CASE STUDY - Atlassian: The Cloud, AI, and Carbon

Written By Tim Prosser

Navigating the Digital Sustainability Frontier

The modern business landscape is defined by rapid technological advancements, most recently the explosive growth of Artificial Intelligence (AI). For enterprise software companies operating primarily in the cloud, this digital transformation presents both significant challenges to climate targets and vital new opportunities for sustainable action.

Atlassian, a leader in collaboration software used by about 80% of the Fortune 500, has set an ambitious long-term goal of net zero by 2040. Achieving this goal requires integrating social and environmental progress into every aspect of the business. As a cloud company, their journey provides key insights into balancing innovation with climate ambition.

Digital Sustainability Challenges: The Scope 3 Scrutiny

For companies like Atlassian that do not operate their own data centres, the vast majority of emissions fall under Scope 3 (indirect emissions from the value chain). This reliance on digital infrastructure creates significant hurdles:

  1. Hyperscaler Dependencies: As a cloud company, Atlassian's emissions profile is heavily dependent on hyperscalers (cloud service providers) that sit in their supply chain. Purchased goods and services (including cloud services) contribute the most to the Scope 3 footprint. While they have deep relationships with providers like Amazon Web Services (AWS) and Google Cloud, achieving supplier engagement targets is difficult. Atlassian fell short of its FY2025 goal to ensure 69% of suppliers by emissions had set science-based targets (SBTs), achieving only 12.3% as of the FY2024 update.

  2. The AI Footprint: The push to incorporate AI into core products puts further pressure on net-zero goals. Concerns over AI-related emissions are rising among stakeholders, including customers. Companies and AI model providers may need to expand their emissions reporting practices to provide greater transparency in this new territory. Furthermore, AI increases demands on water usage for cooling data centers, which may negatively impact nearby communities’ access to water and a clean environment.

  3. Distributed Workforce Emissions: The shift to remote and hybrid work models, such as Atlassian’s Team Anywhere, introduces new complexities in emission tracking. A typical home office is often less energy efficient than traditional office space on a per-person basis. Employee commuting emissions also saw a substantial increase (122%) from the FY2019 baseline to FY2025, reaching 15,866 tCO2e.

  4. Evolving Regulatory Landscape: Looking ahead, mandatory reporting standards, such as the Australian Sustainability Reporting Standards (ASRS), the EU's Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD), will require companies to advance their climate strategy and data gathering processes with laser focus.

Digital Sustainability Opportunities: Leveraging Influence and Innovation

Despite the challenges, a commitment to digital sustainability offers significant opportunities for business leadership and customer value.

  1. Leveraging Procurement Influence: Sustainability can be integrated into business decisions and procurement negotiations. Atlassian views engaging suppliers as a long-term collaborative journey. The primary ask of top suppliers is to set an SBTi-validated net-zero goal. For instance, Atlassian’s decision to embark on a multi-cloud strategy was a business decision where sustainability played a role, partly motivated by Google’s bold sustainability commitments.

  2. Driving Supplier Engagement: Atlassian has found success in engaging specific key partners; out of their top 15 highest-emitting suppliers without SBTs that they engaged, 10 have now committed to setting or have set SBTs. They support this process by providing free advisory services and resources to suppliers in partnership with the Business Council on Climate Change (BC3).

  3. Product-Driven Climate Action: Atlassian’s mission to unleash the potential of every team extends to helping customers advance their own climate goals. For example, EDP, a global renewable energy firm, used Atlassian tools like Jira, Confluence, and Bitbucket to undergo an agile transformation, enabling a 40% reduction in project lead times and speeding up their mission to transition to 100% renewable energy by 2030.

  4. Meeting Customer Demand for Transparency: Customers are increasingly vocal, with an 83% increase year-over-year in requests for sustainability-related information, including climate topics like energy usage and net-zero targets. This provides an opportunity for leadership through transparency, such as sharing their journey via the "Don't #@!% the Planet Guide".

  5. Proactive Risk Management (The Digital Footprint): Atlassian pushes its ambitions beyond mandates. Although not required by the Science Based Targets initiative (SBTi), they started purchasing Energy Attribute Certificates (EACs) in 2022 to cover their work-from-home (WFH) energy use (electricity and gas). Furthermore, they are developing a Virtual Power Purchase Agreement (VPPA) to cover their remote workforce and office electricity use in Australia.

Conclusion: Collaboration is the Key

The complexity of digital sustainability, especially with the integration of AI, requires companies to be willing to "push through the tough moments" and embrace the unknown. The most effective lever Atlassian has found is collaboration and teamwork. Combating climate change requires a team of companies working together to decarbonize the planet.

As Atlassian Chief Sustainability Officer Jessica Hyman advises, leaders must embrace humility and be willing to learn, asking tough questions of engineering teams, heads of AI, and hyperscaler partners. Progress, though non-linear, is achieved by playing as a team.

A commitment to digital sustainability in the cloud era is like navigating a busy international airport: You can't control every plane landing (your Scope 3 suppliers), but by proactively collaborating with partners, communicating clear flight paths (setting SBTs), and optimising your own terminal (your product and operational efficiency), you can ensure your entire ecosystem moves toward the same net-zero destination.

Tim Prosser
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