As someone in the cloud area but with an interest in climate tech, I read about ESGs and decided to dive in to learn about the intersection of the two. More specifically, I was asking myself ‘I’ve read that cloud platforms work with ESG’s, but how?’ This is what I found out. For starters, ESG’s stand for environment, social and governance and are used as a way to measure the socially responsible metrics of a business.
ESG’s stand for:
Environmental - the company’s impact on the environment. This can include things like greenhouse gas emissions, pollution, compliance with environmental regulations etc. Social - the company and its relationships with its employees (diversity, equity and inclusion, compensation) as well as, others it does business with and the community in which it operates. Governance - this is how a company governs itself from its leadership to how it makes decisions to how it stays accountable to shareholders.
Why is all of this important? ESG ratings show that as a company, the business is mitigating itself from risks. In the long run this signifies that a company can retain a competitive advantage thus being more attractive to investors.
How does this work with cloud providers? There’s a few ways:
- Cloud computing can be better in terms of energy use. For example, since systems built in the cloud are scalable, companies utilize only what they need. This minimizes energy use and can reduce greenhouse gas emissions. Also less physical hardware is used thus being a part of the circular economy.
- There are also options within cloud providers to choose data centers based on their impact on the environment.
- Platforms can also be used to calculate carbon emissions which, in turn, can be used in measuring a company's performance in their ESG goals.
As the uses of ESGs grow it will be interesting to see how the major cloud providers adopt and scale based on the demands of industry.