Understanding a Business's ICT Carbon Emissions Profile
Digital Sustainability and its Business Imperative
Digital sustainability involves a conscientious and responsible approach to technology usage that fosters workload efficiency and leads to sustainable outcomes for our planet. It is mutually supportive with existing Financial Operations (FinOps), where engaging in one amplifies the other.
Currently, global greenhouse gas (GHG) emissions from the tech sector are estimated to be on par with or larger than the aviation industry. Data centres alone consume vast energy and water resources, which left unaddressed within a decade are predicted to rise to 10% of global emissions.
Furthermore, the global average consumption of digital content (web surfing, social media, streaming, video conferencing) generated by the 4 billion people now with internet connectivity can account for approximately 40% of the per capita carbon budget consistent with limiting global warming to 1.5°C, and around 55% of the per capita carrying capacity for mineral and metal resources. Ignoring the environmental impact of digital content consumption means overlooking a significant contributor to planetary pressure.
Understanding a business's carbon emissions profile generated from its technology use is critical for several key reasons:
Regulatory Compliance and Risk Mitigation: Climate change is a dominant political and international concern, leading to national regulations that obligate organisations to report GHG emissions. Mandatory climate reporting deadlines are approaching, with thousands of businesses needing to prepare for direct (Scope 1) and indirect (Scope 2) emissions reporting, eventually extending to upstream and downstream Scope 3 emissions. Boards are accountable for accurate disclosures, and non-compliance can result in legal repercussions, with the Australian Securities and Investments Commission (ASIC) pursuing serious breaches.
Stakeholder Scrutiny and Reputation: Businesses face growing demands from customers and increased scrutiny from investors, customers, employees, and regulators. Inaccuracies or misleading statements in climate reports can lead to legal claims or reputational damage. There is also an increased regulatory focus on preventing "greenwashing," where unfounded claims about climate initiatives can lead to legal challenges.
Integral to Business Value and Performance: Sustainability is increasingly seen as integral to business, moving beyond marginal Corporate Social Responsibility (CSR) programmes to being ingrained in triple bottom line accounting, which emphasises people and the environment alongside profit. Organisations with strong environmental, social, and governance (ESG) practices are outperforming peers in profitability and EBITDA metrics, making sustainable IT central to competitiveness, growth, and resilience. Digital transformation efforts that overlook sustainability miss a key component for long-term value creation.
Cost & Value Optimisation Supporting Efficiency Opportunities: Measuring Scope 3 emissions can reveal significant GHG emissions and cost reduction opportunities that often lie outside a company's direct operations. By prioritising efficiency in IT resource usage, businesses can capture substantial carbon benefits without significant investment and often save money. For instance, optimising the number of end-user devices and extending their lifecycle can reduce emissions and lower costs.