By Amyn Jaffer, Ultima Labs Director 

Over the past two years, a company’s impact on wider society has been brought into sharp focus. Companies are rightly being judged on their environmental, social and corporate governance (ESG) activity more than ever. As part of the UK Government’s carbon emissions reduction targets, 78% of carbon emissions are to be cut by 2035, to reach net zero by 2050. Research shows about a third (30%) of all current UK greenhouse gas emissions (including household, industrial, and government emissions) come from small businesses, and around half (50%) come from large businesses.

Carbon reduction commitments are important for every business, no matter what industry or region. By 2023 all publicly listed companies and financial institutions will have to detail how they intend to meet the UK’s 2050 net-zero carbon target. Right now, around half of smaller UK businesses fall within being ‘Carbon Complacent’ or ‘Carbon Exposed’.

Right intentions, wrong message

Previously, it’s been too easy to pay lip service to the issue. Too often, businesses have put the cart before the horse – proclaiming environmental benefits or boasting better sustainability than their competitors before they have the underlying data. Regulators are becoming bolder in cracking down on such behaviours, which can amount to greenwashing, with moves such as the UK’s Green Claims Code launched in September 2021.

We’re already seeing customer choice being influenced by a company’s commitment to the environment, and this is likely to grow in the future. Customers won’t buy from companies unless they can demonstrate their commitment to the environment. It’s an issue that binds all organisations – regardless of industry or size – and businesses need to show that they are taking sustainability and reducing their impact on the environment seriously.

It’s also become an imperative for companies seeking investors. A recent survey by EY found that 25% of CEOs in the US see strengthening their ESG performance as the “primary goal” in pursuing M&A activities this year. Fortune noted that this survey is the first time ESG shows up as a significant driver of deals.

So how can businesses take practical steps to reduce their impact on the environment?

Going greener in the cloud

The digitalisation of SMEs is driving new business models and determining how work is undertaken. In a move helped along by the pandemic, more organisations are moving to the cloud than ever before. Gartner estimates that by 2025, 85% of organisations will adopt a cloud-first principle. The cost savings and innovations such as artificial intelligence and machine learning are largely understood, but the cloud can also help businesses meet their sustainability goals.

The estimated total carbon emissions generated by IT is around 1.4% of the global greenhouse gas (GHG) footprint, and by 2040, this number is expected to hit 14%. Data centres make up the largest share of this percentage (45%). But a 2018 study found that Microsoft Azure is up to 93 per cent more energy-efficient and up to 98 per cent more carbon efficient than on-premises solutions. It’s estimated that a greater reliance on cloud computing can reduce per-user carbon footprint by 30% for large companies and 90% for small businesses. Cloud brings flexibility around scalability and prevents wasted space and energy resources from being used by companies who rely on their own data centres.

Also, when organisations are in the cloud, there are other savings to be gained. When workloads are managed in the cloud, they can benefit from automation capabilities which can help to consolidate the environment and reduce energy consumption. When you consider that the possibilities for automation are endless, this can make even more of a difference to the energy consumption used by companies of all sizes.

The role of sustainability calculators 

While the cloud offers vast improvements in carbon performance compared to on-premises, continuous scrutiny of the digital tools we deploy is essential, and our consumption should be transparent. Sustainability calculators for the cloud provide businesses with a way of demystifying their carbon footprint and giving a solution-based approach to calculating their impact on the environment. At the same time, it allows them to demonstrate cost savings and the more comprehensive benefits of the cloud to the rest of the organisation.

There is now a specific carbon footprint calculator, for example, that will show customers how much they can reduce their carbon footprint by moving compatible workloads to Azure. This assessment tool enables businesses to assess their estates to help them evaluate which on-prem workloads would be suitable for Azure, the Azure VM types recommended for the target environment, the cost of hosting those workloads in Azure and the carbon saving they would achieve.

For example, the sustainability calculator demonstrates that a small business that has eight virtual machines running workloads in the cloud instead of on-prem would save:

• 12,913 miles per year saved.
• 5 acres per year saved.

This is based on:

• 7,800 CO2 kg per year – the amount of carbon footprint generated by purchasing and running similar physical servers through their entire lifecycle per year on-premise.
• 1,793 CO2 kg per year – the amount of carbon footprint generated by running these compatible workloads in the cloud through their entire lifecycle per year to compare with the on-premises figure.

It’s becoming far easier to spot cases of greenwashing as we become more educated about making a real difference to sustainability and our impact on global climate emissions. But quantifying the carbon impact of each Azure subscription gives a business tangible data for reporting existing IT-based emissions. It allows a company to see estimated carbon savings from running those workloads in Azure versus on-premises data centres. It’s also the first step in establishing a foundation to drive further decarbonisation efforts.

Other IT areas that a business can change

Digitalisation will undoubtedly significantly impact decarbonisation. But it’s important to remember that the tools we use to access the digital world all use valuable resources. What’s more, these tools become obsolete relatively quickly as technology improves, which amounts to a massive amount of e-waste.

As well as energy efficiency, renewable energy, circular economies, asset disposal, and refurbishment of technology should all be areas of focus. From paperless offices with low energy lightbulbs and automatic power down to using specialist companies like N2S to recycle old equipment responsibly, every aspect of a business should be assessed to see how it can be changed to help reduce its carbon footprint.

Stand behind your sustainability goals

The task of reducing global carbon emissions may sound challenging, but rather than be disheartened, it’s vital to recognise that every business has a role to play while still being able to flourish. There is so much help available to enable you to set your ESG strategy and stand confidently behind it – from Government websites to articles on industry best practices. Investing in sustainability is good for business, good for customers and good for the planet.