Making room for a greener world

A blog post by Brett McCoy, principal, Deloitte Consulting LLP, Jayanta Ghosh, senior manager, Deloitte Consulting LLP, Abhinav Gupta, manager, Deloitte Consulting LLP, Rishabh Kochhar, consultant, Deloitte Consulting LLP, Vrudhi Shah, consultant, Deloitte Consulting LLP.

Growth in digital data, demand in data centers, and developing trust in the cloud

Data has often been heralded as the new oil.¹ At the center of global trade lies the power of data. The global economy consumes and produces large quantities of data. Some major shifts in data consumption can be traced to how we lead our lives. We have evolved from watching movies on DVDs to streaming them on digital platforms; today, we drive cars that are equipped with software, capturing a huge amount of data. Even physical purchases come tagged with digital enablers that track shopping patterns and audience personas—transforming businesses and shopping experiences alike.

While digitalization is indeed a step toward modernization, it has consequences that are seldom instantly visible. Our growing desire to consume all things in digital formats entails that the data centers powering digital services consume an unprecedented amount of energy, contributing to global emissions. Climate change presents one of the greatest challenges the world has ever faced, and data centers could produce 3.2% of all carbon emissions by 2025.²

Is your data center sustainable and efficient?

The first step for enterprises to reduce their data center carbon footprint is a thorough evaluation of the resources contributing to carbon emissions. Apart from a data center’s location vis-à-vis climate conditions, other factors include the sources of electrical power (e.g., coal, solar), the efficiency of the data center design, and the total IT energy consumption by servers and networks.

To reduce their carbon emissions, enterprises can take measures such as improving the efficiency of their data centers across IT operations, equipment, infrastructure, and better management of hardware and software. Some of the methods of doing so include using discreet heating and natural cooling methods in the data center, leveraging sustainable material to design greener facilities, and deploying artificial intelligence to generate insights on power usage and using those insights to derive optimal usage levels. 

While these approaches can help enterprises become more carbon-neutral, they can be time consuming and require large capital investments.

More efficient, cost-effective approaches can include adopting public cloud or migrating to co-location facilities wherein leading hyperscalers or third-party providers have already invested in best-in-class, leading facilities and IT infrastructure to run their data centers. This approach can provide organizations a better chance to balance their investments in emissions reduction strategies potentially producing better returns on investment and faster time to market.

Sustainability with cloud

As more business data and IT services move to the cloud, the need for more sustainable data centers has gained high momentum. Cloud providers can offer an edge over the measures adopted by traditional and private data centers by following efficient design and operating principles that help companies when they move to cloud. Some ways in which hyperscalers can help enterprises reduce their carbon footprint include:

1. Consuming less energy by ensuring higher utilization rates from fewer servers
2. Achieving improved Power Usage Effectiveness (PUEs) by scale and efficient design
3. Building data centers that take advantage of natural environmental conditions to reduce the need for unsustainable power generation
4. Enabling cost guarantees by partnering with green energy suppliers 
   

Business growth and sustainability are virtually inseparable for modern enterprises

The increasing focus on sustainability also has deep financial repercussions. Investors and customers are increasingly focusing on environmental, social, and governance (ESG) friendly enterprises. To discourage the use of carbon-emitting fuels and transition to a cleaner alternative, governments across the world are planning to tax CO2 emissions. For instance, Chile levies a Green Tax, “a CO2 tax applies to CO2 emissions at a uniform rate of USD 5 per tonne of CO2. The tax, which is classified as an explicit carbon tax in Taxing Energy Use (TEU) report, applies to facilities of which the total thermal power capacity of boilers and turbines is at least 50 MWt.”³

Early-stage investors are now using ESG metrics to screen and support investments. According to Bloomberg Intelligence’s latest ESG 2021 Midyear Outlook report, professionally managed ESG assets are expected to exceed $50 trillion by 2025.4 There is a growing need for companies to ensure that they embed social impact into their business and brand strategies to thrive and compete for talent, customers, and investors.

To help ensure that sustainability acts as a core business philosophy and an enabler to create long-term value, it is imperative to design processes that progressively reduce businesses’ carbon footprint associated with technology infrastructure for data centers. While there are several methods to reduce a data center’s carbon footprint, adoption of public cloud bears potential to emerge as the easiest, quickest, and cost-effective way to balance business growth and sustainability.

1. Charles Arthur, “Tech giants may be huge, but nothing matches big data,” The Guardian, August 23, 2013.

2. Climate Home News, “‘Tsunami of data’ could consume one fifth of global electricity by 2025,” The Guardian, December 11, 2017.

3. Organisation for Economic Co-operation and Development, “Taxing Energy Use 2019: Country Note – Chile,” 2019.

4. Veronika Henze and Samantha Boyd, “ESG assets rising to $50 trillion will reshape $140.5 trillion of global AUM by 2025, finds Bloomberg Intelligence,”  press release, Bloomberg, July 21, 2021.