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US companies are lagging in ESG adoption. They must leverage the cloud to accelerate their transition to a more sustainable, diverse, and equitable state.

Anant Adya

December 18, 2023

4 Min Read
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Alexander via Adobe Stock

With states on either side of the political divide taking opposing ESG stances, the United States has not managed to progress on sustainability like Europe and the United Kingdom. Regulatory action has been slow, and it is mainly customer and investor sentiment that is driving corporations to declare their commitment to sustainability.

However, US organizations aren’t necessarily following through on their promises. One reason is that top leaders tend to delegate the ESG agenda down the ranks; this hands-off approach dilutes ESG focus, leaving the organization without a clear strategy and implementation framework. 

Another reason is that US companies have not leveraged the full potential of the cloud to support their sustainability and inclusion goals. A recently published report from Infosys and MIT Tech Review, entitled “2023 Global Cloud Ecosystem” says that Europe is the clear leader when it comes to using the cloud to drive social and environmental sustainability in its region: 42% of European respondents were leveraging cloud-based energy management systems; an identical number were using cloud tools for reporting scope 1 & 2 carbon emissions and 35% for scope 3 reporting. On the other hand, North American companies, which lead cloud adoption, are prioritizing it for building stronger businesses (93% measure cloud ROI, versus 82% overall; 76% of US companies enjoy positive ROI from the cloud, versus 66% overall).

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In neglecting to utilize the cloud as a sustainability driver, US organizations are compromising their ESG and DEI performance, and consequently, their reputation, credibility, and business performance.

Cloud Shrinks the Energy Footprint

Enterprises can reduce their energy consumption drastically by shifting workloads from proprietary data centers to the public cloud. Unlike overprovisioned, underutilized data centers, the cloud uses resources efficiently by sharing them across clients. Compared to a private server of similar capacity, a cloud server supports a workload that is 100 times larger. Additionally, hyperscalers are constantly striving to make their clouds even greener than before. Cumulatively, these measures could reduce the IT carbon footprint of an organization by as much as 88%, according to one study.

Cloud Simplifies ESG Reporting

Cloud is a key resource for ESG reporting, helping enterprises overcome challenges by standardizing varied and voluminous financial and non-financial data and automating reporting tasks. It also offers emission reporting and tracking tools in SaaS mode. Some 54% and 51% of the participants in the 2023 Global Cloud Ecosystem study leverage cloud tools for ESG reporting, and compliance and DEI compliance respectively.

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Cloud Helps Businesses Accelerate Emission Cuts

Rather than undertaking multiple disparate initiatives to cut emissions, organizations can use the cloud to achieve the same or better result, faster. They can also continue to make incremental cuts by leveraging the insights from a sustainability dashboard that tabulates the emissions linked to their cloud usage.

Cloud Recycles the Data Warehouse; Reduces E-Waste

Cloud is doubly environmentally friendly because it saves energy, while also cutting electronic waste. Some cloud infrastructure and services providers are helping customers to retire old servers responsibly. The Circular Electronics Partnership is a global sustainability forum for promoting circularity in electronics through the reuse and recycling of technology infrastructure.

Cloud Provides ESG and DEI Insights

Data and analytics is critical for making the most impactful sustainable initiatives. Enterprises gather vast quantities of ESG and DEI information, ranging from natural resource consumption to waste generation to diverse employee expectations, with the help of the Internet of Things, machine learning and edge computing. Organizations need the compute, storage, and agility of the cloud to process that data into insights that can drive sustainable and equitable actions. A US-based management services company has introduced a suite of products built on AWS to help create more diverse, equitable and inclusive workplaces. Large organizations can view a DEI dashboard to understand the diversity of their workforce -- in terms of race, gender, age, physical ability, etc. -- by subsidiary, business unit, department and role. Separately, an analytics and benchmarking tool provides data on pay equity.

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Cloud Empowers the Less Privileged

Google Cloud has a number of cloud-based initiatives to help underprivileged or underrepresented groups. One program empowers Black businesses in the financial services space using cloud technology, which will be extended to other sectors as well.

The Cloud Radar 2023 report from Infosys found that while companies around the world were quick to announce cloud commitments, they were slow to utilize them: As much as $300 billion worth of cloud commitments have not been used. This is not only depriving organizations of business benefits -- cost efficiency, agility, innovation, scale -- but even hindering their progress towards greater sustainability, equitability and inclusiveness, which improve business performance. US companies, while leading cloud adoption, haven’t utilized their full potential for improving adherence to ESG and DEI principles. Moving forward, enterprises should remedy this issue as soon as possible. 

About the Author(s)

Anant Adya

EVP, Infosys Cobalt

Anant Adya is EVP - Infosys Cobalt He and his team are responsible for designing solutions to help customers in their digital and cloud journey. Infosys Cobalt is a set of solutions, platforms and services that help the enterprise journey to digital. They also leverage the Infosys Innovation team to partner with the start-up ecosystem to co-create solutions for customers. He is very passionate about industry clouds, use cases around the six technologies (cloud, AI, data, edge, IoT & 5G) and most importantly, working with enterprises to focus on business outcomes.

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