With many businesses prioritising sustainability and ESG goals, cloud services have an important role to play. But it isn’t just the services themselves, vendors also must prove their own sustainability credentials if they are to be successful.
With environmental, social and government (ESG) goals, along with the wider desire to become more sustainable, driving how many businesses operate today, many look to their vendors to help achieve this and cloud services are no exception.
As Becky Stables of Catalyst-ERP notes, recent research shows that 86% of businesses consider ESG and sustainability important when selecting a cloud vendor, with carbon footprint and net zero targets being key factors. “This trend is shaping the future of cloud services, as vendors respond to growing customer demands for greener, more responsible operations,” she adds.
“Increasingly, small and medium-sized businesses (SMBs) are joining the drive towards more sustainable operations. This shift is partly driven by customer expectations and regulatory pressures, but it’s also due to the recognition that ESG strategies can create long-term value. Smaller businesses may have limited resources, but their agility allows them to adapt to and benefit from these evolving priorities. For them, partnering with a cloud vendor that can help meet ESG goals is a key differentiator, allowing them to align their operations with the sustainability expectations of larger partners and investors.”
Mark Appleton, chief customer officer at ALSO Cloud UK, agrees, adding that on a government level, there has been a focus for ESG to be part of strategic plans moving forward. “This has now become part of customer and stakeholder expectations,” he says.
“There is an increasing interest in the wider business approach to reducing their environmental footprint, specifically for customers invested in brands that share their values. This ensures repeat business but also turns customers into brand advocates, driving word-of-mouth marketing and growth.”
It also means that businesses in the channel, many of which are SMBs, must pay heed to it to support the broader ecosystem, adds Richard Eglon, CMO at Nebula Global Services “As a result, there has been more expectation put on SMEs to set out their own ESG strategy, including how they are going to reach their net zero targets,” he says.
“The channel supply chain is only as strong as its weakest link, and for this reason businesses need to be much more collaborative in their approach to ESG with the Goliaths supporting the Davids on their journey. The larger channel firms rely on their partner network to deliver their set business outcomes so it is imperative that they can report on their own Scope 1, 2 and 3 emissions for incumbent partner to report on their own ‘downstream’ and ‘upstream’ emissions.”
What customers want
Customers’ demands regarding ESG are also changing. “Companies are looking for more than just technical capabilities and cost efficiencies, they want providers that can support their ESG objectives,” says Becky. “Key criteria include carbon neutrality, renewable energy usage and transparent reporting of the environmental impact. Businesses also seek vendors that innovate to improve energy efficiency and minimise waste across data centres, networks and infrastructure.
“This is especially relevant as businesses pursue net zero targets. Many organisations expect their vendors to demonstrate clear carbon reduction strategies, such as utilising 100% renewable energy, optimising resource usage, and providing tools to help customers measure and reduce their own carbon footprints. Data-driven insights into energy consumption and carbon output have become an essential part of the offering.”
Cory Hawkvelt, CTO of NexGen Cloud, adds that customers are also seeking higher energy efficiency solutions that can offer increased performance, with lower energy consumption. “For example, customers are now prioritising the most power efficient GPUs for their individual workloads, rather than just selecting the most powerful GPUs,” he says.
Virtual desktops
One growth area has been Desktop-as-a-Service. “This has been driven by ESG pressures, with 74% of UK businesses prioritising cloud adoption to meet sustainability goals,” says Gavin Connolly, field CTO at Nerdio. “Many organisations are putting more emphasis on ESG and sustainability metrics during the procurement process. This is carrying over to several frameworks across EMEA. Adopting thorough ESG practices is, therefore, a necessary and critical step toward long-term, sustainable success.
Gavin adds that customers are looking for vendors that help them achieve their ESG targets by offering energy-efficient, sustainable solutions.” They are utilising cloud-based platforms such as Azure Virtual Desktop that can reduce carbon emissions, optimise power consumption and support renewable energy initiatives,” he says.
“Customers moving their virtual desktop from on-prem data centres to the cloud – such as Azure Virtual Desktop or Windows365 – also benefit from moving those emissions from scope 2 to scope 3.”
“Virtualisation is an enabler for remote and hybrid working, which allows for better employee experience, flexibility and accounts for CO2 emission avoidance by reducing travel.”
Ensuring sustainability
As mentioned, cloud vendors must ensure their own sustainability across their operations and the solutions they provide. But this presents challenges. “Cloud computing, responsible for about 3% of global carbon emissions, presents a pressing sustainability challenge,” says Gavin.
“To improve sustainability, cloud providers first need to assess their own carbon footprint including energy consumption, carbon emissions and e-waste generation and begin focusing on energy efficiency. In addition, they should focus on resource optimisation by using automation and cooling technologies and promote ethical practices among product development and business operations.”
Becky adds that it can also involve sourcing renewable energy for data centres, optimising cooling systems to reduce energy consumption, and developing products that allow customers to operate more efficiently. “Initiatives such as circular economy practices, recycling old equipment and minimising waste also contribute to sustainability goals,” she says.
Cory adds that it is vital to partner with data centres that are powered by renewable energy. “This ensures that customers can train AI at no cost to the environment,” he says. “It is also important to select the most energy-efficient hardware.
Mark adds that the work starts from within. “IT leaders should consider their own IT solutions and their impact on the environment,” he says. “For example, this can include cloud computing to promote energy-efficient data centres, strong regulations and guidelines that are implemented company-wide from IT departments to the leadership team and evaluating sustainability factors across the product life cycle – from concept to end-of-life disposal.”
John Bradshaw, director of Cloud Computing Technology and Strategy EMEA at Akamai, adds that vendors can boost their sustainability by embedding eco-friendly practices throughout their supply chain. “Think responsibly sourcing materials and streamlining logistics to cut down on emissions,” he says.
“On top of that, they should focus on making their own operations greener, like reducing energy use, switching to renewables and fostering a sustainability mindset among employees. It’s about creating a ripple effect that touches every part of the business, making sure that products, solutions and everyday actions all align with sustainability goals.”
Transparency
Another key factor for customers is transparency. “Customers want transparency in reporting on environmental impact and sustainability measures,” says Cory. “As businesses become more educated about greenwashing, they are demanding clearer communication of the green credentials of cloud vendors.”
Richard adds that customers also want transparency when it comes to the manufacturing process of their hardware. “This includes the use of mined materials such as precious metals, water usage, anti-bribery and modern slavery to name but a few areas vendors need to raise their game,” he says. “This information is critical for ESG reporting of the customer as they need to know the provenance of materials if they are to become an ethical business.”
Mark says that a transparent leadership taking visible ownership of their ESG agenda signals commitment and reliability. “With some businesses requiring sustainability targets and measures in place to onboard a supplier (e.g. MSPs), it is something that should be considered throughout the channel,” he says. “ESG targets should be measurable and trackable. Accountability is everything to modern businesses, many can talk the talk, but few practice what they preach.”
Communicating credentials
To stand out in an increasingly crowded marketplace, cloud vendors must highlight their sustainability credentials to customers, says Becky. “Clear, measurable goals, such as reducing emissions by a specific percentage over time or achieving net zero by a particular year, are effective in demonstrating commitment. Equally important is sharing the practical steps being taken, such as switching to renewable energy sources or adopting carbon offsetting initiatives.”
To connect meaningfully with consumers, vendors need to firstly be aligned with as many businesses as possible that have similar ESG values as themselves, Mark adds. “Being able to show that the business is not only doing its part but working with partners who share the same sustainable values will signal authenticity and reliability,” he says. “Having a strong ESG portfolio and showing ESG initiatives can also give you better access to credit to expand your business.”
Cory adds that vendors should highlight the percentage of renewable energy that powers their services. “Vendors can also showcase the ways in which their solutions reduce energy consumption compared to alternatives,” he says. “It is also important to strongly communicate sustainability commitments to customers, as well as long-term goals and ongoing initiatives for environmental protection.”
Mike Barron, UK managing director, SYNAXON, adds that customers need to see bold and verified commitments to achieving key goals. “And, in the shorter-term, demonstrable actions: the use of plastic-free packaging and recycled materials in products and programmes that drive higher levels of recycling and reuse of products, for example.
‘However, that’s going to take a quite significant change in channel business models and applying those changes and adapting to them will take time. Once it does start to happen, the changes will happen swiftly, and we’ll see more suppliers promoting and more customers embracing a circular approach to the product lifecycle.”
Future
It is expected that sustainability will become more integral to business strategy in future. “Regulatory pressures and stakeholder expectations are likely to intensify, making it crucial for vendors to continue innovating and investing in greener technologies,” notes Becky. “For businesses, choosing the right cloud partner can help them meet their ESG goals, reduce their carbon footprint, and ultimately contribute to a more sustainable future.
“Cloud providers that demonstrate a genuine commitment to sustainability will find themselves at the forefront of this shift, as companies of all sizes look for partners that can help them achieve their environmental and social ambitions.”
Mark adds that business success is increasingly aligned with creating a positive impact on the world. “Addressing it will allow businesses to attract new revenue and gain a competitive edge while fulfilling their broader responsibilities to society,” he says. “It is important to be on the journey to sustainability with our customers, as every business has an impact. Together, let’s shape a greener future and unlock the potential of sustainable innovation.”
John adds that with growing concerns about climate change and increasingly stringent regulations worldwide, businesses will be under more pressure to adopt sustainable practices.
“On top of that, sustainability makes commercial sense: reducing waste means cutting costs, which boosts competitiveness,” he adds. “It’s not just about doing good for the planet; it’s also about driving efficiency and value. The surge in ESG-focused investment strategies will further nudge businesses to align with these values, making strong ESG credentials a must-have for staying competitive and relevant.”
