By Gaurav Aggarwal, VP and Global Lead, Everything on Azure Solution Strategy and GTM, Avanade
Sustainability has been a buzzword and rightfully so due to the accelerated global climate crisis. Corporations worldwide acknowledge the urgent need to act on climate change and have even set climate targets. Gartner defines sustainability as ‘An objective that guides decision making by incorporating economic, social and environmental impacts’.
According to the ‘Business Ambition for 1.5°C — Our Only Future’ campaign, 177 corporations from across sectors have come forward to make efforts to reduce the rising global temperature. They are not just making empty promises, but also taking concrete steps 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 we are well into the Decade of Action, which started in 2020 and calls for accelerating sustainable solutions to the world’s biggest challenges from poverty and gender to climate change, inequality and closing the financial gap.
Sustainability is critical for all aspects of our lives, and has undoubtedly pervaded the digital technology industry as well. While digital transformation is disruptive and innovative, is it truly sustainable? 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 organisations. Alternatively, it is also recorded that digital technology use is currently responsible for four per cent of global carbon dioxide 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 leveraging technology to deliver sustainable solutions and to incorporate environment-friendly IT practices. To make ethical choices regarding design and technology that invariably contribute to the internet’s broader ecological impact. We must harness the power of the Cloud as Cloud computing is truly the silver lining, or should we say the ‘green lining’ here. There needs to be a paradigm shift in the organisation’s internal structure to achieve sustainability goals by harnessing cloud computing.
Cloud helps meet sustainability goals in four primary ways.
1. Sustainable Platform for Infrastructure, Application, and Data
Microsoft and WSP USA conducted a study in which it was discovered that Microsoft cloud computing was 93 per cent more energy efficient. Additionally, it was noted that the Microsoft cloud platform had 98 per cent lower carbon emissions than on-premises data centers. A report published by Accenture strategy also said, “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.”
2. Rapid innovation for sustainability centric solutions
Corporations have been leveraging technologies to create more sustainable businesses while reducing environmental impact. For example, virtual meeting applications have been one of the most notable cloud-powered innovations so far. This became the most valuable sustainable innovation even during the Covid-19 pandemic, wherein business continuity was ensured seamlessly.
Microsoft research found Cloud could help provide scalable technological solutions such as smart grid, intelligent buildings, etc, to ICT sectors. Moreover, significant enterprises are harnessing the power of the cloud to find sustainable solutions. Take, for example, the case of AGL. AGL, one of Australia’s leading energy companies, used 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.
3. Software as a Service (SaaS) Solutions
SaaS has transformed the way we work, communicate, and share data. With sustainability, the reporting requirements have become crucial and complex. SaaS platform essentially provides a cloud application solution that drives business operations by managing and automating key activities.
4. Innovation and investment from hyperscalers
Hyperscalers can invest vast amounts of money in innovation for energy-efficient data centers and technology due to an increase in cloud consumption and the number of cloud users. For example, Microsoft is investing in building datacenters based on new leading-edge designs (eg, Microsoft has created a data center underwater) to improve the average PUE (Power Usage Effectiveness). Investments in green infra will significantly reduce the per-user footprint when cloud business applications are being used.
Sustainability benefits of Cloud from CXO’s perspective
Sustainability initiatives are indeed being harnessed across all levels from CEOs to CFOs and CIOs. There has been significant pressure from customers and stakeholders to take a stand on sustainability as well.
By embracing the power of the cloud, CXOs can efficiently harness growth and innovation. They can also use sustainability as a driver for business growth.
1. CEO perspective
According to a report published by Accenture strategy, 21per cent CEOs and CXOs acknowledged the importance of embedding sustainability goals into their corporate strategy. However, less than half were able to integrate it into their business operations. Additionally, according to the report, CEOs believed that there could be real business opportunities (like faster innovation and growth) from embracing UN Sustainability Goals. As customers, employees, and other stakeholders are calling for the new version of responsible leadership; sustainability is most certainly redefining leaders’ roles today.
The uncertainties brought 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.
2. CFO perspective
CFOs have always viewed non-financial metrics like sustainability as a cost rather than as a source of value. This can be attributed to the language barrier between the CFOs and sustainability colleagues, as rightfully pointed out by a Harvard Business Review study. A CFO’s understanding and expertise lie in ROI and EBIT, whereas sustainability officers’ metrics lie in mitigating carbon emissions, water consumption, etc. Hence, CFOs fail to understand the value of investing in sustainability goals truly. However, according to the same research done by Harvard Business Review, “Non-financial metrics such as carbon emissions can reveal hundreds of millions of dollars in sustainability-related savings and growth.”
2b. Cost Reduction on IT Systems, Operations
The Smart 2020 report estimated technology-enabled energy efficiency would result in a total of US$ 947 billion worth of total cost savings. Thus, migrating to the Cloud ensures significant cost savings for CFOs, which can then be used for other revenue-generating projects. Cloud computing does not just reduce hardware expenditure but also reduces the overall capital and operational costs. This is huge as CFOs can streamline and manage these cost savings for better innovation, scalability, and growth. The Cloud also allows CXOs to shift their outlook to think ‘green’, to contribute to something larger than just their companies. This can be done by choosing an economic platform like the Cloud, which ensures an overall reduction in total costs and carbon emissions.
2c. Cost saving from the reduction in carbon footprint offset expense
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.
2d. Faster Value creation with Business Agility
Cloud enables CFOs to move on from immediate financial imperatives to engage in better value creation. By incorporating sustainability goals into their business operations through the Cloud, CFOs can build a better Environmental, Social, and Governance profile (ESG). This can help build stronger relationships with customers, shareholders, and broader stakeholders. It’s a common misconception that corporate social responsibility initiatives add no monetary value. They enhance the company’s reputation and goodwill while ensuring no contribution to the climate crisis. Hence, CFOs should look beyond immediate short-term financial investments to long-term sustainable investments.
3. CIO and CTO Perspective
In addition to standard Cloud Economics and business agility benefits of Cloud adoption, the sustainability benefits of Cloud help CIO and CTO with a sustainable platform for innovation. It helps to optimise your application by enhancing image size, caching, and data.
4. Workforce perspective
As many as 70 per cent 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 organisations to take greater responsibility and action towards sustainability.
Leading cloud providers like Microsoft’s Azure are pledging to be carbon negative by 2030 and match 100 per cent of their global annual energy consumption with renewable energy credits. This highlights how serious cloud providers are about sustainability and how much effort they are willing to put to uphold their environmental credentials. It is time for CXOs to consider the sustainability benefits of the Cloud now more than ever, as sustainability is now a business imperative.