There’s a dilemma in modern business. In every sector, organizations are on a digital transformation mission to ensure they remain viable and competitive. Companies are eagerly embracing revolutionary technologies - like blockchain, virtual reality, edge computing, machine learning and AI – as they pioneer new business models and keep pace with new trends.
Joe Baguley is Vice President and Chief Technology Officer for EMEA at VMware.
But their increasing reliance on these computationally intensive technologies hinders another important corporate goal: to reduce their carbon footprint. Although exact figures are debated, it’s accepted that the data centers that power these businesses are significant consumers of global electricity and contribute as much carbon into the air as the aviation industry. And these emissions are predicted to double by 2025.
Mounting pressure to reduce carbon footprint
Businesses are facing mounting pressure from multiple sources to decarbonize their operations.
Consumers, sparked by recent environmental disasters including heatwaves, flooding, wildfires and hurricanes, have a newfound awareness of the climate crisis. People have learned, with alarm, that our online habits come at a cost to the planet – in one year our collective love of Netflix is enough to power 40,000 average US homes. As a result, consumers are now holding companies to account on the environmental impact of their operations.
Investors, spurred by the growing evidence-base for a connection between environment, social and governance (ESG) policies and operational resilience and business success, are now using ESG as a signal for investment decisions. Similarly, companies are increasingly tying executive compensation to sustainability metrics.
This is all happening against a backdrop of stringent regulation. The number of countries legislating for net-zero carbon goals by 2050 or earlier is steadily increasing. The European Green Deal, proposed by the European Commission, is particularly ambitious. It proposes that all 27 member states become carbon-neutral by 2050.
Like the targets set under the COP21 Paris Climate Accords, achieving these goals requires a multi-faceted approach to decarbonization. Every industry has to pull its weight, and that includes the IT industry. Tech companies have a responsibility to help customers decarbonize their growing digital operations and achieve their sustainability goals.
With that in mind, here are three key areas where IT companies should be stepping up:
1. Intrinsic sustainability from the start
From energy-efficient coding onwards, sustainability should be a built-in characteristic of all new products and solutions. Taking an ‘intrinsic sustainability’ approach to design and development will ensure the energy consumption, carbon emissions, electronic waste, water usage and broader environmental impact for each product and service through its entire lifecycle is always considered.
The fact is, it’s easier to build a more sustainable ecosystem from the start than to reverse engineer one at a later stage. Bitcoin for example is never going to be able to lower the carbon-intensity of crypto-mining – it’s baked into the system. Tim Berners Lee, credited as the inventor of the World Wide Web, has described bitcoin mining as “one of the most fundamentally pointless ways of using energy.”
Another example is machine learning and artificial intelligence, both huge consumers of computational power. As the tech industry heads collectively down the road to these super-smart algorithms, we need to think intelligently and make sure we are being as energy-efficient as possible. That includes the way in which the algorithms are deployed, as well as the associated hardware and software.
2. Push sustainability through the supply chain
Every company is both a producer of products or services, as well as a consumer of others’ goods and solutions. That means every tech company has an opportunity to cause a positive chain reaction of sustainability through the supply chain, and hence help customers reduce their carbon footprint.
For example, some tech companies are adopting ‘responsible sourcing’ methods that demand sustainability from their suppliers. By building these requirements into contracts, sustainability is cascaded up the supply chain.
Similarly, if companies build sustainability into their own products and services, and demand sustainability from the partners selling their products, it has the same effect in the other direction.
A case in point is recent research by the 451 Group. It showed that organizations want their cloud providers to give them contractually binding efficiency and sustainability commitments. In other words, companies want tech suppliers who can prove they’re reducing their environmental impact, which in turn helps them 'green' their own supply chain and meet their own sustainability objectives.
That’s a powerful motivation for tech companies to engage suppliers and partners in their own sustainability journeys, building environmental standards into contracts, and procuring goods and services only from those who are themselves environmentally responsible. The goal should be a carbon-neutral supply chain.
3. Build sustainability into business operations
To reduce the carbon footprint of the tech industry, we must all play our part in building environmental sustainability into our own global business practices and operations. For many IT companies, the goal is to decouple business growth from carbon emissions and resource consumption. This starts with understanding, monitoring and classifying an organization's carbon emissions.
Scope 1 emissions result from company-owned and controlled resources, like heating sources or vehicles. Scope 2 are emissions made indirectly by a business, mainly when the electricity it buys is being produced on its behalf. Scope 3, usually both the biggest and hardest to tackle, brings us back to the supply chain. These emissions are those the organization is indirectly responsible for, from buying products from suppliers through to its products when customers use them.
Businesses are understandably progressing fastest to reducing Scope 1 and 2 which are in their control, for example by switching to renewable energy or electric vehicles. But they have less control on how Scope 3 emissions are addressed, which makes it harder to tackle. This is why organizations are rightly assigning the responsibility to the C-Suite.
Despite climate concerns, the shift to digital is unstoppable. Tech companies must therefore lead the way in reducing the environmental impact of IT. We must set our own ambitious targets. We must be more transparent, more collaborative, and more engaged with all our stakeholders and wider communities. If we all play our part, businesses and society will continue to reap the rewards of digital solutions while simultaneously supporting the battle against planetary warming.
