Why the cloud gives companies the perfect opportunity to boost their ESG credentials

By Naveen Thomas, Director – Technology Consulting, EY.

  • 1 year ago Posted in

With environmental, social and governance (ESG) goals at the top of many business leaders’ agenda, the cloud provides a perfect opportunity for organisations to improve their sustainability credentials.

For many companies, efficiency and cost-cutting have been the major incentive for migrating to the cloud. However, another factor driving the trend is business leaders’ push to reduce energy consumption and carbon emissions.

Research by EY estimates that 10% of the world’s electricity is consumed by computers, data centres and networks. Such energy generation can be significantly reduced when companies migrate their on-premises data storage to the cloud.

While there is capital expenditure involved for organisations as they migrate more of their operations to the cloud, CIOs, CFOs, COOs and their teams must broaden their horizons beyond cost paradigms and refocus on the value piece. The cloud’s ability to act as a vast data warehouse, deliver savings, and strengthen systems agility and resilience, empowers companies to improve their operations and bolster their sustainability credentials.

It’s no wonder that, according to EY, nearly half (49%) of businesses are still planning to invest significantly in the cloud in the coming years.

Here we will explore how organisations can use the cloud to become more sustainable, and why businesses need to have strong governance over their cloud environment to get the most out of their investment and unlock the cloud’s full potential.

Leveraging the cloud to improve sustainability

EY research shows that consumers are becoming increasingly vocal about the need for companies to act on sustainability, with 80% believing they should act now to improve their sustainability practices.

The research also shows that more investors consider ESG as a key priority when making business decisions. For example, 43% view climate change and sustainability as increasingly important to investment strategies, while 83% consider ESG factors in their investments.

This is where businesses can leverage their adoption of the cloud – and enhance their sustainability practices even further by continuing to migrate more of their operations to the cloud.

The cloud is a powerful way for businesses to cut their carbon footprint, as it reduces the need for businesses to maintain and upgrade their own IT infrastructure, therefore enabling them to lower their energy consumption significantly. This can also drive significant cost savings, and allows IT departments to their boost productivity as the cloud provider – rather than the internal IT team – takes on responsibility for managing IT infrastructure.

The cloud also enables companies to share resources, such as storage and processing power, which means they can avoid over-provisioning and reduce their environmental impact.

In addition, many cloud providers are committed to using renewable energy sources and building green data centres. Cloud providers tend to have a strong focus on the environmental impact of their operations and continuously work to reduce the carbon footprint of their services. By

choosing a cloud provider that is committed to sustainability, businesses can ensure their IT infrastructure is as environmentally friendly as possible.

Strong governance to unlock the cloud’s full potential

While the benefits of the cloud have long been clear to most businesses, simply migrating services to the cloud or adopting cloud native solutions isn’t enough to unlock its full potential.

Companies are likely to uncover operational inefficiencies and overspending on underused and overprovisioned resources if they don’t have a plan in place to manage their cloud environments effectively. Businesses can also encounter potential cybersecurity issues if they don’t have the right governance in place.

Research shows that, on average, organisations believe over a third (35%) of their cloud spend ends up being wasted, while 79% have said they struggle with their spending on cloud services. In addition, 81% of organisations see security as a challenge when it comes to the cloud.

To overcome these challenges, companies need to have strong governance over their cloud environments. This includes developing policies and procedures around cloud adoption, usage and management, as well as implementing tools and processes to control costs, security and compliance.

But in order to achieve this, organisations need to have skilled and knowledgeable teams in place. This means investing in training and development for governance teams to ensure they have the right expertise to manage cloud environments effectively. This includes developing knowledge in areas such as cloud architecture, security, compliance, and cost optimisation.

It is also crucial to have the right company culture in place to ensure a high level of governance and that the business is taking full advantage of everything the cloud offers. Organisations should look to break down silos wherever possible and foster closer collaboration between IT and other business functions. This means creating a culture of innovation, experimentation and agility where IT and business leaders work together to identify new opportunities and deliver value to customers.

A crucial part of every organisation’s IT infrastructure

Overall, the cloud should be a crucial part of every organisation’s IT infrastructure. The more businesses continue to migrate their operations to the cloud, the better they unlock its full potential – enabling them to cut costs, improve productivity and, importantly in today’s business environment, meet their ESG targets.

Businesses that keep on investing in the technology now will be better prepared to meet the demands of the digital age and create a more profitable and sustainable future for their organisation.

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