There’s been a tremendous increase in attention to sustainability initiatives across business and government in the past few years. What was once largely seen as the purview of individual consumers and regulatory agencies has now become a mainstream discussion for enterprises. Companies of all sizes, across industries, are establishing sustainability targets and measuring their progress—and customers, investors and regulators all expect quantifiable improvements year over year.
At the 2022 Equinix Digital Leaders Summit, I had the opportunity to discuss sustainability trends around expediting key objectives and creating competitive advantage alongside sustainability experts Matthew Sekol, Worldwide Sustainability Industry Advocate at Microsoft; Donald Chan, Managing Director for Asia Pacific at CDP, an international nonprofit that helps organizations disclose their environmental impact; and event moderator Elias Khnaser, Chief of Research at EK Media Group. Here are some highlights from our conversation.
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What’s driving investment in sustainability?
Although the increase in climate-related weather events has put leaders under pressure to take tangible action on environmental sustainability, Donald noted that one of the main drivers of sustainability work remains governments and regulators. In addition, Matthew pointed out that companies now face both top-down and bottom-up pressure to make sustainability commitments. Everyone—from markets, regulators and suppliers to customers and employees—wants sustainability to be prioritized.
Through international treaties like the Paris Agreement, governments have committed to achieve net-zero emissions and are setting deadlines to achieve this. As a result, they’re focusing on high-emissions sectors like power generation, heavy industry, transportation and logistics. Businesses are well aware of the importance of sustainability for their stakeholders, and they’re prioritizing greater transparency and disclosure as they work toward their sustainability targets.
CDP provides scoring of both companies and cities on their environmental disclosures. Donald explained that in 2021, 13,000 companies—representing 64% of global market capitalization and 80% of the S&P 500—answered CDP’s sustainability questionnaire. That was a 30% increase over the number of respondents in 2020, and a similar increase is expected this year.
Climate commitments must be backed by auditable KPIs
What’s also evident is that climate commitments must be measurable to be credible. A sustainability strategy should include clear KPIs and provide transparency about both the current state and future targets. Corporate sustainability commitments typically follow a pattern:
- Start with aspirational targets, such as a commitment to 100% clean and renewable energy.
- Specify that commitment with a timeline—in the case of Equinix, we’ve committed to achieve our goal of 100% renewable energy by 2030.
- Then, deep dive into more detailed science-based targets. For Equinix, this includes reducing absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 50% by 2030 and reducing absolute Scope 3 GHG emissions from fuel-and-energy-related activities by 50% by 2030. (Learn more about Equinix’s commitments.)
Most companies are in the early stages of building out their in-house expertise on environmental sustainability, so working with third parties and vendors that can help them establish the most appropriate and material sustainability KPIs for their business is important.
According to Donald, “Environmental reporting [used to be] relatively niche, but over the last 3 years, in particular, we’ve really seen this uptick in using environmental disclosures as a way of reporting for different stakeholders, and increasingly now for mandatory disclosures as well.”
Business growth depends on core ESG commitments
As environmental sustainability becomes a higher priority globally, companies need to prepare for the future to stay competitive. Donald pointed out that organizations must move beyond baseline environmental commitments and look for ways to create competitive advantage with sustainability. That means thinking about the future: what will your company need to do to be ahead of the curve and strategically prepare for future regulatory requirements in addition to customer needs?
Matthew shared what that journey has been like for Microsoft. The company set moonshot announcements in 2020 and started looking at operational reductions—things like switching from fossil fuels to renewable energy, driving efficiencies in the manufacturing process, and encouraging more sustainable, responsible supply chains. From there, it started looking at its products and services and asking how it could enable engineering teams to develop sustainably. Now, Microsoft has turned it out to customers and partners, creating Microsoft Cloud for Sustainability to help them understand their emissions. Finally, the company encourages everyone to engage with policy advocacy.
“Think of [sustainability] as a core business problem,” says Matthew, “not something external to your business.”
As the drive for sustainability continues to increase, leading companies are making ESG commitments an essential part of their business strategy—and it’s likely to pay off.
Designing the sustainable data center of the future
At Equinix, we’re hard at work continually improving the efficiency of our data centers, and we’re committed to reaching 100% clean and renewable energy for our business. Not only that, but we’re helping our customers and partners do the same. Our power usage effectiveness (PUE) for new data center builds exceeds industry benchmarks and has steadily improved over time—an advantage that extends to our customers and partners.
Highlights from our annual sustainability report show how we’re prioritizing ESG goals in the coming year—including our ambition to become climate neutral globally by 2030—and we are incorporating sustainability as we design the data center of the future. Our green data center innovation includes adaptive control systems, liquid cooling, energy-efficient lighting, fuel cells for onsite generation, hot/cold aisle containment and much more. We’re dedicated to supplier sustainability, climate risk management, and transparency and disclosure as we continue this journey.
The challenges of climate change can only be tackled when we come together—as businesses, governments, employees, customers and communities. At Equinix, we believe in a future of possibility, and we have prioritized building a more sustainable business ecosystem.
For more insights about how IT and digital leaders are planning for the future, you can view on-demand sessions from the Equinix Digital Leaders Summit.