The New Age of Sustainability: ESG & Hyperscalers

Over the past year, the idea of sustainability has been among the most discussed headlines globally, including the tech world. The climate change narrative accelerated global conversations on how corporations can or, instead, should contribute to global sustainability efforts. The technology world was also highly affected by this conversation, engaging hyperscalers and cloud providers in the topic of Corporate Sustainable Responsibility (CSR). Subsequently, the ESG (environmental, social, and governance) criteria are standards for a company's operations that socially conscious investors use to screen potential investments.

In May 2021, Google announced a partnership with the AES Corp. to supply 24/7 carbon-free energy to Google's data centers. Amazon announced a US$2 Billion Climate Pledge Fund to invest in companies’ technologies to decarbonize the economy and run a 100% renewable energy within the five years to 2025. Microsoft is matching the effort with its three new data centers in Sweden utilize renewable energy, using Vattenfall AB to improve environmental efficiency and create an AI tool, called the AI for Earth Initiative, to assist environmental organizations. Other hyperscalers, such as MTN and IBM, have made similar commitments and investments in their data center spaces' carbon-neutral and renewable energy facilities. Ultimately, the question is—are data centers the only option to become sustainable?

Since the beginning of the sustainability narrative, the big three cloud providers have been accused of inefficiency in the running of the hardware and software in their data centers. As a result, the solution currently is merging efficiency and sustainability enabled enterprises to reduce their energy consumption and become more ESG friendly by simply moving from in-house to the cloud.

However, the cloud can become an enabler for sustainability not just for themselves in their de-carbonization effort, but also for other enterprises by using the platform to promote ESG data management. With enterprise-wide data warehouses and data lakes (see AN-5335), the cloud platform enables organizations to unify and combine relevant ESG data in a single data pipeline that can be later analyzed and scaled, depending on the use case requirement. In other words, the hyperscaler allows a positive feedback loop that dynamically corrects and updates the visualization and data reporting requirements of the ESG data demand. There are many examples of how the cloud can become an enabler of sustainability through ESG reporting base through their existing services, including:

• Standardization Through Data Management: The cloud PaaS enables rapid access and visibility of corporate data, which allows greater corporate transparency, appeasing shareholders and regulatory authorities.
• Data Integration: Cloud data architecture allows utilization of data lakes and provides access to all the enterprise data (structure and unstructured), which breaks down the ESG data siloes and allows a 360-degree view of data.
• Analytics and BI (Business Intelligence): Cloud give the ability to run BI, AI, and ML algorithms for prescriptive and predictive purposes, assisting organizations in transforming ESG data into actionable insight and having a timely estimate for meeting their ESG goals.

Sustainability is a tricky, complicated, and very versatile term. While the majority would instantly think of a “green mindset” (see IN-6102 for more debates on the topic), cloud vendors are doing several business transformations for carbon-free and green-energy heavy processes by stimulating sustainable development and modernizing data centers. It is essential to pay attention to how the cloud, with so many products and services, is becoming an enabler for sustainability and ESG reporting. The requirement for being a sustainable business is rooted in the deep analytics and understanding of the business operation, where connected things and people are displaying contribution to complex ESG data and turning it into an effective platform for compliance, analytics, and reporting. Even the COVID-19 pandemic showcased that organizations leveraging technologies (web-conferencing, remote monitoring, asset racking, etc.) were able to create more sustainable businesses while minimizing their environmental impact. Software-as-a-service (SaaS) has played another vital role with data, accessibility, reporting, and analytics, while cloud-native SaaS is stimulating the creation of autonomous business activities and sustainable operations management. Finally, the reporting, assurance, and security brought by the cloud has created a layer of corporate transparency, with more collaborative and sustainable business practices.  

All and all, everyone has a degree of responsibility when it comes to sustainability. Hyperscalers are stepping up to carbon-free goals and reduction of CO2. They are also entering CSR as an enabler and a tool for other enterprises to utilize for their sustainability and ESG journey—and that’s a new and exciting market development!