By Steve Veitch, Director, Solution Architecture, Ensono
The cloud can deliver a wide range of benefits for any business: increased flexibility, low cost, low risk opportunities to flex demand over time, and both financial and sustainable economies of a scale. When it comes to your ESG targets, a move to the cloud can alleviate the pressure of meeting regulatory standards and provide assurance of long-term innovation in sustainable solutions.
There are four overarching ways you can leverage a move to the cloud to directly deliver against ESG targets and combat the impact of higher energy costs for your business, whether the carbon footprint of your on-premises technology is known or not.
Take advantage of out-of-the-box carbon reductions
The carbon emissions of hyperscale cloud services will almost certainly become a top criterion in cloud purchase decisions, as the overarching ESG benefit of cloud computing is that it, quite simply, reduces the amount of energy your IT systems consume. It is estimated that the average cloud data center uses 50 percent less electricity than on-premises hosting.
The big three are already touting their carbon emission credentials. Microsoft stated that Microsoft Cloud is as much as 98 percent more carbon efficient than on-premises data centers, with a power usage effectiveness (PUE) of 1.185 in EMEA. PUE determines the energy efficiency of a data center and the closer the measure is to 1.0, the greater the overall efficiency—the data center industry average is 1.8 and alongside water usage effectiveness (WUE). These measures will help data centers—and the businesses that use them—track progress on the road to net-zero. Cloud providers are lowering their PUE and WUE through:
Virtualization – Using virtual machines that can run their own workloads, reducing energy consumption and releasing floor space.
Sustainable cooling systems – Using natural cooling techniques such as heat exchangers rather than power-hungry refrigeration-based systems.
Maintaining hardware – Maintaining hardware and replacing equipment when it falls below set levels of performance not only means processes run at maximum efficiency but are also more sustainable.
Energy efficient lighting – Although energy-hungry data center lighting makes up a small proportion of the power consumption, switching to LEDs across lighting systems can help both reduce consumption and limit extraneous heat production.
UPS usage – An uninterrupted power supply (UPS) that stores power can boost efficiency or reduce energy usage across systems.
Cloud providers have taken massive strides in the efficiency of their hardware over the past decade. However, scientists1 warn that we will ultimately reach a tipping point when most organizations have moved to the cloud and the energy demands will start to rise again, so the source of that energy becomes even more important.
Leverage renewable energy investment
The pressure is on data centers to find new sources of energy or offset their energy usage against investment in renewables. The EU Green Deal states that “data centers can and should be carbon neutral by 2030.” The industry has responded with a commitment to tackle energy, resource and water use at their European data centers, aiming to power them solely by renewable energy by 2030. Microsoft has gone one step further, pledging a 100 percent renewable energy supply by 2025. In the U.S., the New Energy Act of 2021 covers a spectrum of energy efficiency initiatives, some of which specifically target the data center industry, but all of which will require significant investment.
While moving away from fossil fuel-sourced energy completely is still in the works, the industry has made strides towards net-zero through reducing demand, purchasing wind and solar generated power and renewable energy credits (RECs), and offsetting carbon usage. Investment in renewables is most widely evident through Power Purchase Agreements (PPAs) where large tech firms agree to buy renewable energy from a project not yet online, for a set price and a set number of years, usually from 10 to 20 years.
1Lawrence Berkeley National Laboratory, “Data centers continue to proliferate while their energy usage plateaus,” Science Daily, June 2016
Reap the economic and social value of dematerialization
By shifting to a cloud-based system, you will be able to rely less on hardware and physical machines and contribute to dematerialization. Although literally meaning the use of less materials, this process of consuming fewer resources while delivering increased value is considered a crucial strategy for advancing industrial ecology at a societal level.
The replacement of high-carbon products with new, virtual equivalents—such as moving from physical, on-premises data centers to cloud-based systems— can improve both productivity and profitability, as well as sustainability. According to a 2021 Ericsson IndustryLab report, 60 percent of decision-makers agreed that cloud infrastructure was among the top three key contributors to the dematerialization already underway in their businesses.2 Nearly half agreed that improved productivity and profitability were key benefits of dematerialization and around 40 percent said the same for sustainability.
Gain efficiencies from large-scale innovation
Cloud providers have been ironing out inefficiencies in the hardware and software running in their data centers. They run virtual machines on their servers to limit downtime, install custom cooling systems, automate wherever possible, and so on. As noted, this consistent pursuit of efficiency has helped the data center industry keep its energy needs stable over the past decade.
It also means that when companies move their data from in-house servers to the cloud, they will almost certainly end up reducing their energy consumption. Using cloud providers makes it easier for most businesses to reap the benefits from large scale investment in technologies as well as meet corporate need to be environmentally conscious and risk averse. The power of the larger players to seek out and develop new solutions have emerged as a blueprint for a “green data center” with innovations such as renewable power procurement models (such as RECs and PPAs), waste recycling, and use of AI, ML and IoT to forecast and automate energy use and distribution.
Whatever the challenges faced, it is beyond doubt that moving to the cloud offers an accessible, low-risk route to meeting ESG targets for many organizations. The potential for long-term sustainability, opportunities for extensibility and resilience, and reduction in risk responsibility makes the cloud worthy of serious consideration in your digital strategy.
2“The dematerialization path to profitability and sustainability,” Ericsson & IndustryLab, February 2021.
Pose a question to our Mavens today!
Submitting a question to Ask a Maven is quick and easy. Just send us an email at askamaven@themavenreport.com. Include your question and let us know how you’d like to be identified (provide your name, company and/or industry) or if you’d prefer to remain anonymous.
Our Mavens personally review and consider each reader submission. If yours is featured in an upcoming issue, you’ll receive a special Maven gift—our way of saying thanks for asking a Maven.
