Sustainability Reporting Uncovers Hidden Risks and Opportunities

Metrics gathered for ESG initiatives are helping mitigate risks caused by global warming and political instability and may soon influence customer behavior.

By Gene Knauer

By Gene Knauer April 13, 2023

Amid predictions that data centers could account for more than 10% of global electricity consumption by 2030, sustainability efforts in IT are getting a lot of attention.

The environmental, social, and governance (ESG) report has become a valuable new way to uncover once-hidden sustainability risks, providing data and metrics beyond those in a corporate annual report. Armed with ESG information, companies can make eco-savvy decisions and influence the behavior of partners and customers all along the sustainability value chain.


Carbon Calculators Measure Path to Sustainability

“Right now, digital is pretty much free because I use all my apps on my phone as much as I want,” said Nutanix cloud economist Steen Dalgas. 

“In the future that will change. The costs and energy associated with that use will be more visible to consumers. And that has the potential to eliminate some usage and provide massive environmental benefits.”

Managing Risk Through Measurement

Risks that ESG initiatives can help manage range from environmental to political. For example, Steen pointed to a hyperscale data center in the Netherlands that was using 84 million liters of water a year, equivalent to the consumption of a small town. Following the 2022 drought, the worst in Europe in 500 years, the company had to look for another, more sustainable solution. Managing water consumption as part of ESG reporting enabled the company to start to identify and mitigate the business continuity risk of a scarce water supply.


Attention Turns to IT Sustainability and ESG

Beginning with the understanding that you can’t improve what you can’t measure, ESG reporting measures direct, indirect and downstream energy usage. That includes sources of energy like electricity, gas and water and related emissions from assets (like company vehicles and offices); indirect energy usage in data centers (like electrical, steam, heating and cooling); and downstream energy usage and emissions and other impacts from partners, suppliers, employees and customers.

Based in London, Dalgas has experienced the gas shortages and inflation affecting Europe since the war in Ukraine began. “With usage data from smart meters and utilities made very available to European consumers, I’ve seen people better managing their energy usage, resulting in a drop in overall consumption,” he said.


IT Sustainability Becomes Business Imperative

According to Euronews, for example, France has used energy data to enforce a maximum of 190 C (66.20 F) for heating offices. It has also promoted lower temperatures in swimming pools and gyms and a ban on doors left open in heated or air-conditioned stores. Citizens in Finland are being encouraged to take fewer saunas. All over Europe, fewer lights are on in public and private places at night.

Cross-Ecosystem Sustainability

With more data and metrics gathered and reported, companies can measure the emissions that users of their applications and products are generating so they can find opportunities to improve efficiency. ESG data also gives executives insight they can use to influence and change partner and consumer behavior, such as reducing pollution in factories, holding more virtual meetings and running appliances during off-peak times. Dalgas and his cloud economist colleagues at Nutanix help create measurement solutions to support such innovative strategies that promote sustainability.


Building Scalable, Sustainable Data Centers

For some companies, adaptation to avoid risk doesn’t occur quickly enough. Southwest Airlines is a cautionary tale of what can happen with technology that isn’t up-to-date. Aside from inclement weather that hit major portions of the U.S. during the 2022 Christmas season, part of the reason for Southwest’s holiday meltdown ― when 16,700 Southwest flights were canceled, stranding aircraft, flight crews, and 2 million passengers between December 20 and 29 ― was the failure of the company’s outdated crew scheduling system. That failure required pilots and crewmembers to call in to communicate their location or if they were sick. The system didn’t scale and was overwhelmed, resulting in a four- to six-hour backlog.

Simplifying IT and Increasing Staff Diversity

Today, fixing aging systems and running corporate data centers are challenging due to high costs, complexity and a shortage of available skills and experience. Dalgas and his team of cloud economists at Nutanix believe that part of the solution is to simplify IT and open IT jobs up to a broader cross-section of the population.


Green Data Centers: Designing an Eco-Smart Future

According to past research comparing the high-technology sector to the overall private industry, the U.S. tech industry employs a substantially larger share of whites, Asian Americans, and men.

“Companies are on a three- to five-year journey,” said Dalgas. 

“Many of them are transitioning from running their own data centers, getting out of the hardware business and focusing purely on their data. Every investment should deliver cost benefits plus sustainability benefits. That involves strategy around systems, people and governance.” 

He sees organizations rethinking their three-tier architectures in favor of hyperconverged infrastructure (HCI) and simplifying IT operations by using data center collocation and hosting services. Dalgas estimates HCI reduces legacy hardware footprints by 80% to 90% and uses far less energy.

“Liquid cooling, which has been around since the 1970s, is coming back,” he added. “That plus HCI, with a smaller footprint, could bring down [data center] energy use and emissions by almost half.”

Gene Knauer is a contributing writer who specializes in B2B marketing for technology companies.

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