Cloud computing is an increasing contributor to carbon emissions because of the energy needs of data centers.
With demand for digital services and cloud-based computing rising, industry efforts concentrated on energy efficiency will be required. This means organizations across all verticals must fold their cloud carbon footprint into their environmental, social, and governance (ESG) targets.
This is especially true for those organizations that have committed to net-zero or science-based targets or other similar decarbonization commitments, as cloud computing would need to be accounted for in the calculations.
Depending on an organization’s business model, and especially for companies that focus on digital services, the energy consumed through cloud computing can be a material portion of their overall emissions.
In addition, shifting to the cloud can contribute to the reduction of the carbon footprint if it is approached with intent, and explicitly built into the DNA of technology deployment and management.
Major Cloud Providers Offering Insight
Casey Herman, PwC US ESG leader, explained that the major cloud service providers — Google, Amazon, Microsoft — are already providing data on energy usage and emissions on a regular basis.
“Smaller players are still playing catch-up either providing online calculations, which require customers to be responsible for securing these values, or there is no information provided at all,” he says. “CIOs should have their operational teams monitor these and preferentially select those service providers that provide real-time tools to optimize the energy usage.”
He notes that CIOs should also increasingly build or purchase tools that allow a holistic view across all the cloud computing impacts: Currently, they would need to look at each provider separately and then aggregate them external to any tools that may be provided by service providers.
“At PwC, we have been piloting an IT sustainability dashboard that collects data from public cloud providers and on-premises systems and then provides views on key sustainability metrics like energy reuse efficiency or carbon usage effectiveness,” he adds.
Herman says that ultimately, organizations are seeking greater use of data for more advanced analysis, which will consume increasingly more computing power, which translates to more energy.
“Cloud service providers have been quick to reduce their carbon footprints, including public statements and investing money in renewables and carbon capture projects,” he says. “These organizations are putting in a carbon-neutral infrastructure that could then support the current and growing demand for data, analytics, and computing power.”
Using Migration to Install Tools
In fact, shifting to the cloud (provided it’s the right provider) could reduce a company’s carbon footprint through optimization and rationalization of on-premises/private data centers to more efficient (energy and carbon) cloud-based data centers.
A company can also use their cloud migration program as a catalyst to transform their technology footprint and become environmentally conscious by design.
Herman says that this can include re-architecting applications and building within enterprise architecture a strategy to utilize more discrete and reusable components (microservices, APIs), preventing wasteful use of energy in the cloud.
The key to getting cloud carbon impact initiatives underway is aligning the ambition and strategy of the overall business with the IT and digital function around ESG and being an active champion of the ESG agenda within the organization.
“Without the tools to measure the carbon footprint of their cloud footprint, companies will struggle to holistically aggregate relevant carbon impact for their IT department or manage to net zero, especially when these represent meaningful parts of their overall footprint,” Herman says.
He explains that measurement tools and processes will also allow the organization to leverage that same data and insights to support decarbonization agendas and strategies in the business.
AI Provides Insight into Cloud Emissions
For Chris Noble, co-founder and CEO of Cirrus Nexus, the focus for his company has been on an artificial intelligence designed to help companies quantify and shrink the level of carbon their cloud operations produce.
“By giving organizations the chance to impose a cost on that carbon, it allows them to make a better-informed business decision as their impact on the environment, and then to drive that actual behavior,” he says.
By giving businesses a window into how much emissions their cloud computing demands are producing, those organizations are then able to form a roadmap that will help their ESG strategy.
This is a part of transparency reporting, which Noble notes will be increasingly required through government regulations.
“There’s a lot of people making claims about carbon neutrality, but there’s no way to verify that — there’s no proof,” he says. “What we allow companies to do is to see what that activity is.”
He says that for IT departments to understand cloud-based carbon emissions as a business problem, they need parameters and metrics by which they can tag on cost on the issue and work toward resolving it.
“How do we educate, inform and drive that behavioral change across their environments?” Noble says. “We spend a lot of time doing that.”
Reliable Data Intelligence is Critical
Elisabeth Brinton, Microsoft’s corporate vice president of sustainability, says that accurate, reliable data intelligence is critical for the success of ESG initiatives.
“For organizations to truly address the sustainability imperative, they need continuous visibility and transparency into the environmental footprint of their entire operations, their products, the activities of their people and their value chain,” she says.
Just as organizations rely on real-time financial reporting and forecasts to guide decisions that affect the fiscal bottom line, they need foundational intelligence to inform sustainability-related decisions.
“Leveraging a cloud platform offers organizations comprehensive, integrated, and increasingly automated sustainability insights to help monitor and manage their sustainability performance,” Brinton says.
With cloud technology and a partner ecosystem, cloud providers like Microsoft are also bringing integrated solutions to connect organizations and their value chain, ultimately helping organizations integrate sustainability into their culture, activities, and processes to prioritize actions to minimize their environmental impact.
Microsoft Cloud for Sustainability is the company’s first horizontal industry cloud designed to work across multiple industries, with solutions that can be customized to specific industry needs. At its core is a data model that aligns with Greenhouse Gas Protocols — the standard in identifying and recording emissions information.
Brinton explains as the company operationalizes its sustainability plan, Microsoft is sharing its expertise and developing tools and methods customers can replicate.
“We’re also thinking about where we’re going, what we have to solve as a company to walk our own talk, and how we’re going to enable our customers to deal with that complexity so that at the end, they’re coming out on the other side as well,” Brinton says.
The Customer Demand for Clean Clouds
Kalliopi Chioti, chief ESG officer at financial services software firm Tememos, notes banks are heavy users of datacenters and so being a part of this positive trend — moving from legacy on-premises servers to modern cloud infrastructure — will have a significant impact on emissions.
Temenos Banking Cloud, the company’s next-generation SaaS, incorporates ESG-as-a-service to help banks reduce their energy and emissions, gain carbon insights from using their products, and to track their progress towards reaching their sustainability targets.
It also runs on public cloud infrastructure, and the hyperscalers Temenos partners with have all made commitments to sustainability goals, science-based targets and using 100% renewable energy. “All these energy efficiencies are passed onto our clients,” Chioti says. “Let’s also remember that banks are in a unique position to influence the transition to a low-carbon economy.”
She points out that the move to the cloud also has commercial implications: Consumers are not passive bystanders to the climate agenda, and they are increasingly matching their money with their values and voting with their wallets.
“If companies want to continue to thrive and grow in the new era, they need to listen to their customers,” she says. “That starts with using cloud banking solutions to transform their climate credentials and show their customers the work they are doing to transition to a low-carbon global economy.”
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