More companies than ever are focusing on environmental, social, and governance (ESG) goals. It’s tied to everything from C-level compensation to new market development. Cloud migration can offer companies a better way to assess and manage ESG initiatives but with some considerations for implementation. This is what every company should consider as they build an ESG cloud strategy.
Companies are moving to the cloud for a multitude of reasons
According to a PwC survey, a vast majority of leaders within Fortune 1000 companies are already engaged in a cloud strategy. While ESG is a relatively new goal, many of these same companies are using the cloud to engage with ESG goals. For example:
- 34% are already leveraging the cloud to improve ESG reporting, while 26% have a plan but haven’t started just yet.
- 26% of executives have a plan to use the cloud to improve ESG strategy, and another 33% have already begun implementing the cloud for these goals.
- Around the same numbers are exploring the impacts of cloud on each component of ESG or have a plan to do so.
As businesses prioritize ESG initiatives, they’re also advancing their cloud strategies designed to improve processes. These two could offer an excellent partnership.
The benefits of leveraging the cloud in ESG initiatives
Cloud computing itself can offer some improvements for ESG as companies move away from rigid legacy infrastructure.
On-premises systems often lock companies into a specific processing tier whether they need it or not. When companies migrate to the cloud, they’re able to use processing power when they need it and scale back when they don’t. They can reduce the energy necessary to process data based on actual usage.
Reducing physical waste
When companies upgraded legacy systems in the past, it required purchasing new hardware and tossing the old. Even if old hardware went for recycling, that’s still a lot of physical waste. Cloud operations reduce the physical waste of hardware as companies share server capabilities and focus on upgraded software.
A better understanding of ESG goals
Cloud operations promise to better leverage data to understand the impact of ESG initiatives. This data can also help companies better assess whether these ESG initiatives are working and how companies can better pivot to meet their goals. The long-term impacts of using cloud computing could help companies build better ESG goals in the first place.
Companies are enhancing ESG Reporting
Cloud providers have been quick to understand the draw of ESG features. Microsoft, for example, offers a sustainability dashboard. Users can monitor the ESG metrics related to the use of the Microsoft cloud itself, including how root causes of emissions changes through tracking.
Google Cloud allows companies to choose locations based on carbon-free energy scores. The tool offers metrics based on the geographic area so that users can compare locations and choose the one that best suits their ESG goals.
Other cloud providers offer similar solutions that provide companies with tools to examine not only their own ESG impacts but those of the cloud provider. Because ESG transparency is a significant concern with consumers and other stakeholders, these tools could provide valuable monitoring over traditional legacy systems.
Challenges of ESG and the cloud
Challenges still exist in implementation. Companies will need to examine their short and long-term strategies to ensure that they can leverage the cloud to its fullest potential.
Not taking a holistic approach
Companies choosing to use services from multiple providers may reduce the risk of downtime should something go wrong. The downside is more complexity. Companies will need a straightforward process for tracking ESG goals through multiple cloud vendors. In addition, companies must closely examine each vendor’s policies and commitment to ESG. This should go along with their existing cloud governance strategies.
Managing new talent and hiring
Cloud migration may also require companies to hire new talent designed to build and maintain cloud architecture. This need could take focus from implementing the cloud to its fullest potential, including using AI and machine learning to offer actionable insights.
Legacy system involvement
Legacy needs also somewhat derail the good that the cloud can do. Companies will be making decisions in the coming months and years about how much of their legacy architecture is really necessary. Until then, complete transparency into ESG goals could prove challenging.
Adopting Cloud strategies will most likely help ESG in the long run
Cloud appears to make good partners with company ESG initiatives. Cloud not only provides more efficient processing but can integrate newer technologies into processing. Artificial intelligence and machine learning can improve data insights and help companies better understand the impact of ESG. Cloud providers can integrate these capabilities right into the architecture without the company needing to hire new teams to deploy it.
Organizations that create robust governance strategies to monitor ESG impacts will gain the most from cloud migrations. Once companies address the challenges inherent in cloud migrations and implementation, ESG monitoring will follow shortly after. It’s a matter of ensuring proper governance to gain the most benefit from their ESG cloud strategy.
Elizabeth Wallace is a Nashville-based freelance writer with a soft spot for data science and AI and a background in linguistics. She spent 13 years teaching language in higher ed and now helps startups and other organizations explain – clearly – what it is they do.