Sustainability and net zero: The path Lenovo is taking
It's widely accepted that global temperature increase needs to be limited to 1.5 degrees over pre-industrial levels, and that we need to reach net-zero greenhouse gas emissions by 2050, in order to avoid the possibility of catastrophic climate breakdown.
ZDNET recently spoke with Mary Jacques, executive director of global ESG and regulatory compliance at Lenovo, about how the company is contributing to the battle against climate change.
Technology companies, including Lenovo, may well have historically contributed to global warming, but can you summarise the impetus for them to now become better -- and even exemplary -- environmental citizens? What are the key drivers here?
Mary Jacques, executive director of global ESG and regulatory compliance at Lenovo
That's a great question, and this is not new for Lenovo as we've had climate change commitments in place for over a decade. But we shifted gear starting in 2020, focusing on our own operations and the biggest areas of impact that we have in our value chain. There are many drivers, but we recognise that this is a very big challenge and that globally every organization -- whether it be a government or a company -- has a role to play.
We also recognize that it's something our customers are keenly interested in; many of them have their own goals, but they expect us as a partner and a supplier to help them on their journey. Investors also see there's risk in climate change: how well the company responds to climate change, and how well we address risk, is really critical for investors to evaluate the long-term sustainability of an organization. Last but not least, it's important to our employees personally, from individuals working at Lenovo all the way up to our senior leadership.
Lenovo recently announced that it was among the first group of 139 companies to receive validation from the Science-Based Targets initiative (SBTi) for its goal to reach net-zero greenhouse gas emissions by 2050 -- and also that it was the first PC and smartphone maker to get such validation. Can you briefly describe the SBTi, how its emission-reducing goals are set and validated, and how progress towards them is monitored?
The SBTi is a partnership between CDP (the Carbon Disclosure Project), the UN, the World Resources Institute, and other organizations that are very knowledgeable about climate change science. The reason we have chosen to align with the SBTi is that, frankly, there has been a lot of noise in this space: there are a lot of organizations making commitments -- maybe bold commitments and taking big actions -- but without a common standard, and a common set of terminology, goals, and measures, there's really no way to ensure that we're all aligned and ultimately trying to address the underlying issue and limit greenhouse gas warming to 1.5 degrees.
So, the SBTi is really the leading body in setting these standards, and they have been validating climate change targets for many years. In fact, our previous set of goals were validated by the SBTi, but it wasn't until 2021 that they released a new net-zero standard. That's significant because it really defines what organizations need to do across multiple industries in order to achieve net zero by 2050, or whatever applies to the particular industry. So, we worked with the SBTi to adjust our previous generation of goals and to set new net-zero goals, which they validated -- and we were one of the first companies, and the first PC and smartphone company, to go through that process.
In addition to making sure our goals are aligned with the standard and with the global scientific consensus, the other really important part of alignment with the SBTi is that we are holding ourselves accountable and that we're going to disclose our progress, and look at our progress and look at the science on a regular basis, and adjust as needed. So we're not just setting a goal for 2050 and walking away saying, "We hope we make it". We're going to continue to report our progress: we've set mid-term goals for 2030 that help us measure whether we're on track, but even for those we'll continue to evaluate and adjust our goals as needed -- if the science changes, or if our business changes, or if other factors influence what we need to do.
How big a challenge will it be for Lenovo to achieve its near-term and long-term science-based targets -- and can you give some specific examples of measures the company is taking to meet those goals?
Getting to net zero is a huge challenge -- perhaps the biggest challenge we're facing as a society and an economy right now. So, it will be something that no organization can do alone: it's going to require co-operation across all sectors of the economy -- between governments and corporations, and between different types of industries, whether it's power, technology, automotive, shipping -- you name it.
But the good thing is, for Lenovo and many of our customers, this is not something we're just starting -- we have a pretty solid foundation that we're basing our programs on. For us that's everything from a very mature environmental management system that helps us assess our impact and set annual goals, to a strong governance structure at the executive level that requires us to measure and report our progress on a regular basis. So we've got good checks and balances from a structure standpoint.
The activities we have to undertake include everything from looking at our own operations -- our R&D sites, our manufacturing sites -- and optimizing the carbon and energy efficiency of those sites. We're doing that through several different means: we're certainly looking at making them as energy-efficient as possible, making physical plant improvements, and installing renewable energy on site wherever possible, and then looking at new innovative measures. One example is a manufacturing site in China, one of our larger sites, for notebooks and phones, where we just worked with a standards body to develop a new carbon-neutral certification for factories. So, it really sets a bar, not just for Lenovo, but for others in our industry who want to think about the carbon impact of a plant as it's being built or remodelled.
So, there are lots of opportunities on the Scope 1 and 2 side, which would be our own emissions. But by far our biggest impact from a carbon perspective is with our Scope 3, or value chain emissions -- that's 99% of our impact. In that area, the biggest impact areas are, first, our own products -- what's called the 'use of sold products'. When a customer buys a PC or a phone or a server and they use it, energy is consumed and that energy causes emissions, and those are part of our Scope 3 emissions. For that part of our program, we're looking at driving down the energy use of our products, minimizing the carbon footprint, and maximizing the carbon efficiency. We do that through incremental changes, and also via big changes in technologies.
A great example of a bigger change would be our Neptune water-cooled servers, which instead of using electricity to power fans that cool the servers, use warm water to more efficiently cool servers in a data center environment. That's a technology shift that we think is one of many innovations that will help drive this transition at a product level.
Lenovo's Neptune Direct to Node (DTN) technology utilizes warm-water cooling (up to 50⁰C) to remove heat from a server's CPUs, memory, I/O, local storage, and voltage regulators.
A couple of other big areas for our Scope 3 include our suppliers -- what's considered 'purchased goods and services'. We're really trying to partner with our suppliers to help them along this journey, and to lead by example. We're pushing the Science-Based Targets initiative and net-zero standards as being the gold standard in terms of commitments: in theory, if everybody is aligned, we should all be marching towards the same goal -- working with suppliers on disclosure and measuring, and giving feedback on their performance.
Then last, but not least, the third biggest area is global logistics -- how we move our products. In that space, there's a lot of exciting change happening quickly -- everything from electrifying the last mile to sustainable aviation and marine fuels. We're not a global logistics company, but we are working with partners that can offer carbon-optimized shipping.
Reducing greenhouse gas emissions in line with IPCC targets is clearly good for the planet -- but is it also good for Lenovo's business? In particular, are customers getting the message and showing a preference for buying sustainable products -- 'green' smartphones, laptops, desktops and servers, for example?
In other words, does sustainability sell, or do you have to persuade customers that it's a good thing?
Absolutely -- customers care about this, and it's good for Lenovo's business. It's something we've seen for many years: customers want to do business with a company that is responsible, both in terms of climate change but also other areas as well. More and more customers are using sophisticated ways to measure performance; so whether it's an eco-label like Energy Star or EPEAT or TCO, for many years our customers have demanded those sorts of certifications; or really detailed requests for information about product carbon footprints, which we do provide at a product level.
One great example of a tool that customers use is CDP, which is the Carbon Disclosure Project -- many of our largest customers request that we participate in that, and we request that our suppliers participate as well. That's a great platform because it has thousands of organizations reporting and responding to the same set of questions, so you can really start to assess how well an organization is performing, and I'm really proud that Lenovo is at the leadership level for CDP climate change and CDP water security.
Are there plans to increase the number of Lenovo products with environmental certifications? Is there further to go along those lines?
We have very strong participation from the PC and server businesses in some of these standards, and phones as well. But instead of expanding it more broadly in our portfolio, because we actually have a pretty broad reach, I think what we're seeing is that the standards themselves are demanding more -- that's where the growth is happening, and we're responding to that. But we do have very good coverage across all our product lines in these different programmes.
When it comes to the 'circular economy' -- which involves better repairability, refurbishment, and recycling programmes, and more responsible e-waste disposal -- what does Lenovo's report card look like? How much of this is done by Lenovo itself, and how much by third parties -- and if the latter, how closely are their operations monitored?
That's a good question, and the circular economy issue is so big. If you think about it from a lifecycle perspective, you've got the design decisions that we're making -- to make products more repairable, to extend their life -- and we have a lot of examples of work we're doing to assess ourselves in that area.
The other thing we think about from a design perspective is using circular materials -- sourcing materials that are either recovered from post-consumer waste streams or specifically closed-loop, post-consumer waste streams. We have a very strong story there, and a very long history of using recycled content in our products. And in 2017, we started sourcing not just post-consumer content, but closed-loop, post-consumer waste streams -- which are essentially used IT and electronics. We started in 2017 with a handful of products, and by 2021 we were up to around 248 products (I don't have the 2022 number yet). That's not just desktops and monitors, but also servers, notebooks, keyboards.
On the other end, once a product does reach end of life -- which we hope will be after a long time -- how do we facilitate responsible resource recovery and recycling? Lenovo does not itself, at any large scale, operate its own recycling operations: we rely on third-party partners that specialize in this -- all over the world. We do require, though, that any supplier we use, any partner, meets our global standards for product end-of-life management. So, we have several different audit partners that go out and audit suppliers and make sure they meet Lenovo and other third-party standards before they can be used. And where we're trying to close the loop, to tie it back to the closed-loop plastic example, is by connecting those end-of-life suppliers with our materials suppliers to identify waste streams. Because we're not resin producers, but we're trying to help those two industries solve a problem, which is mixed plastic -- kind of a challenging waste stream, so we're trying to create a market for that by using it in our products.
As well as creating more sustainable product lifecycles, has Lenovo made any basic technological advances that might help in the battle against climate change? I'm thinking of areas like carbon capture and removal, renewable energy, next-generation battery technology, smart devices in all manner of locations...
One of my favourite examples, because Lenovo has a very large manufacturing footprint, is the low-temperature solder that we invented. It's a new way of soldering in the PC manufacturing and PC component-manufacturing process that uses the same basic ingredients as the previous generation of solder, but in slightly different ratios, and this allows us to lower the temperature of the ovens on the manufacturing lines. We started this on our notebook lines, and have shipped many millions of notebooks made with this process. What's significant is that we're not just using it in our own manufacturing, but we've also given this technology away. So, we're allowing our partners and suppliers, and others in the industry, to use this technology, both for components that they're supplying to us and also to other customers.
This is really significant because it allows us to lower the temperature by 35% on the lines, and while that's just one part of the overall manufacturing process, I truly think that the path to net zero will be made up of all these innovations that may be incremental and impact different parts of the business -- whether it's the Neptune water-cooled servers, a product design feature, or low-temperature solder, a specific manufacturing process. All of these pieces together will become part of the solution and help us along the path to net zero.
Finally, as the first PC & smartphone maker with an SBTi-validated net-zero target, do you think that other leading manufacturers will be swift to follow Lenovo's example? In other words, are you optimistic that tech companies will play a full and active part in the fight against climate change?
I think so, and I'm super-proud that we're the first PC and smartphone manufacturer to get this validation. But I think we're part of an industry that's very much part of the solution. We can help our customers and other parts of the economy get to net zero -- there's going to be so much investment in new technology that's needed to support the grid, to support the infrastructure, to support individual customers. Truly, I think our industry has a huge role to play. While we're the first, I don't expect us to be the last.