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Businesses across the globe are rapidly increasing their need for data processing as digital transformation accelerates across industries and geographies. This need is resulting in an explosion in the reliance on computing power in data centers which are massive buildings in urban and rural settings alike that quietly process digital medical records, everyday ecommerce purchases, your food delivery orders and the latest streaming movies.
As of January 2021, nearly 8,000 data centers were in operation globally. To function, these centers consume considerable energy and water resources; some estimates indicate that data centers use more energy than some countries. If unchecked, this consumption will likely create daunting challenges for global sustainability efforts. For organizations that depend on data centers, today’s leaders must urgently ask: how do I make my organization sustainable to align with the values and beliefs of my customers, shareholders and employees?
For any company expanding its footprint and infrastructure, this is an increasingly difficult question to answer. But it is essential for business operations, and ultimately long-term profitability, to pursue and consistently enact sustainability practices throughout the entire enterprise, as there is a cost to pay for irresponsibly consuming finite resources that affect the global ecosystem in which we all live.
In the last five years, my company has embarked on a conscious effort to be more efficient with our resources by making our resource consumption sustainable. At the same time, we have aimed to reduce the resources required to operate a digital advertising technology business that generates 5.9 petabytes of data — the equivalent of more than a quarter of the data stored in the Library of Congress — on a daily basis. Therefore, we have made it a priority to utilize renewable resources for all of our power needs. As a result, we have achieved 100% renewable energy usage through our global data centers and intend to continue this initiative as our company grows.
We have found that embarking on this effort has not only proved beneficial for the planet but for our business in several key areas.
Today’s consumers are well-informed and increasingly motivated by values and principles. In 2021 86% of consumers expected brands to take one or more actions beyond their product and business, including donating to good causes and addressing societal issues. And, with good reason: small operational enhancements can spur large-scale impactful change. Google, for example, used 15.5 terawatt hours of electricity in 2020, the majority consumed by its data centers. Saving a small amount of energy per transaction could be cumulatively impactful.
Companies that embark on sustainability efforts invariably gain a publicity and sales advantage over companies that ignore or downplay this issue. Data shows that nearly two-thirds of consumers around the world now make purchase decisions based on companies’ alignment with their beliefs. This is as true of traditional consumers as it is of the business-to-business space. According to a recent McKinsey report, sustainability is a source of durable competitive advantage in B2B. Of course, this can’t just be a self-motivated act. Going public with a principle-driven position requires accountability; just as easily as you can attract consumers, you can repel them by not demonstrably following through on your commitment to sustainability.
A growing number of investors now focus on green and renewable investment opportunities. The importance of environmental, social and governance (ESG) commitments has grown exponentially, as money flows into funds that specifically target companies committed to sustainability. As the appetite for aligning money with sustainability continues to grow, investors are paying more attention to the efforts of conscientious businesses.
At PubMatic, I regularly hear from investors with an ESG focus – they want to know what our plans are to ensure that PubMatic is a responsible and sustainable company that they can potentially invest in. Investors have moved beyond platitudes to instead look for hard data that demonstrates that a company takes its environmental impact seriously and is thinking about how to be sustainable while maximizing profitability.
Talent recruiting and retention
Although the job market is beginning to cool, competition for talent remains fierce. Employees are increasingly attracted to organizations with shared values, with the World Economic Forum reporting that employees are becoming more “belief-driven” in the wake of the pandemic, with 60% changing jobs to seek a better fit between their own and their employer’s corporate values. Comparatively, less than one-third cited better compensation as motivation for quitting. Initiating sustainability efforts can serve as an effective recruitment and retention tool and can prove an influential differentiator when compensation offers vary.
For many organizations, significant, sustainable change is achievable through small modifications that have a massive impact.
Most companies do not operate independently but are intertwined with an ecosystem of partners, customers and vendors. As more companies seek to align themselves with environmental values, they will begin to scrutinize their partners and supply chains, and companies that align with those values stand to benefit.
Trade organizations that govern industries are already spearheading this alignment. In our industry, trade organizations from around the globe announced last month a joint commitment to achieve net zero emissions and curtail environmental harm, thereby setting guidelines and benchmarks for the industry.
If you’re not getting questions from your partners yet, it’s likely you will at some point in the near future. As more organizations examine their own sustainability efforts and more industry standards are developed, your peers and partner network will be increasingly concerned with your organization’s efforts in this area. Setting sustainability efforts in motion now can better position the business for future partner engagement.
There is a collective responsibility among the business community to assess and reduce the impact on our environment. As your organization evaluates its sustainability efforts, be mindful of the role stakeholders play in such initiatives. Like we have at PubMatic, I hope that you may ultimately find that what is good for the planet is also good for business.