Long reads

How can cloud migration be leveraged to achieve sustainable goals?

Sehrish Alikhan

Sehrish Alikhan

Editorial Assistant, Finextra

Cloud allows businesses to deliver on net-zero goals by creating a space where all forms of the company’s digital ecosystem can be accessed at one point. Sustainability ambitions can be achieved through thorough data analysis, insights into company activities, and collective strategies employed by teams throughout the company. Cloud platforms can be the tool that businesses use to put green ambitions into action, however, depending on the cloud service, cloud computing can also bear an environmental impact.

Net-zero goals are at the centre of many financial institutions’ and businesses plans for the next decade. At the end of 2021, 90% of the world’s GDP is covered by net zero commitments, including 450 financial institutions.

Financial institutions are increasingly taking environmental impact into account in major corporate decisions. Unfortunately, seeing the impact of climate change in real-time is the catalyst for decisive action in larger businesses, and even then, many sustainability campaigns have been accused of greenwashing. Consequently, to drive change and work towards sustainable goals, companies should optimise cloud service technologies to initiate change.

Is cloud more sustainable than its alternatives?

A 2020 study reported that cloud migration can reduce carbon emissions by 59 million tonnes per year, which is equivalent to taking 22 million cars off the road.

Listed in a previous long read on the benefits of cloud migration, one significant advantage is the reduction of energy consumption that cloud services allow. By building scalable platforms, companies consume less energy while operating on the cloud as they employ fewer servers and host more efficient data centres which do not exhaust as much energy as traditional data infrastructures.

Cloud computing involves switching from traditional technological hardware to online platforms and servers, which scale down power usage and wattage. Moreover, the switch eliminates the need for constant updates of legacy hardware, reducing water use and carbon emissions.

It is easier to provide remote and hybrid working and worldwide real-time access through cloud connectivity and for employees. These developments limit employee commute times and the use of transport reducing the overall carbon footprint of the company.

The reduction of material waste naturally makes cloud greener than its traditional alternative. Analytic platforms and data collection typically built-in to cloud services makes visualising ESG goals and climate strategy easier. Companies that integrate cloud services can scale and innovate responsibly, taking steps towards clean energy and reducing their environmental impact.

How can cloud integration enhance climate strategy?

Climate strategy can be optimised and ESG goals can be achieved through scalable and innovative features introduced to businesses and financial institutions by migrating to cloud.

How can financial institutions utilise the cloud to reach their sustainability goals?

When migrating to cloud, companies should research and assess cloud services providers to ensure that they opt for one which has clear commitments towards sustainable action in their operations and are carbon-conscious.

Companies can consider a transition to Infrastructure-as-a-Service on cloud platforms to significantly reduce energy usage and carbon emissions, and can promote sustainable software engineering practices by being mindful about which programming language they opt for.

When American bank holding company Capital One migrated to the cloud using Amazon Web Services (AWS), it was able to recycle 41 tonnes of copper and 62 tonnes of steel, and remove 13.5 million feet of cable from their last three data centres. The company expects to save 10 megawatts of power per year, which is equal to the power of 650,000 light bulbs. The company even commissioned an artist to repurpose decommissioned scraps and create a sculpture.

Can cloud computing have a negative environmental impact?

There are several significant factors that should be examined when choosing a sustainable cloud service provider. The main points of consideration are how green the provider’s infrastructure is (such as lights and cooling), whether or not they source their electricity and energy from a renewable source, and the storage systems it has in place. Other factors which indicate sustainable commitments are support for green initiatives and eco-friendly data centre sites.

Tech giants Amazon, Google, and Microsoft are key consumers of energy for cloud computing, according to the Financial Times, tech emissions are predicted to exceed 6% annually. For this reason,  cloud migration must be implemented in a mindful and environmentally-conscious manner so that companies avoid cloud providers that are draining resources.

Cloud computing giants such as AWS, while pledging net-zero commitments, only met 12% of their goals. This is why Greenpeace accused Amazon of investing in clean energy but putting in little effort to stop emitting the dirty energy that they are producing.

Elizabeth Jardim, Greenpeace USA senior corporate campaigner, stated: “Despite Amazon’s public commitment to renewable energy, the world’s largest cloud computing company is hoping no one will notice that it’s still powering its corner of the internet with dirty energy. Unless Amazon and other cloud giants in Virginia change course, our growing use of the internet could lead to more pipelines, more pollution and more problems for our climate.”

Other large companies, such as Microsoft, are investing their technologies into renewable energy practices to work towards establishing cloud platforms that are not consuming mass amounts of electricity and energy. In 2018, the tech giant submerged a data centre the size of a shipping container 117 feet deep into the sea off Scotland’s Orkney Islands. After analysing the results for two years, the project concluded that the natural cooling of the water and absence of human interaction made the underwater server eight times more reliable than an identical data centre on land, and more environmentally conscious.

In 2021, Microsoft has announced their plan to expand the number of data centres worldwide to make cloud services more accessible in all regions. To combat the dryness of certain climates they are shifting from submerging data centres in bodies of water to flooding servers with a fluorocarbon-based liquid, reducing costs of energy by eliminating the need for chillers and condensers.

Overall, when it comes to cloud migration there are benefits and pitfalls – and much of this boils down to the cloud service provider that a financial institution opts for. When looking to migrate to the cloud, conducting thorough research into the sustainability practices of cloud service providers will assist firms in their efforts to leverage cloud services and work towards green goals while growing their business with a clear conscience.

Finextra has recently launched the inaugural Financial Cloud Summit, scheduled to take place on 2 March 2023. For more information and to register for this event, please visit the event page here.

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