of gtnews.com. I also worked on Banking Technology, Computer Weekly and IBM Computer Today. I have a BSc from the University of Victoria, Canada.

Friday 24 July 2009

Turning green

Features

Climate change is making the entire world sit up and take notice of the potential challenges it poses. What technology can financial institutions employ to reduce their carbon footprint and promote sustainability?

After years of environmentalists banging on about climate change, it took an economist to make the business world sit up and take notice – basically because he presented the crisis in market terms. In his November 2006 report, Sir Nicholas Stern, head of the UK Government Economic Service, said that the world was facing not only a potential economic disaster but also the greatest market failure ever seen due to the effects of climate change.

The UK government, following the recommendations of the Stern Review, has become the first to propose binding legal limits on carbon dioxide emissions – aiming for a 60% cut from 1990 levels by 2050. The government is in the process of pushing these regulations, embedded in the Climate Change Bill, through parliament, which will impact every industry, including the financial services industry where IT is a major component of its carbon footprint.

The Stern Review was also the catalyst for the Confederation of British Industry to establish a task force on climate change. In its recently released report Climate Change: Everyone’s Business, the CBI Task Force, made up of 18 chairmen and chief executives from UK firms including Barclays and the London Stock Exchange, committed themselves to adapting their businesses for the new low carbon world. These include: a promise to develop new products and services that will help households to halve their emissions by 2020; and a commitment to encouraging their employees to achieve major cuts in emissions both at work and at home. The initial aim is to identify and promote action that will save an extra one million tonnes of COemissions within three years.

Ahead of the pack, last year Barclays signed a contract with EdF Energy for the supply of electricity from a portfolio of different sources including wind, small-scale hydro, biogas, tidal and waste. The three-year deal will cut Barclay’s carbon footprint by up to 125,000 tonnes of CO2 a year, equivalent to the annual emissions from 19,000 homes in the UK. In March this year Barclays went “carbon neutral”, focusing on improving energy efficiency and using increased amounts of renewable energy before offsetting the remaining carbon emissions. Barclays has a target of reducing its UK CO2 emissions per £million of income from 16.8 tonnes in 2005 to 12.9 tonnes by 2010.

But “carbon counting” is quite difficult because it is hard to accurately map emissions across an enterprise. In order to help firms calculate their carbon footprint, telecommunications giant BT, whose chief executive Ben Verwaayen chairs the CBI Task Force, has recently launched a carbon impact assessment service. The model looks at: pattern and infrastructure (e.g. office-based, home worker, mobile worker, and so on), which includes the transportation individuals use during work and their commute, plus emissions from any equipment used; shared services – where only a proportion of the contribution needs to be attributed to the business or department being assessed (e.g. WANs, LANs, office communications systems, and communal display screens); and also buildings – the relevant real estate infrastructure and its carbon contribution through, for example, heating and lighting.

Janet Blake, head of corporate and social responsibility, BT Global Services, makes the point that the model offers an assessment together with a set of recommendations, which she thinks is vital. “Once you have the data, the discussions begin over which should be the significant areas that you want to focus on first; and then you do more detailed analysis into those areas to work through the recommendations. For instance, if you highlight the data centre as one of the key focus areas – and in the financial environment that is definitely the case – then you might want to drill down into that area first and get more detailed recommendations for that area because it may account for a more significant proportion of the carbon footprint. We promote a holistic approach,” she says.

Data centres are indeed topping the list of priorities for many financial institutions when they look to tackle carbon emissions – not least because it is estimated that in the US data centres account for 1.5% of all the power consumed in that county, and power requirements are predicted to double within the next four years. As energy and oil prices rise, as well as the potential for brown or black outs, data centres are increasingly targeted to reduce energy consumption and also carbon footprints.

But, as Trewin Restorick, director of the environmental charity Global Action Plan, points out, there is a contradiction between the government’s drive to cut carbon emissions and its regulatory drive to retain more and more data. “One big cry for help from the financial sector is that government policy on data should be compatible with its policy on carbon emission reductions,” he says. “There is also a big concern about energy supply and security – lots of companies are feeling that they are going to run out of server space fairly soon and they are having a hard time finding that added server space, especially in places like Canary Wharf and inner London. There is not enough energy coming into the city, so they have to look at storage options outside of the UK and that is a major constraint for business growth.”

Whether or not national governments take this contradiction into consideration, global financial institution Citi has targeted data centres as part of a global $50 billion (£24 billion) plan to address climate change. Citi has invested €170 million (£120 million) in one of the “greenest” data centres worldwide. The data centre is being built in Frankfurt and the year long construction is expected to be completed in March 2008.

Dirk Schubert, head of Citi Realty Services Germany, Austria and Switzerland, says: “Computer power consumption is the primary user of energy in the data centre. This requires efficient cooling technologies to maintain the required operating environment. With the new data centre, we are employing the latest cooling technology, including a free cooling system. We only use our cooling towers during the summer months and the rest of the year we can do without. Our design will enable savings in energy consumption of up to 25% annually. And 99% of the electrical energy used will be ‘green’.” This is the equivalent of powering 3,000 family homes.

The data centre will provide IT services for Citi’s operations in Europe, the Middle East and Africa. It is being built by the Gold-standards of LEED (Leadership in Energy and Environmental Design). LEED is the benchmark for sustainable building in the US.

Morgan Stanley has also targeted the data centre. Through a global programme, codenamed Firebird, the bank is evolving 12 data centres to be cost and energy efficient. The New York data centre should be complete in 2010 or 2011. This is part of a larger plan to reduce CO2 emissions by 7% by 2012 and become carbon neutral.

Speaking at BT’s Green Bank Event in October, Jonathan Saxe, international chief information officer at Morgan Stanley, laid out the methodology, which has board level endorsement: “First level of awareness is the business imperative; the second is low hanging fruit and the development of a work plan; the third is integrating real goals into projects; and the fourth is an operating model shift in terms of technology.”

Saxe says that the data centre is just the “tip of the iceberg”. Morgan Stanley also looks at the amount of paper wastage and has created document warehouses so its employees don’t have to print a hardcopy. It employs collaborative technologies, recycling and thin client technology on desktops.

HSBC, which declared itself the first carbon neutral bank in October 2005 through planting trees, reducing energy use and buying “green” power at an extra cost to the bank of £3.4 million a year, is involved in a number of projects in order to offset its global footprint. According to Jon Williams, head of group sustainable development, the bank’s 150 megawatts wind farm in Wales has been approved; it has launched the “coolest building” in India; its UK training centre in Bricket Wood has embarked on a wind and solar trial; it has launch a zero carbon branch in New York; and it is also using BT technology for video conferencing. Finally it purchased 813,000 carbon credits to offset its 2006 emissions. So there is a myriad of ways to become more environmentally friendly. UK information and communications technology firm Bailey Teswaine, which recently launched a product called EcoPod, a naturally ventilated data environment, also looks at all aspects of the building environment, using “intelligent building” methodology.

“The push back we had a few years ago when we suggested some of this stuff was ‘well we do all our patching of servers overnight so they need to be on 24x7 so they can get the latest version of Microsoft’s bug fix’”, says Rajesh Sinha, technical director of Bailey Teswaine, “but there is new software out there that allows much more dynamic upgrades so you don’t have to have servers on 24x7. There is software which effectively hibernates your PC.

“The other gripe from traders is ‘I don’t want to lose all my windows and spend the first half hour of the day moving my trading application to exactly where it was yesterday’. Things have moved on since the 1980s and you can get software that automatically re-positions everything. It is technologies like that which we are trialling with customers and getting good results.”

Sinha says that Bailey Teswaine promotes Wi-Fi instead of structured cabling, but in financial climes that is “not necessarily the thing we are pushing just because of the volumes of data and the data speed and the reliability that people need, but it is an option for things like guest areas and hot desking”.

Bailey Teswaine also encourages video conferencing which can see return on investment within the first year on “people flying all over the world or getting on trains to spend three hours of dead time when they could wake up in the morning and get presented with a video conferencing unit, see the whole team, decide on the day’s activity or work on a project together – which costs virtually nothing compared to all that transportation,” says Sinha.

As part of the Barclays Group, Barclaycard has been pulling its weight environment-wise – nine years ago its headquarters in Northampton was built to very high environmental standards with a building management system so that the building is not heated and cooled at the same time, and there are motion sensors and light-level monitors on the lighting so that the building is not overlit. After a successful trial at its headquarters, these ideas were then rolled out to the regional offices and call centres.

Barclaycard is presently trialling three major projects targeting: 1) energy use – using eco-friendly lamps; 2) water use – re-using lake and rain water; and 3) resource use – by using 80% recycled paper from Xerox and Canon duplex printing machines.

Because of its environmental activities, Barclays has obtained an ISO 14001, a standard which specifies the actual requirements for an environmental management system. But with that accreditation comes responsibility. Ben Brakes, environment manager, Barclaycard UK, explains the vicious/virtuous circle. “We have an improvement programme that we must adhere to. Once [the standard] is put in place, it makes you act on it because the bad publicity that comes with losing ISO is too great. You are stuck in a cycle of having to do environmental projects. That is the good thing about ISO – the business must take notice or it will lose it. To get ISO you have to be environmentally aware; so to lose it will look worse than if you hadn’t got it in the first place.”

Best Contribution to Reducing the Carbon Footprint, European Banking Technology Awards 2007

Global financial institution Credit Suisse is focused on serving its clients in three business lines: investment banking, private banking and asset management. The bank found that its applications were becoming increasingly resource-intensive; legacy proprietary technologies were being employed to run server grids and the cost of maintaining these proprietary investments was becoming prohibitive and limiting.

Credit Suisse wanted break down the traditional IT application silos that were tied to specific computers while reducing dependency on and maintenance of expensive proprietary software. It looked for a common solution that would address a wide range of applications while building cross-project architecture that was scalable and flexible enough to satisfy the unpredictable and growing demand for computing power across the organisation.

In 2004, after a review of existing in-house grid solutions and available off-the-shelf products, the bank decided to implement GridServer, DataSynapse’s grid management technology which provides an application virtualisation solution by abstracting underlying hardware from business applications. GridServer maintains a real time inventory of the available compute nodes and client applications submit a request to the middleware; then GridServer dynamically allocates resources (compute nodes) based on application requirements and runtime priorities.

The group began work in early 2005 to develop production pilots with a number of applications and in Q4 2005 decided to concentrate on moving an application measuring collateralised debt obligations risk onto the grid, driven by a significant increase in the volume of CDOs and complexity of risk calculations.

“The complexity of the instruments traded in the market has been increasing rapidly,” said Alexander Pastron, IT director, head of grid programme, Credit Suisse. “If the CDO risk application was deployed on our usual dedicated server farm, it would not calculate risk quickly enough for the amount of trading that the business wanted to achieve. We needed to find a way to run the calculations faster without investing lots of money and effort into building new dedicated server farms. We were also constrained by limited data centre capacity.”

A proof of concept was completed in early 2006 using GridServer and a small grid of servers. A benchmark test showed a CDO pricing calculation took 3.5 hours to complete on 12 servers; after the implementation of the workstation grid, the same pricing calculation was completed in one hour using 100 workstations. “We are now running the application on 4,000 desktop workstations in London and New York,” said Pastron, “achieving more timely results with more complex risk models and greatly increased trade volumes than we achieved in the original server grid benchmark.”

In the second half of 2006 Credit Suisse also moved an equity research application from blades to the workstation grid. Credit Suisse has improved the performance of its existing operations with a recent survey citing a reduction from 206 hours to 18 hours for an equity research production job.

Today Credit Suisse’s enterprise grid footprint stands at around 5,000 workstations and server blades in London, Zurich and the US on heterogeneous hardware including HP PCs and IBM blades running Linux and Windows operating systems. The bank has seen tremendous cost savings, including reduced operating costs, lower capital costs and ongoing cost avoidance. With 30-40,000 desktop workstations being at least 60% available during business hours globally, Credit Suisse sees ever more enormous potential for further grid expansion.

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