Sustainability has been a buzzword and rightfully so owing to the accelerated global climate crisis. Corporations worldwide acknowledge the urgent need to act on climate change and have even pledged to set climate targets.
According to Gartner, Sustainability is defined as “An objective that guides decision making by incorporating economic, social & environmental impacts.”
According to the “Business Ambition for 1.5°C — Our Only Future” campaign, 177 corporations from across the sectors have come forward to reduce the rising global temperature. They are not just giving out empty promises but are also taking concrete actions to bring policy changes within their own countries and regions. These are undoubtedly positive breakthroughs and require to be implemented now more than ever as the time between now and 2030 is known as the Decade of Action.
Sustainability is pervading all facets of our lives, and it has undoubtedly pervaded the digital technology industry as well. No doubt, Digital transformation is disruptive and innovative, but is it truly sustainable? Well, I would say there are two sides to the coin here.
On the one hand, we can contest that software technologies are intelligent solutions built to support the environment. For example, Microsoft created an AI tool called AI for Earth Initiative to assist environmental organizations. Alternatively, it is also recorded that our digital technology usage is currently responsible for 4% of global CO2 emissions. With more and more digital use, the number is only going to increase. So, where does the solution lie? How can Cloud help with Sustainability?
The solution lies in utilizing Technology to deliver sustainable solutions and to incorporate environmental-friendly IT practices. To make ethical choices regarding design and Technology that invariably contribute to the internet’s broader ecological impact. My perspective is to harness the power of the Cloud as Cloud computing truly is the silver lining, or should we say the ‘green lining’ here.
Therefore, in this blog, I intend to highlight cloud computing efficacy in driving sustainability goals.
Microsoft and WSP USA conducted a study wherein it was discovered that Microsoft cloud computing was 93% more energy efficient. Additionally, it was noted that the Microsoft cloud platform had 98% lower carbon emissions than on-premises data centers. This comprehensive study does highlight the efficiency of cloud infrastructure in maintaining Sustainability and has numerous environmental benefits. A report published by Accenture strategy also stated that “migrations to the public cloud can reduce CO2 emissions by 59 million tons per year which equates to taking 22 million cars off the road”. Such statistical data isn’t just hyperbole but a reality.
Let me take you through the different ways the cloud infrastructure poses a sustainable option:
Typically, on-premises data centers consume an unreasonable amount of energy as you require a constant power supply, a cooling system to avoid overheating, etc. Additionally, server underutilization also results in energy waste as servers are left unused to build up more e-waste.
Additionally, Public cloud providers can deploy ‘green data centers’ by utilizing other energy sources. For example, Microsoft’s data centers use renewable energies like wind, solar, and hydroelectricity.
Migrating to the Cloud will replace high carbon-emitting machines with virtual equivalents. Such a replacement ensures to reduce the company’s carbon footprint significantly. For example, the Cloud enables seamless virtual services like video streaming rather than utilizing heavy hardware equipment that consumes more energy. Elimination of significant physical hardware from the day-to-day operations ensures dematerialization and reduces cost, waste, effort, and environmental impact.
Corporations have been leveraging technologies to create more sustainable businesses while ensuring to minimize their environmental impact. New innovations and technologies using cloud computing infrastructure have powered sustainability goals. For example, virtual meeting applications have been one of the most notable cloud-powered innovations so far. Companies can now have periodical employee meetings online, saving high costs, energies and time.
In a research conducted by Microsoft, it was noted that the Cloud could help to provide scalable technological solutions such as smart grids, intelligent buildings, etc., to ICT sectors. Moreover, significant enterprises are harnessing the power of the Cloud to find sustainable solutions as well. Take, for example, the case of AGL. AGL, one of Australia’s leading energy companies, utilized Microsoft’s Azure cloud platform to manage solar batteries remotely. The company was able to derive a sustainable solution with the help of cloud computing infrastructure efficiently.
These use cases certainly highlight that the cloud infrastructure isn’t just inherently a sustainable solution but also an infrastructure that powers rapid Innovation for sustainability-centric solutions.
SaaS has transformed the way we work, communicate, and share data. With Sustainability, the reporting requirements have become crucial and complex. As such, it has become essential to have secure, accessible, and accurate data. SaaS platform essentially provides a cloud application solution that drives business operations by managing and automating key activities.
Hyperscalers can invest vast amounts of money in Innovation for energy-efficient Datacenters and Technology due to an increase in cloud consumption and the number of cloud users. For example, Microsoft is investing in building data centers based on new leading-edge designs (e.g., Microsoft has created a data center underwater) to improve the average PUE (Power Usage Effectiveness). Such investments in green infrastructures will significantly reduce the per-user footprint when cloud business applications are being used.
Sustainability initiatives are indeed being harnessed across all levels of hierarchy, from CEOs to CFOs and CIOs.There has been significant pressure from customers and stakeholders to take a stand on Sustainability as well truly.
Hence, by embracing the power of the Cloud, CXO’s can efficiently harness growth and Innovation. Let me tell you how:
According to a report published by Accenture strategy, it was noted that 21% of the CEOs and CXO’s acknowledged the importance of embedding sustainability goals into their corporate strategy. However, less than half were able to integrate it into their business operations.
Incorporating sustainable goals doesn’t just ensure a competitive advantage but also allows companies to fight against climate change proactively.
Indeed the uncertainties bought about by the pandemic have halted and distracted the CEO’s sustainable efforts. However, the accelerated migration to the sustainable Cloud has also invariably solved this very problem.
Leaders of technology-driven businesses or other businesses can drive sustainable actions by incorporating Cloud computing technologies. Achieving sustainability goals doesn’t happen in a vacuum but requires bringing together different technologists, employees, and stakeholders to realize the importance of leveraging sustainable options into operations.
The goal is not to make profits from Sustainability but rather to make profits sustainably. CEOs must align Sustainability with profits, business operations, investments, Innovation, and growth. By embracing the power of the sustainable Cloud, they can quickly alleviate the pressures to implement Global Goals and concentrate on strategizing for business success.
CFO’s have always viewed non-financial metrics like Sustainability as a cost rather than as a source of value. This can be owed to the language barrier between the CFO’s and Sustainability colleagues, as rightfully pointed by a Harvard Business Review study. However, according to the same research done by Harvard Business Review, it was noted that “Non-financial metrics such as carbon emissions can reveal hundreds of millions of dollars in sustainability-related savings and growth.”
a) Sustainability investments have tangible and intangible benefits, and CFO’s must realize this now more than ever.
b) To maximize the value from Sustainability initiatives, a model like the “The ROSI (Return on Sustainability Investment) analytical modelis a great starting point.
c) Another important model is CISL’s “Net Zero Framework for Business” — designed for those companies tasked with delivering net zero in a business context and influencing this ambition’s societal transition. By drawing on a range of leading frameworks and CISL’s insights, it provides a ‘one-stop-shop’ for the essential tasks that need to be set in place to align with net-zero.
Source: Targeting Net Zero — framework — Cambridge Institute for Sustainability Leadership
Let us now understand how the Cloud can make a business case for CFOs:
Allows CFO to use different Financial Engineering to drive the operations in the core business stream instead of worrying about huge cash flow upfront.
In the Smart 2020 report, it was estimated that technology-enabled energy efficiency would result in a total of $947 billion worth of total cost savings. This is huge as CFO’s can streamline and manage these cost savings for better Innovation, scalability, and growth. The Cloud also allows CXO’s to shift their outlook to think ‘green,’ to contribute to something larger than just their companies. It poses an opportunity to participate in the fight against climate change without considering mitigating costs or analyzing risks.
By migrating to the Cloud, CFO’s can quickly mitigate and avoid carbon footprint expenses (Expenses like emission taxes, penalties for non-compliance, etc.) that might be incurred later on.
Cloud enables CFO’s to move on from immediate financial imperatives to engage in better value creation. By incorporating sustainability goals into their business operations through the Cloud, CFO’s can build a better Environmental, Social, and Governance profile (ESG). This can help to build stronger relationships with customers, shareholders, and broader stakeholders.
In addition to standard Cloud Economics and business agility benefits of Cloud adoption, the Sustainability benefits of Cloud help CIO and CTO with:
70% of the employees are now looking to work at a company that has strong environmental goals. This is reflected within the IT sectors as employees are now urging their organizations to take greater responsibility and action towards Sustainability. Additionally, the sustainable benefits of cloud computing certainly reach all levels of hierarchy, including the workforce as well. With CEOs establishing to maintain corporate social responsibility (CSR), the workforce or the employees can make a collective and collaborative effort to ensure minimal carbon footprint. Using the new sustainable Productivity tools and IT systems, employees can easily ensure the consumption of energy.
Leading cloud providers like Microsoft’s Azure are pledging to be carbon negative by 2030 and match 100% of their global annual energy consumption with renewable energy credits (REC). This highlights how serious cloud providers are about Sustainability and how much effort they are willing to put to uphold their environmental credentials. Hence, it is time for CXOs to consider the sustainability benefits of the Cloud now more than ever, as Sustainability is no longer just a perspective but a business imperative. CXOs need to collaborate to align their operational goals with sustainability goals to build a corporate purpose to tackle climate change. Sustainability benefits can be truly harnessed only if the cross-divisional teams understand the urgency.
In my opinion, Cloud computing can definitely support the company’s sustainable efforts by saving billions of dollars in energy costs and reducing carbon emissions by millions of metric tons.
Keywords: Cloud, Business Strategy, Digital Twins