Technology

Embedding ESG into Cloud Computing—a Shot in the Arm

Cloud computing has entered the world of environmental, social and governance (ESG) as socially
conscious investors assess a company’s impact on the world. Stakeholders want to know that the
companies they are investing in are “doing no harm” and “doing the right thing” while providing a
positive return on investment (ROI).

Ethical investing is paramount in decarbonization, carbon footprint reduction, board diversity and waste
management. Sustainability solutions are key to achieving business goals amidst surging penetration of
cloud services across automotive, healthcare, financial services, e-commerce, media, gaming, public
services and has furthered the need to bolster the sustainability profile. Brands are expected to use
AR/VR, edge computing, big data, blockchain and cloud-native technologies to foster brand recognition,
complement sound corporate behavior and bolster sustainable investing.

ESG strategies have gained prominence in the wake of surging environmental awareness and
consumers’ willingness to pay premium prices for sustainable products. Environmentally and socially
conscious practices have become prevalent to attract and retain investors and customers. Cloud
computing service providers have exhibited profound traction to expedite their ESG progress. For
instance, the Google Cloud Platform offers carbon-free energy scores for Google Cloud regions, enabling
companies to choose GCP locations optimized for reduced carbon emissions.

In July 2023, Initiative Climat International (iCI) joined forces with ERM to introduce a guidance
document, helping software companies to account for the scope 3 emissions. The guidance elucidates
(including but not limited to) disclosure requirements and reporting trends, a governance structure for
GHG accounting and reporting, carbon reduction initiatives and scope 3 carbon accounting.

Navigating Google’s Path towards a Sustainable Future

Concerted efforts to meet sustainability goals have led investors to assess what risks or opportunities
companies may face from environmental issues. A shift to more resilient and low-carbon economies will
require investors and other stakeholders to invest in ESG issues. Industry leaders are inclined to use
green equipment in data centers to minimize power consumption. Moreover, businesses are expected
to receive impetus from recycling and reuse to reduce waste and capital expenditure. In essence, Google
suggests that 5 of its data centers operate at almost 90% carbon-free energy (CFE).

With data centers continuing to be sought-after in the energy transition, sustainable cloud services will
witness investments galore. In August 2021, the American giant announced an infusion of USD 1.2 billion
in Germany’s Cloud Computing Program by 2030 to undergird cloud computing infrastructure and
renewable energy usage. Besides, Google has set an audacious goal of reaching net-zero emissions
across operations and value chain by 2030. Sustainability-minded organizations are expected to
contribute to reversing climate change.

Is your business one of participants to the Global Cloud Computing Industry? Contact us for focused consultation around ESG Investing, and help you build sustainable business practices.

Inclusion Top Priority for Microsoft

Diversity representation and the focus on inclusivity help create a culture where everyone can thrive
and propel progress. Prominently, the 2022 Diversity & Inclusion Report suggested that women contributed over 30% of the Microsoft workforce globally. Moreover, women in technical roles have
risen between 1.4 and 1.6% points over the past half a decade. It has also embarked on a mission to
represent the population of people with disabilities. As of June 2022, around 7.8% of the Microsoft
employees in the core business in the U.S. self-identified as having a disability. Moreover, the behemoth
spent over USD 9 billion with the U.S. diverse-owned businesses (as per the 2023 Impact Report). The
company exhorts it has trained and certified 8.5 million people globally with skills for the digital
economy.

As the world strives to underpin racial equity, the company has injected around USD 150 million to
reinforce inclusion and the number of U.S. Black and African American and Hispanic and Latinx people
managers, senior leaders and senior individual contributors by 2025. An emphasis on diversity, equity
and inclusion will redefine computing solutions and help employees be more innovative and creative.

IBM Banks on Board Diversity

A wide range of strategic planning can provide avenues of growth through impact investing with data
standardization, increased transparency, and process automation. Tax transparency, board diversity,
executive pay, and sound governance structure will leverage companies to create long-term value.
Brands and institutions have fostered governance frameworks and brought new skills and global
perspectives. To put this in perspective, eleven out of 12 director nominees are independent in IBM.
Meanwhile, two women directors and three ethnically diverse directors were included in the past three
years, according to the IBM 2021 ESG report.

The American giant has an Audit committee to help identify financial and audit risks with the assistance
of IBM’s enterprise management framework about AI ethics, privacy and cyber. The development of
practices and policies that emphasize transparency, trust, ethics and accountability could be
pronounced, auguring well for the industry growth.

ESG Trends Paint Robust Picture

ESG ratings have become the new standard for investing as companies with high ESG ratings show less
volatile earnings and a lower cost of capital and help preserve the wealth of global ecology.
Furthermore, concerted efforts for improved ESG disclosures in their sustainability reports can leverage
stakeholders to integrate ESG risk analysis into their investment decisions. For instance, in October
2022, Alibaba announced opening a new campus with investments in cloud computing. The design of
the campus is reportedly eco-friendly, including flowerpots made from recycled plastic, a photovoltaic
power generation system and high-efficiency low-energy devices in the on-site coffee shop. The global
cloud computing market size was pegged at USD 368.97 billion in 2021 and could observe a 15.7% CAGR
between 2022 and 2030.

Relates Reports:

About Astra — ESG Solutions By Grand View Research

Astra is the Environmental, Social, and Governance (ESG) arm of Grand View Research Inc. — a global market research publishing & management consulting firm.

Astra offers comprehensive ESG thematic assessment & scores across diverse impact & socially responsible investment topics, including both public and private companies along with intuitive dashboards. Our ESG solutions are powered by robust fundamental & alternative information. Astra specializes in consulting services that equip corporates and the investment community with the in-depth ESG research and actionable insight they need to support their bottom lines and their values. We have supported our clients across diverse ESG consulting projects & advisory services, including climate strategies & assessment, ESG benchmarking, stakeholder engagement programs, active ownership, developing ESG investment strategies, ESG data services, build corporate sustainability reports. Astra team includes a pool of industry experts and ESG enthusiasts who possess extensive end-end ESG research and consulting experience at a global level.

Manisha Jadhav

I am a dedicated and result-driven professional with expertise in Environment, Social and Governance (ESG).

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