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The Role of Cloud Computing in Meeting ESG Standards

Businesses and institutions around the world are constantly having to adapt to consumer needs and public sector directives. Though it is not new, one directive in particular is shaping the future of business and business values, which is included in the EU’s Green Deal. It observes a business’ impact on the environment, on society, and on governance, referred to as ESG (environmental, social, governance), a term originally coined in 2005, and only recently has taken a hold as a priority among organizations.

ESG policies aim to improve business sustainability, and encourage business leaders and their board of directors to commit to more than generating desirable profits. They provide a framework for entities to identify and mitigate risks, as well as to document and show their involvement in the betterment of their respective communities. ESG’s rise in significance is evident as “more than 90 percent of S&P 500 companies now publish ESG reports in some form… In the United States, the Securities and Exchange Commission (SEC) is considering new rules that would require more detailed disclosure of climate-related risks and greenhouse-gas (GHG) emissions”, according to McKinsey.

Balancing the shift of focus from mostly profit-driven decisions to sustainability and digital solutions, organizations must consider the implications of their actions on ESG parameters, as well as working towards successful digital transformation. These two initiatives work more in tandem than what many may think, and complement and enable each other in their implementation and development. As the World Economic Forum indicates, “businesses need to align their digital transformation and sustainability objectives, and their decisions need to be grounded in data.”

Today, a successful digital transformation entails the inclusion of sustainability, providing a structure for long-term operability and success for organizations. Microsoft’s Director of Cloud and Enterprise Business, Edy Susanto, highlights that “benchmarking your digital transformation with sustainability goals becomes pertinent. Sustainability can thus be the KP of the degree of digital transformation.”

An avenue of digital transformation, cloud computing, has proven to provide sustainability solutions, as well as improving communication and data storage methods for organizations. One example is found in Microsoft’s 2018 study on cloud computing which documented that the Microsoft Azure cloud platform can be up to 93% more efficient in reducing an organization’s carbon footprint.

The inclusion of cloud technology within organizations is becoming increasingly popular, as it aligns with sustainability efforts and improves enterprise efficiencies. According to the European Commission, 41% of EU companies incorporated cloud computing in 2021 for communication and data storing. “73% of those enterprises used sophisticated cloud services relating to security software applications, hosting enterprise’s databases or computing platforms for application development, testing or deployment.”

There are multiple reasons for a company to adopt cloud computing in efforts to achieve ESG goals. 59% of leaders of Fortune 1000 companies report that they have adopted cloud computing to improve their decision-making, and the technology’s contribution to ESG practices is being continuously monitored. Cloud technology emits less carbon emissions through automation of data storing, processing and sharing.

The global efforts to minimize carbon emissions have been the motive behind the creation of Microsoft Cloud for Sustainability, a cloud service that assists organizations in recording, reporting and reducing emissions towards net zero. The new cloud offering is said to assist businesses in their sustainability journey through integrated and automated operations following data analysis.

All in all, sustainability is one of the most important factors in business today and cloud computing and cloud as a service is a powerful tool in achieving a company's objectives on sustainability. It is important to note that cloud technology and cloud as a service are a means of achieving sustainability, and at the same time contribute to the digital transformation of an organization. S&P Global indicates that “cloud servers are much more efficient, in general, and are much more highly utilized than enterprise servers. This means that by moving workloads to the cloud, enterprises can dramatically reduce their energy use by up to 60%”. While there is no quick-fix to meeting ESG goals, cloud-based solutions serve as a great place to start.

Capacitor Partners helps organizations in implementing a successful digital transformation with a firm grasp on emerging technological trends, and aligns ESG standards with their digital transformation to ensure long-term sustainability and favorable relations with potential investors. From market research, to a thorough understanding of your organization’s needs, it requires not only an active role, but experience and knowledge in the multiple facets of implementing technological solutions. This is where Capacitor Partners can take the helm and steer your organization towards the future.


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