Cloud Computing Industry ESG Thematic Report, 2023

Environment, Social and Governance (ESG) in the Cloud Computing Industry

Environment, social, and governance (ESG) policies made by companies are rapidly shaping the current trend in investments in public and private sectors due to rising demand from various stakeholders, mainly consumers and governments across the world.

Advancement of technology through Information Technology has created a positive impact across various industries by promoting cloud computing services as virtual infrastructure that can also be used as a part of virtual value chain, decreasing the negative impact on the E in the ESG - Environment and improving the G - Governance aspect across industries through advanced solutions. Despite the relevance of positive ESG impacts of the cloud computing industry, certain challenges in terms of environment, social and governance aspects still exist in the market. 

The Covid-19 Pandemic in the year 2020 has given a steep surge to the industry, where companies of various industries have become dependent on these services, impacting the environment and governance aspects of the ESG.

ESG Trends

Through the usage of cloud computing services, many industries have abled to reduce the carbon foot from the emissions from their value chain pertaining to IT services, enabling the companies to eliminate the use of conventional logistical support, thereby enabling the corporate customers to achieve the net zero target and paving way for achieving the UNSDG (United Nations Sustainable Development Goals) goals of innovation, industry and infrastructure and climate action (SDG9) and (SDG13).

The cloud computing services are also reported to improve the governance aspect of the corporate customers, since these services are reported to have improved security, eliminating the risk of data breach, thereby helping the customers to achieve the UNSDG goal of institutions for peace and justice (SDG16).

Conversely, there are certain challenges in the environmental aspects of ESG in the industry. Although the cloud computing services have been reported to reduce the emissions from the value chain to an impactful extent and lessen the energy consumption of clients by 84%, a small workload on the cloud computing uses 50% more energy than conventional systems. Powering cloud computing infrastructures at industrial scale from conventional power sources, which use thermal and natural gas as their power source, increases emissions and strains the environment. These directly prevent the attaining of UN SDG 7: Affordable and Clean Energy and UN SDG 6: Responsible Production and Consumption.

Another challenge in the environmental terms of the industry arises in the form of water consumption and conservation. For a cloud computing infrastructure to sustain, the cooling process is essential, where the systems are cooled down by using fresh waters, to reduce the heat and enhance the performance of the system.

To address and resolve the issue of water conservation in the market, key leaders of the industry have partnered and made a policy to reduce the freshwater consumption for process by 66% by 2045. Another key leader has made a policy to integrate process optimization, to enhance the performance of the systems and to reduce the water consumption also helping in resource conservation by reducing the consumption of energy, moving towards the UNSDG goals of clean water and sanitation and affordable and clean energy (SDG6) and (SDG7).

Growth of the Cloud Computing Market

The cloud computing market at global scale is economically valued at USD 368.97 billion as of 2021 and is forecasted to expand with a CAGR (compound annual growth rate) of 15.7% from 2022 to 2030. The market is reported to increase the data security and protection impacting the governance aspect of the various industries, the challenges remain in form of power sourcing and water conservation.

Key Companies in this theme

    • Adobe Inc.

    • Alibaba Group Holding Limited

    • Amazon.com Inc.

    • Google LLC

    • International Business Machines Corporation

    • Microsoft Corporation

Scope of the Cloud Computing Industry ESG Thematic Report

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Aspects of the Cloud Computing Industry ESG Thematic Report

    • Offers a global perspective of the industry and the policies and measures taken by the players, for overcoming the challenges faced in terms of Environment, Social and Governance.

    • Key insights into the sustainability practices of major players in the market.