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AI’s Impact On Green MSPs

Three weeks ago, I talked with an MSP owner who mentioned that nearly half of their revenue comes from e-waste collection and recycling. They work primarily with small to mid-size ecommerce businesses that deal in consumer electronics and as a result, are confronted with loads of e-waste via returns of defective and damaged products. What started as a unique opportunity to expand their service offering became a new business model. That in-turn led to new messaging around the idea of being a “Green MSP.” 

This conversation really made me question where this green and sustainability movement stands among MSPs and their customers. With the shift in public narratives over the past few months, it would be easy to make the assumption that sustainability is no longer en-vogue and therefore MSPs have been forced to move on to more productive and profitable endeavors. However, I don’t think this is true. AI is turning sustainability on its head. What was once a moral preference is quickly becoming a necessity, as power becomes the currency of the future. 

To help me wrap my head around what’s actually going on in this sector of the IT Industry, I called on Joe Panettieri, Founder & Editorial Director of Sustainable Tech Partner. He schooled me on all things sustainability in the channel and the role MSPs will play now and in the future.

The Big Opportunity 

To understand the direction this trend is headed, it’s important to first take stock of where we’ve been. I thought Joe mapped the trajectory perfectly, as he explained: “MSPs follow the money. First, it was mobile and cloud, then cybersecurity. Now, many are struggling to figure out how to monetize AI. The next step is connecting AI with sustainability—there’s a real revenue opportunity there. AI applications are consuming an enormous amount of energy. Instead of talking about sustainability, MSPs should be framing it as cost optimization. ‘You’re already using AI to automate your business, but it’s driving up power consumption—let me help you optimize that.’ That’s an easier conversation to have with a CFO.”

The good news is that this is not an untested theory. It’s happening as we speak at the enterprise level, at the hands of both business and technology consulting firms. Panettieri explains, “If you want to see where the market is going, look at what the big global systems integrators—Accenture, Deloitte, KPMG—are doing with their vendor partnerships. They’re already bundling sustainability with managed services, and MSPs can do the same at a smaller scale.” 

Political Headwinds

This reframing of the narrative from sustainability to cost-saving is largely due to the political turnover happening in the United States. Joe Panettieri suggests that “A lot of the climate tech service providers and consulting firms have shifted their messaging. Instead of leading with sustainability, they’re now talking about energy efficiency and energy security. It’s a strategic pivot based on the political climate.”

“During the Biden administration, there was a flood of money into climate tech and sustainability initiatives. On paper, it sounded great, but in reality, a lot of startups with no clear path to profitability were getting funded. That created a lot of waste.” The term sustainability takes on a double meaning in this case. What was once considered environmentally sustainable, may not have been economically sustainable. This applies to almost any startup who took money during the ZIRP era, not just those focused on climate tech. 

Panettieri went on to explain the correction that is happening at this very moment. “In the current administration, we’re seeing businesses remove sustainability and ESG mentions from their websites. There’s a real shift in how companies position themselves, and that will likely slow down some sustainability initiatives—at least in the short term. There’s hesitation from businesses to promote ESG openly, which makes it harder to sell these solutions. But that doesn’t mean the market is going away—it’s just facing new challenges.”

Passion vs. Profits

MSPs are now faced with a harsh reality. For the sustainable technology movement to progress, passionate narratives and the social pressures that they create may not be enough. The dollars and cents have to add up. As Joe put it, “Passion is great, but it won’t sustain an MSP if the financials don’t work. If an MSP can align profitability with sustainability—where they help customers cut costs and improve efficiency—then it’s a win-win. That’s how this space will grow.”

“Businesses are not sustainable without profits. The word ‘sustainability’ is interesting because, from an environmentalist’s point of view, it’s about protecting the earth. But from a business leader’s point of view, sustainability means profitability. You can’t have one without the other.” He went on to explain that,“This isn’t about fast money. It’s about building a recurring revenue stream over time, just like traditional MSP services. It’s a compounding model. Year one might not look exciting, but ten years in, you’ve got a serious business.”

A Lack of Framework

While copying the playbook of major consulting firms may seem logical for MSPs, it may only be necessary due to a lack of guidance in this space.This is contrary to other programs such as LEED certification in Real Estate, which acts as a framework for Architects, Builders, and Developers who contribute to that industry. In response to this notion, Panettieri reiterated, “It’s very early days for this space. There’s no single certification or framework that defines a green MSP. It’s something that’s evolving, but it’s not at the level where you can look at a company and say definitively, ‘That’s a sustainable IT provider.’”

This appears to be both a threat and an opportunity for MSPs looking to go down the sustainability path. Those who help mold and define the framework will undoubtedly capture first mover advantage as the AI sustainability opportunity reaches critical mass. This is similar to those who were first to market in Managed Services. Joe Panettieri had a front row seat to these events. As he reflects, “You know, in the early days of MSPs, it was pretty easy to label companies as MSPs because you could look at their recurring revenue model and say, ‘That’s an MSP.’ But with green IT services, it’s different. The metrics are harder to pinpoint, and the regulations are constantly shifting.”

Sustainable IT Services

Despite the lack of framework, Joe believes that are four key areas of focus that green MSPs are looking to monetize: 

IT Asset Disposition

The most familiar of these is likely IT Asset Disposition (ITAD). “If you’re an MSP already handling infrastructure lifecycle management, adding IT asset disposition to your services makes a lot of sense. Clients are looking for ways to properly retire equipment, and MSPs are in a great position to guide them through that process. In fact, most are already doing IT asset disposition without necessarily branding themselves as sustainable IT providers. It’s just part of good business practice—helping clients properly dispose of, recycle, or repurpose their IT assets.

On-Prem Infrastructure

Despite cloud stealing the headlines, it has been proven that businesses in some industries still have a quiet dependence on on-premise infrastructure. Panettieri suggests that “Everyone talks about cloud-first, but on-prem infrastructure isn’t going away. Businesses still have data centers, local servers, and network infrastructure that need to be optimized and managed. If you’re an MSP managing traditional infrastructure within a building, there’s a real opportunity to optimize energy consumption. Cutting down on power use, improving cooling efficiency—those things add up to cost savings.”

Managed Energy

As for the software layer that enables the remote management of these on-prem and distributed environments, there is opportunity there as well. As Joe suggests, “MSPs already do remote monitoring of PCs and infrastructure. So if you’re already monitoring and managing that infrastructure, why wouldn’t you layer in energy services to help reduce consumption. Imagine if you could tell a CFO, ‘I’m going to save you X% per month on energy, and you don’t have to pay me for it—I’ll just take 10% of the savings,’ that’s a no-brainer for the customer. You cut their costs, and you build a new revenue stream at the same time.”

Carbon Consulting 

While it has yet to hit Main Street, the major ESG consulting firms are finding opportunities in carbon consulting and accounting. While it may be a while before this trickles down, Panettieri believes that there is an M&A trend happening in parallel that could accelerate this. “There’s a growing market for carbon monitoring software, and IT service providers are starting to manage it as part of their offerings. These firms don’t just consult on carbon credits—they’re actually deploying and managing the software for clients. Over the last 10 to 15 years, we’ve also seen accounting firms acquiring MSPs. I think we’ll see this continue, with carbon accounting coming under that same umbrella. Thus, MSPs that can integrate carbon tracking with financial reporting will have a strong differentiator.”

Vendor Enablement 

Thankfully, MSPs are not the only ones focused on delivering sustainable tech to their customers. Vendors have a horse in this race as well and can act as a great partner and resource. This is precisely where Joe Panettieri recommends that most MSPs start their journey before taking these services to market. “I’d start by making a list of all my existing vendor relationships—cloud service providers, SaaS companies, hardware suppliers—and then I’d dig into their partner programs.”

“MSPs might be surprised to learn that many of their hardware and software vendors already provide sustainability-focused resources. Whether it’s energy-efficient hardware, IT asset disposition support, or carbon tracking software, these tools are there—you just need to know where to look.” 

Taking his advice, I researched a few of the top channel vendors to understand what exactly they were offering. I was pleasantly surprised to learn that Cisco for example has a ‘Take Back & Reuse’ program that enables a stackable discount of 7% on refresh deals. They also offer a financing program called ‘Green Pay’ which gives customers a flexible payment plan at a 5% discount. Since this is technically a leasing agreement as opposed to a purchase, it allows Cisco to automatically reclaim the device into their Takeback program at the end of the term. 

MSP-to-MSP Partnerships 

As I started to go down the rabbit hole of vendor enablement programs, I began to realize just how specialized this has become. It would be difficult for a general MSP to help deliver on these programs without extensive knowledge on how to do so. This is why I asked Joe if this opens the door to more MSP-to-MSP collaborations. To this he responded, “I do think there will be boutique service providers that focus on sustainability and partner with traditional MSPs. The traditional MSP can handle core IT services, while the sustainability-focused MSP brings in expertise around carbon accounting, energy management, and green IT strategies.”

“For example, if you’re an MSP moving customer workloads to AWS, Azure, or Google Cloud, you might not be an expert in the sustainability tools available in those environments. That’s where another specialized MSP—or even an ISV—can come in to help optimize those workloads and reduce costs.” This trend of cooperation as a result of specialization is something that I have been tracking closely. Whether it’s Google Workspace vs. Microsoft 365 or Windows vs. MacOS, MSPs are becoming more uniform in their offering and are increasingly willing to partner on ill-fitting opportunities. 

Vertical Opportunities

This same theme is also occurring for MSPs specializing in industry verticals. Not-so ironically, the customer vertical also has a lot to do with how much they emphasize sustainability in their procurement of IT hardware, software, and services. When I asked Panettieri which verticals specifically are seeing the most traction, he suggested that “Manufacturing is on the leading edge here, mostly because of supply chain optimization and Scope 3 emissions. If you can take carbon out of your supply chain, that’s a big focus area. Financial services is another hot area, but it’s been a bit of a mixed bag. Some institutions are moving forward aggressively with net-zero commitments, while others are pulling back due to political and regulatory shifts.”

Joe also suggested that the energy sector itself is an obvious choice. “It’s not just pure-play green energy companies looking at sustainability—traditional fossil fuel companies are investing in renewables, and they need technology partners to help manage both sides of their operations efficiently.” I’m guessing this also extends into local electric and utility providers as well, which have been a viable target for MSPs for quite some time.

Conclusion

While this has not exactly been a straight path forward, it appears as though there is a lot to look forward to in the sustainable IT sector. Artificial intelligence will undoubtedly increase the demand for energy and on the heels of that demand will come opportunities for cost optimization. While the narrative may have shifted from a feel-good environmental mission to a more DOGE-like cost-cutting endeavor, the result may look the same. Regardless of which narrative motivates you, there is opportunity for growth on the other side. 

For the MSPs looking to stay on the cutting edge of this trend, I highly recommend following Joe Panettieri and the work he is doing at Sustainable Tech Partner.