ESG in IT: Here to Stay or the Latest Fad?

By Mitch Lewis, Wednesday, January 25th 2023

Analyst Blogs

ESG is Suddenly Everywhere

Messaging from IT vendors is frequently centered around common topics such as performance, scalability, ease of use, and economics. Recently, however, a new criterion has entered the conversation – and it appears to have the interest of nearly every vendor in the market. Over the last year IT vendors have rapidly ramped up messaging regarding ESG initiatives, specifically regarding environmental and sustainably concerns. While a product’s environmental impact may not currently have the sales impact that some of the other criteria hold, it is certainly not being hidden from prospective customers. The question then becomes: Are ESG initiatives here to stay, or are they simply the latest marketing gimmick?

The Very Real Impact of IT

Everyone’s favorite IT cliché is to say that “data is the new oil” – obviously highlighting the enormous value that organizations place on data. But perhaps the value obtained from these resources is not the only similarity. Just like oil, data brings along its own very real impact to the environment.

The fundamental impacts that data makes on the environment are straight forward. Data needs a lot of power.  IT operations require power for compute, storage, and networking. Maintaining data’s availability requires power. As do applications that utilize this data, and the fans that are tasked with keeping these systems cool (liquid cooling brings along its own environmental impact). It has been estimated that data centers account for approximately 2% of all electricity use in the United States and contribute significantly to overall global emissions.  In addition, the very servers and storage arrays utilized are made up of rare materials mined from the Earth. And compounding this impact, is the cyclical nature of periodic technology refreshes.

While data has undeniable value, it would be naïve to ignore the environmental impact that accompanies the data centers that store it, and their contribution to growing environmental concerns globally. With this in mind, IT vendors’ new found focus on energy efficiency, and ESG reporting appears well warranted.

The Larger Picture

With a narrow lens focused only on the world of IT, it could appear that ESG initiatives and power efficiency are simply the latest marketing buzzwords being used to one up the competition. Widening that lens beyond the realm of IT, however, would tell a different story. Sustainability initiatives are everywhere. Auto manufacturers are pivoting to electric vehicles, clothing brands are embracing circular economies, packaging of goods are transitioning to recyclable materials, and numerous organizations are setting carbon neutrality goals. The larger ESG and sustainability picture shows that this is a trend well beyond IT, and its likely here to stay.

Looking at the larger picture additionally shows the importance IT customers will place on sustainability. Organizations are making sustainability commitments, and their IT departments will not be exempt. In addition to internal initiatives, increased focus on sustainability from legislative bodies could lead to future environmental regulations, further forcing IT departments to consider the impact of their data centers.

If It’s Not Going Away… Where Is It Going?

It appears that the recent focus on ESG and sustainability from IT vendors is here to stay. In fact, what we have seen so far is likely only the beginning. IT vendors will likely be even more forward with their messaging around the environmental impact of both their company’s internal operations, and their products.

This will come in a number of ways, including ESG reports, energy efficiency testing, and product lifecycle tracking. While we have seen the early stages of these initiatives already, future iterations will hopefully see more standardized processes and trustworthy, verifiable data.

Tracking of energy efficiency and carbon output is also likely to become integrated with data management. As the campaign around IT’s environmental impact continues, it is likely that tools to better monitor, report, and take action on these criteria are added into management software.

While much of the concern around IT’s environmental impact is in regards to energy efficiency, the use, and waste, of natural resources is also of concern. IT vendors are likely to invest in ways to more sustainably source and track these materials through their supply chain, as well as support circular economy initiatives to reduce the e-waste incurred during product refresh cycles.

With service offerings, sustainability metrics such as energy efficiency will work their ways into SLAs to help customers ensure they are hitting their targets. This has already begun, with Pure Storage recently announcing the inclusion of an energy efficiency SLA in their Evergreen One offering.

Energy efficiency and carbon neutrality will also be a key focus for cloud providers – who make up a disproportionately large share of data center energy usage. Cloud providers will invest in sourcing energy from renewable power sources, which in turn will offer a way for companies to offload their energy usage to renewable sources.

On the IT organization side, they will be facing increased pressure to meet sustainability goals. Power efficiency and sustainability initiatives will soon take a front seat in IT planning strategies and purchasing decisions.

This shifting focus towards sustainability, ESG reporting, and environmental impact may seem sudden, almost to the point of a new marketing gimmick, however it is deeply rooted in longstanding issues with society’s approach to the environment. This focus is here to stay, and hopefully a serious commitment from the IT industry can help make a positive impact in a global effort.

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