Environmental, social and governance (ESG) performance is becoming more relevant each year as investors, consumers and governments push corporations to adopt sustainable practices. For example, leaders today across all industries have to think more intentionally about how their organizations contribute to the fight against climate change. It’s no longer enough to run marketing campaigns with empty sustainability promises (i.e., greenwashing) or install energy-efficient lighting in a single building (although necessary).
In addition to promoting positive social activity and robust governance practices, ESG performance includes making choices that mitigate carbon emissions and ultimately lead to a net-zero impact.
Software firms must approach ESG performance differently from other types of organizations. For example, because software companies tend to have smaller footprints, a large part of their emissions can be attributed to indirect sources such as third-party data centers and business travel. Understanding these realities is crucial when it comes to making decisions and investments.
These lessons learned may help software companies clarify their sustainability strategies.
Leverage senior-level commitment and ensure organization-wide accountability
Software companies that are serious about sustainability are driven by a clear vision at the senior leadership level as well as a commitment to ensure that the appropriate resources and structures are in place. These structures may include cross-functional steering committees, executive-sponsored task forces (e.g. DEI committees) or more vertical-oriented teams consisting of people at all levels in the business.
The goal with these structures is to gather ideas and feedback from individuals throughout the organization on how the enterprise can better pursue its sustainability goals. These groups can also provide valuable guidance for those ultimately responsible for ESG performance, for example, how to increase the already-positive ESG impacts your products provide for customers.
Accountability should also extend to the organization’s board of directors. For sustainability initiatives to succeed, companies need support from the very top of the governance structure. Without accountability extending all the way up, it’s difficult to stay on track, inspire engagement and achieve superior outcomes. The pursuit of carbon neutrality is a long journey that requires active participation and buy-in.
Work with sustainability experts
Evolving into a more environmentally responsible software company takes time and effort. Often, the transformation required is too complex and demanding for in-house talent to manage and champion on their own. That’s why collaborating with outside sustainability experts who understand how to evaluate and optimize a company’s environmental impact is often a necessary investment.
Sustainability experts can, for example, help you calculate existing emissions, identify energy-saving opportunities, select appropriate and legitimate carbon offsets and choose the ideal products or solutions for your unique organization. They can also work on a full-time or contracted basis, augmenting the team when needed. If you have any hesitations about your team’s ability or capacity to pursue sustainability, lean on experts who can point you in the right direction. Also, look into joining the UN Global Compact and their Accelerator programs that provide guidance in achieving ESG goals.
The devil is in the details
Software development is not a carbon-intensive business. Yet, software companies still produce carbon footprints, especially from emissions sources that are indirect. For instance, third-party data centers consume large volumes of energy to operate and maintain company servers and keep computing infrastructure cool.
According to Statista, there are 7 million data centers worldwide today. Just two years ago, China’s data centers alone were releasing as much carbon dioxide into the atmosphere as 21 million cars. Some experts warn that data centers could be responsible for 10% of global electrical consumption by 2030 if we’re not careful. As more people gain access to the internet and acquire new devices, data center emissions will increase unless companies rely more on renewable energy for computing power.
One strategy that can help on this front is to find a data center provider that shares a commitment to reaching carbon neutrality. In fact, some providers establish their data centers in areas with cleaner electricity grids, implement specific policies focused on minimizing emissions and purchase Renewable Energy Credits for what they can’t mitigate. These providers take on a lot of the work of cutting emissions themselves, making life easier for software clients.
Beyond data centers, there are many other potential sources of carbon emissions such as travel and energy-inefficient office spaces. As a software company, it’s important to parse through your activities to identify opportunities to lower your organization’s overall carbon footprint. Along the way, you may find partners who can help you achieve your goals.
It’s a marathon, not a sprint
Setting up accountability structures, working with experts and digging into emissions sources are valuable lessons learned. However, building a more sustainable software businesses is a long process. There are no shortcuts. Cultivating and maintaining carbon-neutral organizations takes time, and things will inevitably change as you learn more about how to curb emissions effectively with new technologies.
Achieving carbon neutrality is a marathon, not a sprint. Leaders who understand this will make decisions and build teams committed to adopting sustainable practices over the long term. Given this reality, the goal should be to improve and learn continuously.