Watch for the Cloud: Green Efficiencies Ahead

    Stockholm (NordSIP) – For decades, information technologies have increasingly dominated our cultural direction. From the telephony to the radio, from television to the internet, new devices and ever-more efficient networks bring us closer together and more connected. The inevitable downside is the massive environmental toll that all this innovation has on the Earth’s resources. In its recent quarterly ESG comment, global equity manager ClearBridge helps us understand how cloud computing can help mitigate the environmental burden of data growth.

    More than one billion users upload 400 hours of video content to YouTube every minute, while fleets of self-driving cars are mapping high definition 3D maps of roads all over the world. Such transformation in consumer behaviour and efficiency leads to massive amounts of data is being created, stored and processed at unprecedented rate. A new study, Bitcoin’s Growing Energy Problem (2018), from auditors PricewaterhouseCoopers estimates that the process of mining bitcoins consumes at least 2.6GW of power—almost as much electric power as Ireland consumes. “This figure could rise to 7.7GW before the end of 2018—accounting for almost half a percent of the world’s electricity consumption,” reads the report.

    What all this signals is that the economics of progress must factor in that massive data growth presents significant stresses on energy and environmental infrastructures: The environmental footprint of global computing and how we, as a society, are utilizing an enormous amount of power for our technology needs.

    Mary Jane McQuillen, Managing Director, Portfolio Manager and Head of ESG Investment at ClearBridge Investments in New York, sees long-term value creation for companies that seek to minimize these stresses. One way to offset the negative effects of data growth involves how data centers contribute to energy savings and lower emissions through strategic locations and the growing use of renewable power sources.

    The firm’s report cites the example of one of its investments, Equinx, to show how the efficiencies of the cloud business model should help lessen these impacts and promote new sources of growth for both hyperscale cloud providers and the data centers they utilize:

    Cloud service providers that build mega data centers tend to lease their facilities on a “wholesale” basis, offering long-lived leases (5-10 years) and providing minimal services such as secure shell security protocols, physical security and energy. The wholesale providers tend to be used primarily by large public cloud players that have the sophistication to build and maintain their server farms, and desire for large scale. Data centers that focus on the network “edge” on the other hand, such as (…) Equinix, tend to offer shorter leases (1-3 years), but also offer several services — primarily interconnections between customers and network and cloud providers — on top of space and power. These “retail” leases are utilized by a much broader customer base..

    According to ClearBridge, cloud computing is so efficient because it has the potential to share resources across multiple organisations. This translates as various companies’ workloads can be handled using fewer servers, with the resulting benefits for the environment. Another area is interest is that of renewable energy

    “Google was an early pioneer, setting a long-term goal to reach 100% renewable energy for their operations worldwide back in 2012. After many years, the company finally reached this goal in 2017 across both their global data center and office footprint and has now become the world’s largest corporate buyer of renewable power, with commitments of 2.6 gigawatts (2,600 megawatts) of wind and solar energy.”

    Alongside Amazon Web Services and Microsoft, Equinix has increased renewable energy usage and has set a long-term goal of sourcing 100% of their energy from renewable sources. The shift to renewables also significantly lowers carbon emissions. The drive for more efficient use of natural resources to combat that used by new technologies comes full circle with new techniques like artificial intelligence.

    Picture available at Pexels.

    James Pearse
    James Pearse
    James is a copywriter and editor with a passion for sustainable finance. He has worked with Ericsson Mobile Financial Services, The Consultative Group to Assist the Poor at The World Bank, the Global Partnership for Financial Inclusion, Stockholm Green Digital Finance, as well as banks and fintech startups. James is English-born and now lives with his family in Stockholm.

    Latest Posts


    partner insights

    Find out more >

    NordSIP Insights Handbook

    What else is new?

    ESG Leaders 2023