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Companies around the world are rapidly increasing their data processing needs as digital transformation accelerates across sectors and regions. This need is fueling an explosion of reliance on computing power in data centers that are massive buildings in both urban and rural environments that quietly process digital health records, daily e-commerce purchases, your food delivery orders, and the latest streaming movies.
As of January 2021, almost There were 8,000 data centers in use worldwide. To function, these centers consume significant energy and water resources; some estimates indicate that data centers consume more energy than some countries. If left unchecked, this consumption is likely to pose huge challenges to global sustainability efforts. For organizations that rely on data centers, today’s leaders urgently need to ask the question: How do I make my organization sustainable to align with the values and beliefs of my customers, shareholders and employees?
For any business expanding its footprint and infrastructure, this is an increasingly difficult question to answer. But it is essential to business, and ultimately to long-term profitability, to pursue and consistently apply sustainability practices across the enterprise, as there are costs associated with irresponsibly consuming finite resources that disrupt the global ecosystem in which we all affect life.
Over the past five years, my company has made a conscious effort to be more resource efficient by making our resource use sustainable. At the same time, we’ve strived to reduce the resources needed to run a digital advertising technology business that generates 5.9 petabytes of data every day — the equivalent of more than a quarter of the data stored in the Library of Congress. That’s why we’ve made it a priority to use renewable resources for all our energy needs. As a result, we have achieved 100% renewable energy utilization through our global data centers and plan to continue this initiative as our business grows.
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We have found that engaging in this effort has proven beneficial not only for the planet, but also for our business in several key areas.
Today’s consumer is 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 company, including donating to charities and addressing social issues. And for good reason: small operational improvements can have a big impact on change. Google for example consumed 15.5 terawatt hours of electricity in 2020, the majority consumed by its data centers. Saving a small amount of energy per transaction can have a cumulative impact.
Companies that undertake sustainability efforts invariably gain a publicity and sales advantage over companies that ignore or downplay this issue. Data shows that almost two thirds of consumers around the world now make purchasing decisions based on businesses’ alignment with their beliefs. This is as true for traditional consumers as it is for the business-to-business space. According to a recent McKinsey report, sustainability is a source of sustainable competitive advantage in B2B. Of course, this cannot just be an act of its own accord. Going public with a principled stance requires responsibility; just as easily as you can attract consumers, you can repel them by demonstrably failing to deliver on your commitment to sustainability.
A growing number of investors are now focusing on green and sustainable investment opportunities. The importance of environmental, social and governance (ESG) commitments has grown exponentially as money flows into funds specifically targeted at companies committed to sustainability. As the demand for aligning money with sustainability continues to grow, investors are paying more attention to the efforts of conscientious companies.
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 in which they can potentially invest. Investors have moved beyond platitudes and instead seek hard data that shows a company takes its environmental impact seriously and thinks about how to be sustainable while maximizing profitability.
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Talent recruitment and retention
Although the job market is starting to cool, competition for talent remains fierce. Employees are increasingly attracted to organizations with shared values, with the World Economic Forum reporting that workers are becoming more “faith-driven” in the wake of the pandemic, with 60% changing jobs to better reconcile their own and their employer’s corporate values. In comparison, less than a third cited a better reward as motivation to quit. Initiating sustainability efforts can serve as an effective recruiting and retention tool and can be an influential differentiator when reward offers vary.
For many organizations, significant, sustainable change is achievable through small changes that have a huge impact.
Most companies do not operate independently, but are intertwined with an ecosystem of partners, customers and suppliers. As more companies try to align with environmental values, they will begin to research their partners and supply chains, and companies adhering to these values will benefit.
Trade organizations that govern industries are already at the forefront of this alignment. In our industry, trade organizations from all over the world announced last month a joint commitment to achieve net zero emissions and restrict environmental damage, thereby setting guidelines and benchmarks for industry.
If you’re not getting inquiries from your partners yet, you probably will in the near future. As more organizations explore their own sustainability efforts and as more industry standards are developed, your colleagues and partner network will become increasingly involved in your organization’s efforts in this area. By driving sustainability efforts now, the company can better position itself for future partner engagement.
Businesses have a collective responsibility to assess and reduce the impact on our environment. As your organization evaluates its sustainability efforts, you should consider the role stakeholders play in such initiatives. As with PubMatic, I hope you eventually discover that what’s good for the planet is also good for business.
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