From CO2 offsets to the electrification of everything, we hear about sustainability everywhere outside of pro AV. But only recently has sustainability become an important part of the AV conversation. It started with LEED certification and intelligent building management, but today’s end users are increasingly concerned with their systems’ environmental footprint.

Episode guest

Kim Knickle
Research Director, ESG & Sustainability at Verdantix

Kimberly Knickle is research director of the ESG & Sustainability practice at Verdantix. Knickle has worked for more than 20 years in the IT industry, providing research and analysis to help companies invest wisely in new technologies. Before joining the analyst industry, she held various roles in IT services, engineering, and product safety testing, beginning her career at Underwriters Laboratories, Inc. Knickle holds a MBA from Boston University and a BS in electrical engineering from Cornell.

Episode Transcript

Justin Kennington (00:07):

Hello, everybody. Thank you for joining us. Welcome back to SDVoE LIVE! I’m your host, Justin Kennington. And this is TV for proAV. How does it feel to be back from the long weekend? Everyone in America anyway? We just had our Memorial Day weekend where we memorialize those who gave it all so that we could enjoy the things that we do in America and elsewhere. I celebrated by visiting the beach with the kids yesterday, had a great time. The weather’s just finally turning up here in the magic place where our studio is located. This very real studio that we have. Anyway, had a great time and I hope you did as well because now it’s time for summer. And that means that this today, right here, right now is our last episode of season two of SDVoE live.

So, I hope you’ll be with us next fall when we come back. Anyway, let’s talk about today’s show, sustainability in proAV. Is it time to care? It’s an interesting question. What I noticed that put the idea in my head to start talking about this and bring it to this show is that everywhere I go in life now, just as I’m looking around, as I’m talking to people, as I’m seeing commercials on TV, things are about sustainability. That’s an important new topic. Whether we’re talking about eliminating straws at Starbucks or buying carbon credits to offset our next flight, it’s everywhere. Except I don’t hear a lot about it in my professional life, right here in proAV, where all the rest of you exist with me. So why is that?

Is that really true? Or is there a start of a trend already? We’re going to find out. I had to go find a new guest for the show, a brand-new friend of the show, Kim Knickle from Verdantix, who is their research director for ESG that’s environmental, sustainability and governance. That’s a big, hot topic in analysis circles. So, she’s got a long track record and background in understanding sustainability from the perspective of electronics manufacturers of technology companies. We’re going to talk to her and we’re going to learn all about that. So, get your questions in. Maybe you want to ask something about this live@sdvoe.org. Drop us an email and we’ll be ready to receive. And you will see your questions asked after this show in the aftershow. So, remember when those credits roll, you sit right there and don’t go anywhere. With that let’s get onto the show. I’m going to send you guys to a quiz before we go check in with Matt.

Matthew, are you there? Are you sustainable? Is it sustainable for you to be in the hotline central yet another week?

Matt Dodd (03:09):

It is if we get some air conditioning in here.

Justin Kennington (03:13):

Forget it. We can’t.

Matt Dodd (03:15):

You’re killing me off. Oh, it’s too hot. Hey guys, Favorite English guy here, Matt. It’s me, the guy from ISE. So many people came over and said, “guy, you’re a lot taller than I thought you were”. Well, that’s a good thing I think. We’ve got our team of moderators here. You can probably hear them all busying away, and Kim’s here to talk to Justin and myself about sustainability. Very interesting show today. So, get your questions and your comments in email live@sdvoe.org, or for those inside Academy, use the chat window at the bottom. Click the chat. Gives you feedback on the show, gives you feedback on the series and tell us what you want to see next series. JK as per normal, we’ve had a question. This one comes in from Tina Carrera. Thanks, Tina. A new voice from Orlando, Florida asks “I already do care about sustainability. Thank you very much. I put that bit in, but how can I tell which manufacturers really care and which ones are simply just green washing?”

Justin Kennington (04:15):

Whoa, go right for it, Tina

Matt Dodd (04:18):

green washing.

Justin Kennington (04:18):

We’ll bring that to Kim.

Matt Dodd (04:20):

Well, that’s it. That’s what you brought us here for.

Justin Kennington (04:22):

Well, I’ll bring that to Kim, but first, why don’t you get here and join me in the studio and let’s talk about the news.

Matt Dodd (04:28):

I’m on my way.

Justin Kennington (04:52):

Oh man, there he is. One last run down the stairs. What’d you say it is 17 degrees here today. A scorcher.

Matt Dodd (04:58):

Yeah, but I’m just cool. I’m as cool as ice. Here we are again, last time for the season, but it’s been a great season. Hasn’t it? We thoroughly enjoyed it. It’s been good.

Justin Kennington (05:10):

Yes.

Matt Dodd (05:11):

And you enjoyed Memorial Day?

Justin Kennington (05:12):

I especially enjoyed the new studio. I did. Kids at the beach, tidal pools. We saw a live horseshoe crab.

Matt Dodd (05:19):

What?

Justin Kennington (05:20):

Usually find those washed up dead, but he was just crawling all around. It was a lot of fun.

Matt Dodd (05:24):

Well, we’ve got the Jubilee weekend. I’ve trumped you there about that. I didn’t mean to say that word, but we’ve got the Jubilee weekend coming up. It’s going to be mayhem, lovely weather. We’re all celebrating our glorious queen. Tearful now tear. Let’s do some news.

I don’t, by the way-

Justin Kennington (05:45):

Season finale, baby-

Matt Dodd (05:47):

I’m not one of those guys that does tearful at the queen. British here, but I don’t do tearful. AV and sustainability repair and replace. For many years, recent years over here in Blighty, people have been talking about there’s too much throwaway culture, with throwing things away, the ashtrays full buy a new car. Especially with electronics, it’s too much. Make things repairable. Sustainability is becoming a really vital part of our lives now. So how is AV or is AV keeping up with it? And to quote, I’ve remembered this, honestly, “sustainability is the avoidance of the depletion of natural resources”. I’m not looking over there, honestly, “in order to maintain an ecological balance”. Now, sustainability is playing a big part in our world at SDVoE at the moment. Isn’t that right, Justin?

Justin Kennington (06:41):

Sure, with our ASIC chip set, we keep power consumption extremely low, especially compared to any other AV over IP system out there. If you want to save power and increase reliability with it, which we’ll talk about, then go SDVoE. Wow. Thanks for the plug opportunity there.

Matt Dodd (07:00):

No problem. This is quite a big article really.

Justin Kennington (07:06):

Yeah, both of them were this week. This one was about how does AV at a large scale, focus on sustainability? You touched on something interesting, which is repairability. And that’s very easy to say, to complain about our throwaway culture. But the reality is from a design and manufacturing standpoint we’ve been driven to want, are these electronics to be available as cheaply as possible? And that essentially drives the lack of repair ability, right? Because it means, well, let’s shrink our components. Let’s make everything tiny little surface mountain components on micro circuit boards and things. Stuff that’s not very easy to repair. You can’t rewire it, like you could rewire your power amplifier 50 years ago. It leaves us in a weird spot in terms of, well, do you want a Blue ray player that costs $2,000 and is repairable, or do you want one that costs $300, you know, make that choice.

Matt Dodd (08:10):

Yeah, it’s an interesting area. I keep thinking about my grandparents, my granddad, who was an RF wartime guy. Everything was repairable, nothing got thrown away and it’s weird how in just a few short years, if somebody follows my words, can I have them back, please? In those few short years, it’s just completely changed, and we’ve gone into this, just replace it culture. So, I’m very-

Justin Kennington (08:38):

Here was the example. I’m sorry, I didn’t mean to cut you off, but the example cited in the article, I just found it in my notes here. There was a story of a certain integrator and they’d had 105-inch flat panel display delivered to the job site and it got damaged. And so, they had to choose whether to get a new one or to repair this. And it said to repair the 105-inch TV cost 40% more than simply buying a new one.

Matt Dodd (09:02):

Crazy.

Justin Kennington (09:04):

That’s the reality of it. A repairable, 105-inch TV would also be six inches deep so that you have access for places to get inside. And is that really what we want? Of course, what we want is electronics that are inexpensive, that are high performance, that are small and consume low power and are repairable, but it’s a very difficult optimization problem.

Matt Dodd (09:25):

It’s a really difficult optimization problem because if you think large scale electronics who are kind of depleting the software viability now, so the hardware isn’t even going wrong. It’s the software that’s making it go out of date. So, I think this is an uphill struggle. This is a tough one. Anyway, that leads us into the second piece. So, check these news articles out by the way, they’re just below us on the resource list. So please do check them out. Eco-friendly AV planning, kind of nice segue, really, three things to consider. Again, this is quite a chunky article, but a really good read. And it talks about, well, a bunch of things, but the one that sort of stuck out for me is making sure that equipment is energy star certified. That’s product selection that, you know, has been energy efficient.

And while I read this and I thought, this is great. This is great news. I don’t know what it’s like in the US or around the world, but I’m sure it’s very similar. You know, white goods have been doing this for many years. You buy a refrigerator or freezer or whatever it might be, and they’ve got the energy rating, hey, it’s even happening to houses over here now. But when you think about the electronic white goods for your kitchen, say, I just bought a new fridge freezer and it’s energy rated at E I think, but the same fridge freezer, the same unit with the same functionality and the same technical functionality, but rated at sort of B CBA is nearly twice the price. And I think there’s got to be some balance here between sure, encouraging people to buy energy efficient goods, but don’t make people pay so much more for it because they won’t do it. What do you think?

Justin Kennington (11:01):

Well, easy to say. And that’s actually something I’ve got it on my list here to talk about with Kim, is how to get the consumer to think in terms of the total cost of ownership. Because ultimately you’re going to end up paying more for the electricity for that fridge freezer over its lifetime. The question is, you know what, over five years, over 10 years, which one is cheaper, but “A” which is cheaper, “A” and “B” how do you get the consumer to think in those terms, when you’re sitting at the store saying, well, this one’s 1100 bucks and this one’s 1600 bucks. How do you get them to see that? Oh, okay. Over the long term, this is going to save. We live in a very, give it to me now culture. So that’s tricky.

Matt Dodd (11:43):

Maybe we’ve got to put it to Kim. In which case I’m going to leave you with Kim, and I’ll see you a little bit later. Have a good interview.

Justin Kennington (11:48):

Speaking of segues. Thank you, Matt. We’ll see you soon. Our guest, I mentioned research director of ESG and Sustainability at Verdantix. That’s an industry analysis firm. I’m going to have her tell you what that is. Kim. Please join us. Come on in.

Kim Knickle (12:03):

Hello, Justin. How are you today?

Justin Kennington (12:06):

Good. Hello, welcome. Thank you for joining us. Let’s start with that. I mean, I’ll be honest. I didn’t know what Verdantix was before you and I were introduced. So, I’m going to assume most of our audience doesn’t. Give us a quick high level. What do you guys do and how does your ESG role fit in?

Kim Knickle (12:23):

Of course. So, we are an IT market research and advisory firm. And the best way to think about that is that we research, and we analyze different technologies that are moving the needle forward related to sustainability. So that might be operational excellence, so improvements in a factory. It could be smart buildings, so in a building specifically. It could be environment health and safety related or more general corporate strategy or net zero targets and carbon management. So, a pretty wide range of issues. And the way that I always explain what I do to my in-laws and my parents, which I think is the test, is that companies spend millions and billions of dollars on technology. And wouldn’t you like to have the ability to more wisely spend that money. So, we help with that decision making process, the investment process, the selection process. And we do that through market research and advisory.

Justin Kennington (13:32):

Your in-law pitch is exactly the opposite of mine. Actually, I tell people I work in proAV. They say, “what is that”? I say, “you know how you go in a conference room and there’s a TV on the wall? Well, my industry is the one that thinks of the most expensive way possible to hook up to it”. That’s what we do. SDVoE being the cheapest of the most expensive ways. Of course.

Kim Knickle (13:51):

Of course.

Justin Kennington (13:55):

You touched on a little bit in your previous answer, but what is sustainability for an electronics manufacturer? What do they need to shoot for?

Kim Knickle (14:04):

The first thing I want to check in on is the term sustainability. We’ve been using the term sustainability for a long time, and I’ll say that the definition of that has evolved. And now we talk about ESG and sustainability and climate risk, kind of all in one bucket. And it’s important because ESG is really the shortest way to say it, but it isn’t just sustainability. It really speaks to the fact that there’s been an evolution in thinking about connecting the financial implications of sustainability, across environment, social and governance. So that brings me to, what does it mean for a manufacturer? They are thinking about all three of those components, environment, social and governance. It could mean that they’re thinking about a sustainable supply chain, minimizing risk, and knowing exactly where their products are coming from. Are they using any conflict minerals? Hopefully not. Do they know exactly who their suppliers are and what kind of practices they have? Have they done basically an industry 4.0 review of their factories? And are they using, for example, IOT or artificial intelligence, or even just Cloud technology to minimize the footprint of their factories. So, it’s products and processes, supply chain, you name it.

Justin Kennington (15:36):

You talked about AI and IOT, just as some examples. This is something that came out in one of the news articles, as I read the whole thing, click down below to read the whole thing. That talked about what for our audience is much simpler stuff, building automation, right? The idea that we as an industry are the ones that do this and have been for decades now. When the people detector sees there’s no one in the room, turn off the lights because there’s nobody there. But what you’re talking about now are some even more advanced technologies, things like AI and IOT that are being deployed in this space to reduce footprint, is that right?

Kim Knickle (16:13):

That’s right. And for example, I know of a manufacturer who used both IOT and AI to minimize waste on the production process. So, for example, they were able to take images as a product was being built, identify when one of the machines was getting too hot, was damaging the wiring. And by getting an alert, when the temperature was changing, they’re able to retune the manufacturing process and throw away less product. And of course, there are benefits to where they had more product to sell at a lower cost. So, it definitely is all connected.

Justin Kennington (17:03):

That’s where those things are going hand in hand. Right? So that leads me actually perfectly to my next two questions, which I wanted to ask together because, well, you’ll see why number one, why should a manufacturer care about a sustainability? And then number two, why does a manufacturer care about sustainability? And I’m interested if there is a difference in the answer to those two questions. Why should we care and why do we care?

Kim Knickle (17:36):

Why should they care? You know, there are lots of motivations, I think why companies and people should care about sustainability. Some of them being really big, long term topics. Like we want this to be a healthy and safe environment for everyone here on earth, but the more business oriented, why should they care is because their performance from a sustainability perspective or an ESG perspective has implications, financial implications. And these are getting more serious every day. I mentioned if we can minimize waste in a factory, then we can reduce our costs and then we have more product to sell, right? That’s a simple one, but there are also the impact of the capital markets and things like the SEC securities and exchange commission is working on some rules that will require public companies to disclose their climate risk. So much like they disclose other business risks, like there might be a natural disaster, I might not be able to get the suppliers I need for this product, demand might not go up as much as we thought. They’ll also have to disclose things like this factory is in a location where we are concerned about sea rise, you know, the rise of the ocean and it could damage, or we need water for our process and the water tables are decreasing in this area. Or it could be this product require this specific component, and it’s just not sustainable to acquire that resource. Things like that. I have some other little factoids, let me see if I can grab them. They’re things like the access to capital, cost of debt is two and a half percent higher for firms that don’t have a great sustainability performance than others. Let’s see. Office buildings that achieve the highest sustainability standards can charge more for rents. Lots of things that have financial implications. So hopefully that convinces you if being kind to the earth and your fellow humans, doesn’t convince you.

Justin Kennington (20:13):

I’m curious how we got here. There’s a picture in my head I’m going to try and paint as these words come out. Let’s see if I can make it make sense. Historically, I’m going to say, as if I know anything, the challenge around sustainability has been that in general, the profits are private and the costs, the environmental costs, the sustainable costs are social costs. I’m thinking back to the Lorax. I’ve got little kids. I got my Thneed factory, and I’m making a billion dollars on Thneeds. And dumping all this toxic waste into the lake over here, but you know, it’s not my lake. I don’t care. I’m ruining it for the fish and for everybody, but I’m making a ton of money. I’ll go buy a lake house somewhere else.

That’s the structure. But it seems like what you’re telling me now is that, I mean, my goodness, it’s harder to access financing. If I don’t have some kind of reasonable sustainability process. That sounds like we are now socializing the profitability if you will. Because now there’s something in the world. It’s this political force, I guess, that has told the SEC that has told the financial institutions, we want you to care. So, we need you to create these incentives. You see where I’m trying to go.

Kim Knickle (21:27):

Let me remove a couple words that sound a little risky in your explanation.

Justin Kennington (21:33):

Thank you. I rely on people like you to do that for me.

Kim Knickle (21:35):

It is not about politics and it is not about social, it’s not socialistic-

Justin Kennington (21:47):

No, you’re right.

Kim Knickle (21:49):

So, I want to be careful there, but let’s face it. We’ve gotten to the point where you could not poison the fish because there are already rules and fines around that, But there are, like I said it is about sustainable business where your reputation, what kind of rates you are going to pay to get access to capital, how well you’re going to do in a market. They’re definitely impacted by your sustainability performance. And that’s being quantified more and more every day.

And it’s always been that way to some extent, you go back 20 years and consumer brands would ask consumers, does it matter to you that our product is sustainable? They would often say yes. I’d say that if you look at kind of millennials and generation X and generation Z, they place a lot higher performance on sustainability than previous generations have. It’s definitely going to matter. You were telling me that a lot of the places where your partners are working is in the entertainment venues. Most of the entertainment venues, for example, the artists who perform there have some expectation of the sustainability footprint of the entertainment venue. All of these little connections are being made, whether it’s financial, whether it’s consumer driven, competitive, cost structure, they’re all coming together for it to really be important right now, if you didn’t think it was before.

Justin Kennington (23:54):

Yeah, no, that makes sense. I didn’t mean politics before in the nasty way that we, Americans, can see and understand politics. I just meant from the pure perspective of, you talk about this generational shift, even people coming to just understand more. I think you quantified it perfectly. I’m thinking back to 40 years ago, when David Lee Roth was demanding no brown M&Ms in his dressing room. Now it’s Lady Gaga demanding that we got to have a sustainable AV system powering this concert venue. Okay, it’s the shift in people driving this. I’m fascinated that goes all the way to level of capital markets to me that.. Now you’re really playing with incentives. You know what I mean? Now, it’s not just, let’s do this to feel good. It’s like, oh, hello everybody’s got to wake up and pay attention to do business

Kim Knickle (24:46):

I think that’s the best summary. Everybody’s got to wake up and figure this out to do business.

Justin Kennington (24:50):

Wow. Well, I tell you what I have about six more questions to ask, but we’re up against time for now. Stay right there because I’m going to have you back in the after show. We already have some questions coming in from the audience, keep those coming in to our live@sdvoe.org email address or down there in the chat below me. And I’ve got some questions too. Kim stay right there and you guys head off for your fact check.

Matt Dodd (25:37):

Ah, great. Really great, very interesting lady. Really like Kim. Thank you for your questions so far. Keep them coming in. We have questions from you. Fantastic. Listen, look, ASIC the big deal for SDVoE at the moment. Nobody else has got this. And the power savings are up to 80%. That should be music to everyone’s ears, not just Kim’s and ours here on the show. So, let’s just put that into perspective. For example, a Crestron NVX 20 Watts typical system per endpoint, SDVoE ASIC endpoint about seven Watts, typically. P equals VA, do some sums on a recent install at the European parliament with over a thousand endpoints. That’s a saving of something like 13,000 Watts when you’re burning it 24/7.

Think that one through it’s the big thing, it’s important. Return on investment also through interoperability, ultimately about saving costs and building efficiency, not having to replace, remember it’s reduce then reuse and then recycle. And that’s what this is all about. We got Infocomm next week, looking forward to seeing you guys there, those of you that are going to be there, busy weeks. It’s going to be interesting getting back into play again over in the US. So, looking forward to that, and if you’re over there, I look forward to seeing you. Let’s head back to Justin now to round off the show and I’ll see you in the after show.

Justin Kennington (26:59):

Did you guys hear that? Did you hear that, Matt? Did you just say P equals VA? Every now and then he pulls one out and surprises me. It’s like, wow. I forget Matt knows some stuff. Good work, Matt. I love the sums. I love the math. Catch us on social media, right? Hashtag SDVoE live. We’re going away for the summer, but we’ll be back. Use that hashtag. Tell us what you think. Tell us you miss us. That’s all we really want to hear. I want to give a special thanks, after we see that beautiful hashtag, to our sponsor of Black Box. Thanks to you guys for sponsoring the show this season. We really appreciate that and appreciate all you do. Everybody be sure to go check out Black Box at Infocomm next week, if you’re watching us live. But I also want to mention coming up this summer, a new series from SDVoE Face to Face AV.

This is a series of interviews we recorded a couple of weeks ago, where I sat down with several members of the SDVoE Alliance, but also some other just big names in the AV industry. Just to chat about what’s going on in this space today. What are the hot topics? What’s going on in AV over IP? What’s going on with sustainability? And I think it was a really great series. Watch for those over the summer. Follow us on social media, subscribe to our YouTube channel, and you’ll see all this stuff as it comes out. Watch for a new video every week or two throughout the whole summer. We’ve got about 20 or 25 of them coming face to face AV, don’t miss it.

I’m going to go away now. It’s going to be summertime. I’m going to enjoy my summer. I hope you enjoy yours, but season three will be back. And we launch the season premiere on October 4th right here. So, make sure you’re ready and watch Face to Face AV through the summer. I am ready to be done already. 32 episodes we’ve put in. Big thank you again to the production team. Paul, George, everyone at Clavia who keeps this thing together. Matt, my cohost couldn’t do it without you. Thanks to all of you for watching but stay right there. The aftershow is coming up after these credits roll. Bye everyone.