Cloud companies and datacentre operators are making strides to cut their water and carbon footprints, but corporates need to be aware of the environmental impact of undergoing digital transformation
We are living in a digital age. However, the planet on which we are living is not digital; it is physical and its resources are finite. As a result, any trade-off between digital transformation and sustainability must be counted with care, not just in terms of the value to business and society, but also the cost to the Earth.
In pre-pandemic times, digital transformation and sustainability often appeared together towards the top of the business agenda. However, recent research from Dassault Systèmes, conducted with analyst firm Tech-Clarity, found coronavirus caused 38 per cent of organisations globally to decrease attention on environmental sustainability, while 18 per cent put it on hold completely. The same survey found 46 per cent of organisations have increased their focus on digitalisation.
The trend is understandable, even beneficial, says Séverine Trouillet, global affairs director, EuroNorth, at Dassault Systèmes. “While this may look like businesses are neglecting the planet to focus on immediate priorities, going digital is a leap in the right direction,” she says. “By reducing reliance on travel and paper-based evidence, and increasing their ability to collaborate virtually, companies are effectively reducing their carbon footprint.”
Green data and a cleaner cloud
Any COVID-induced conflict of interest between drivers of digital transformation and sustainability needs resolving, however, with environmental expectations on the rise, says Tom Shelton, head of marketing at solutions provider boxxe. “Consumers are now much more likely to interrogate and take note of ways in which companies are handling environmental responsibilities, something not unnoticed by industry leaders. As the demand for sustainability grows, so will boardroom conversations,” he says.
The first potential conflict to resolve is the carbon footprint of the digital infrastructure itself. According to the International Energy Agency, datacentres accounted for around 200 terawatt-hours of electricity consumption in 2019, towards 1 per cent of global use. However, global internet traffic surged almost 40 per cent between February and mid-April this year.
Some datacentre and cloud providers are cleaner and greener than others, though, says Duncan Grierson, founder and chief executive of sustainable investing platform Clim8 Invest. “It is true datacentres are themselves energy hungry, however many of the big cloud providers, such as AWS and Google, are now buying in much of their energy needs from solar and wind.”
In fact, last year Google announced plans to invest up to $2 billion more in clean power, negotiating the biggest renewable energy deal in corporate history. Then, in September, the company declared it had eliminated Google’s entire carbon legacy through the purchase of offsets to account for all operational emissions prior to becoming carbon neutral in 2007.
As well as publicly cleaning up its act, the tech community is also providing us with tools to calculate the comparative carbon cost of service-provider choices we make.
For example, this July saw the launch of a free real-time index by Bristol-based tech firm YellowDog that specifically adds in carbon impact to allow assessment of sustainability across 25,000 different options for cloud computing. This is the first time such a climate-aware evaluation has been possible.
Water-cooling and the circular economy
Carbon is not the only metric of success applicable to digital transformation and sustainability, however. Much of the energy consumed by datacentres worldwide is used for cooling, hence locating them within the Arctic Circle, for example. This cooling requires billions of gallons of water, though, when water stress is a rising climate-risk factor.
Electricity storage requirements of mobile digital devices with rechargeable batteries carry environmental impacts too, including resource depletion and mineral extraction in manufacture, plus end-of-life disposal or recycling.
It should also be remembered that cutting or offsetting carbon emissions is not the same as reducing energy consumption or boosting generation. Global access to affordable clean energy is increasing, but not yet abundant. So energy-hungry datacentres that eat up supplies of renewables leave less green electricity for sustainably heating homes and powering cars.
Carbon blindness in the c-suite
Seeing this symbiosis of digital transformation and sustainability, the question remains whether corporates are really watching.
For Mark Sait, chief executive of SaveMoneyCutCarbon, a lack of visual understanding of what a tonne of CO2 looks like and the impact it has amounts to carbon blindness in the C-suite. “Executives will consider environmental impact at the design and build stage, which is a good thing although more to do with reducing operating costs, than carbon,” he says.
“The ongoing impact is where the real danger lies, as energy and water become more scarce. We need a more holistic view.”
Levels of environmental awareness around going digital actually differ by job role, says Justin Sutton-Parker, chief executive of PX3, and doctoral researcher at Warwick University. His research found the C-suite were 45 per cent aware that IT had a high impact on sustainability, whereas non-board-level roles in human resources, sales and finance were only 24 per cent switched on.
The differentiating drivers among the C-suite are their responsibilities for greenhouse-gas reporting and key performance indicators (KPIs), explains Sutton-Parker. “Drivers of compliance and KPIs at board level are causing the C-suite to examine the true environmental impact of going digital, whereas the message appears not to be filtering down,” he adds.
Pricing pollution to incentivise change
Ultimately, the net effect of efficiency gains via digitalisation, done right, should have an overwhelmingly positive impact on tackling climate change. The key to keeping any negative environmental consequences in check is to incentivise the C-suite to count the true cost, in carbon, says Trevor Hutchings, director of strategy and communications at Gemserv.
He concludes: “Carbon pollution is a market failure: an externality that needs to be priced to ensure those responsible bear the costs, therefore driving innovation, investment and business practice.”