Even as digital transformation contributes to intensifying climate change due to burgeoning energy consumption, Australian CIOs are missing in action.
Hyperscalers and data centre operators are hoping they can change that, but at least initially it looks like they have a hard row to hoe just to engage IT executives, many of whom put sustainability into the “someone else’s problem” bucket.
Industry researcher Gartner last year revealed that half of the country’s enterprise and government technology leaders surveyed expect no real change in their organisation’s approach to sustainability. Even more remarkably, only three per cent of IT chiefs expect to be leading their organisation’s sustainability efforts in two years’ time.
This lackadaisical view is seemingly at odds with the attitudes of global CEOs, almost a third of whom include climate change in their list of top ten risks — a sharp increase in the result last year, according to the PwC Global CEO survey.
With increasing evidence linking sustainability to profit growth, tardiness by CIOs on the issue is likely damaging their businesses’ bottom line.
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According to an Accenture survey of European companies, those enterprises leading in both digital adoption and sustainable practices are nearly three times more likely than other companies to be among “tomorrow’s leaders,” thereby recovering faster and emerging stronger after the pandemic. With the rest of APAC outperforming on this measure, Australia’s CIOs seem to have missed the memo.
Researchers at Capgemini, meanwhile have confirmed the strong correlation between sustainability and tangible business benefits. More than six in ten organisations have driven an increase in revenue from sustainable operations. Moreover, nearly 80 per cent of executives pointed to an increase in customer loyalty as a key benefit from sustainability initiatives.
For its part, McKinsey and Company says ESG links to cashflow in important ways such as facilitating top-line growth, increasing employee productivity; and optimising investment and capital expenditures.
There is no specific agreement about how much of the world’s energy data centres currently consume, but there is general agreement that it is between one to two per cent. However one point which all the major market participants agree is that the number will double before the end of the decade.
The pandemic inspired digital acceleration, along with the expanding industrial internet underpinned by IOT technology, the rapid advance of automation and AI, and the shift to edge computing.
And then there are cryptocurrencies.
Bitcoin in particular is a massive and hugely inefficient energy hog that currently offers little real world utility beyond enriching or enfeebling speculators. University of Cambridge, which tracks Bitcoin’s electricity consumption found the cryptocurrency alone is responsible for 0.6 per cent of the world’s entire energy consumption — or put another way, half the total energy consumption of every data centre in the world, combined.
As increasing numbers of corporations and governments commit to carbon neutrality and more aggressive ESG policies, something has to change. The pricing signals sent by this shift to sustainable business practice is already having an impact.
Hyperscalers and data centre operators are increasingly putting energy efficiency and recycling at the heart of their sales pitch.
In the last month in Australia, for instance, the national airline Qantas revealed partnerships with NextDC and Fujitsu via Qantas Future Planet that will help the customers of these companies purchase carbon offsets using the same commercial infrastructure the airline put in place for its passengers to offset their carbon consumption of flights.
“Data centres are fast becoming among the top energy users,” says Arun Vishwanath, Senior Research Scientist at IBM Research Australia.
Analysis from the International Energy Agency, Gartner and Schneider Electric suggests that the IT industry is contributing to more than two per cent of global carbon emissions. This includes networks, consumer devices, data centres and ICT production.
According to Vishwanath, data centres alone use one per cent of the world’s electricity and are responsible for 0.3 per cent of our global carbon footprint.
James Veness, Head of Portfolio, Data Centres at Fujitsu Australia, says, “Data centres are essential utilities that power businesses as well as traditional utilities such as power and water. This makes data centres the utility of utilities.”
COVID-19 revealed just how much of an essential utility data centres have become.
The pandemic saw network traffic heighten as a result of demand for streaming and web services. Remote workforces, online learning and the acceleration of networks and reliance on the cloud have all contributed to increased pressure on data centres, and this trend shows no likelihood of slowing down. The high energy consumption of data centres is a trend that is set to continue as digital adoption accelerates.
Meanwhile, Joe Craparotta, Vice President IT Business at Schneider Electric says, “2020 saw the fast tracking of most organisations’ and countries’ digital programs so it will continue to accelerate and the projections to 2030 could see the ICT industry consume 20 per cent of the world’s electrical energy.”
Responding to this concerning data, the industry is doing what it knows best —applying technology to solve the problem.
According to IBM’s Vishwanath, one of the ways that many data centres are transitioning to renewable energy involves moving workloads from coal powered regions to those that are solar PV rich.
He told Which-50, “Part of our ongoing work is looking at how we can exploit this idea at scale so that end users do not perceive any degradation to their service quality.”
NextDC, which describes itself as the country’s leading independent data centre operator, has invested in an ongoing program to apply machine learning algorithms to advance the efficiency of cooling systems and better utilise external weather conditions.
NextDC’s CEO Craig Scroggie, says “By extracting intelligence from this automated data analysis, we are able to better tune facilities, and individual data halls, in real time for optimised energy efficiency based on prevailing internal and external environmental conditions.
“This ongoing program of continual improvement has helped NextDC to set new benchmarks in power utilisation effectiveness for facilities and apply strategic operational intelligence gained across the full fleet of data centres.”
NextDC is also sponsoring research at LaTrobe University in Melbourne to track and reduce their carbon emissions generated, while IBM has a similar project in place with researchers in Melbourne.
In that case, the researchers are using IBM Cloud to investigate data centre efficiency, and power consumption, and to provide insight into the organisation’s own emissions. Vishwanath says IBM is also advancing its carbon sequestration programs to use cloud computing and machine learning to develop materials that capture and remove carbon from the atmosphere.
Fujitsu meanwhile claims that it is Australia’s first and only technology company to certify and publicly disclose its data centre portfolio’s energy performance. Veness says the company is investing in initiatives including LED lighting, building sensor technology to monitor and adjust cooling, liquid immersion cooling technology, battery storage and hydrogen fuel.
Veness says, “Fujitsu has a science-based target with emissions reductions targets aligned to the Paris Commitments, and is aggressively pursuing those goals. In FY19/20, Fujitsu’s direct emissions footprint was 20 per cent less than it was two years ago and it is charting a course to increase our renewable energy use.”
Both NextDC and Fujitsu have recently announced sustainability partnerships with Qantas Future Planet (QFP). NextDC’s carbon offset program, NEXTneutral, and Fujitsu’s offset program allow customers to verify their activities with the data centre as carbon neutral.
For companies which have signed up to the United Nations Sustainable Development Goals they can address 8 of the 17, outlined by the UN, through the QFP program.
QFP provides funding for ecological projects including wetlands and rainforest restoration, Australian habitat protection, and sustainable land management while building a network of corporate sustainability leaders that are supported to deliver on their sustainability objectives.
According to a recent report by the International Energy Agency, the technology sector can have a significant impact on the transition to clean energy, with the five biggest technology companies in the USA in 2020 accounting for almost 30 per cent of corporate power purchase agreements (PPAs) for renewable energy. Amazon Web Services (AWS) is a cloud provider that relies heavily on the services of data centres to drive their business.
The IEA report outlined the transformative role that cloud service providers like AWS can play in accelerating innovation towards sustainability and decarbonising the IT industry.
Matt Old, Head of Mid-Market Australia at Amazon Web Services, told Which-50, “AWS is continuously working on ways to increase the energy efficiency of its facilities and equipment, and innovating the design and manufacture of its servers, storage, and networking equipment to reduce energy use.”
He said AWS’s global infrastructure is built on its own hardware, which includes purpose-built servers, routers and silicon, optimised for workloads run by its customers.
Old also told Which-50 that Amazon is the world’s largest corporate buyer of renewable energy and that the company’s scale allows them to achieve higher energy efficiency than on-premises data centres.
He says, “From the highly available infrastructure that powers our servers, to techniques we use to cool our data centres, to the innovative server designs we provide to our customers, energy efficiency is a key goal of every part of our global infrastructure.”
A spokesperson from Alibaba claims that the company’s hyperscale data centre in Hangzhou reduces energy consumption by over 70 per cent through utilising a liquid coolant.
“In the 2020 11.11 Global Shopping Festival, Alibaba used state-of-the-art green technologies, including liquid cooling and wind energy, at its five hyperscale data centres to ensure the most environmentally-friendly operation. For instance, the hyperscale data centre in Hangzhou has one of the world’s largest server clusters submerged in a specialised liquid coolant, which quickly chills the IT hardware.
“Compared to traditional data centres, the Hangzhou hyperscale data centre can save up to 70 million kilowatt hours of electricity per year, which is sufficient to power over 16,000 households in the United Kingdom in a year.”
Responsibility and Accountability
When it comes to corporate responsibility for emissions reduction, the accountability is shifting to the C-Suite, where sustainability goals are being brought in line with the business strategy. Schneider Electric’s Craparotta suggests that CTOs and CIOs, are increasingly taking responsibility for the company’s energy use.
“Over many decades technology owners deployed technology with little to no awareness of the energy impact, access to energy was taken for granted. However, this convergence of the digital and energy economies will mean that more and more CIO/CTO resources will need to accelerate their learning and partnerships to achieve their sustainability goals as these commitments are being made in the public domain as part of their corporate goals,” he says.
Fujitsu’s ICT Sustainability Benchmark database assesses more than 3000 organisations and tracks who is responsible for the ICT energy spend, or in other words, who is paying the electricity bill. That study reveals that less than a third of CIOs have budget responsibility for the energy their infrastructure consumes, and that 40 per cent of CIOs are not even aware of the electricity consumption specific to ICT.
Not only are IT leaders not contributing sufficiently to sustainability goals, but their lack of oversight is costing their companies, and ultimately shareholders or taxpayers money through inefficiency.
Interestingly, Veness says, KPIs relating to electricity use are increasingly driven by emissions reduction goals, rather than just cost alone. “As more organisations start to measure and target their Scope 3 emissions across the supply chain, there is more collaboration between finance, IT, and sustainability.”
NextDC’s Craig Scroggie cautions, “As power consumption from IT infrastructure balloons in alignment with accelerating digital transformation, it has, and will continue to, become a significant line item on both CFO and CIO ledgers.”
IBM Australia’s Vishwanath suggests that the responsibility for emissions reductions and sustainability is being felt at the board and the C-Suite level as a result of heightened stakeholder expectations and investor scrutiny.
“Innovating with technology to address climate change and sustainability presents a business opportunity that will see long-term benefit for our people and our planet. It benefits business, the economy and the environment. That’s the core of sustainability and it’s only growing in importance at the C-level,” he says.
“It is no longer enough for companies to provide broad sweeping statements about their carbon emissions and sustainability measures — and their carbon footprint in the data centre is no exception.
Image source: helloimnik, Unsplash