Harnessing Digital Transformation for ESG Goals and Carbon Reduction

Introduction

Digital Adoption and Transformation rapidly improve businesses by enhancing customer experience and operational efficiency. As more companies migrate to the public cloud for its flexibility and scalability, it's crucial to consider the increase in carbon emissions. Aligning these digital transformations with Environmental, Social, and Governance (ESG) Goals is not just an expectation but a necessity due to growing worldwide laws and compliances. The importance of a strong ESG proposition is underscored by a McKinsey study that identifies five ways to create substantial value.

Carbon-Conscious Digital Transformation

Consumers are increasingly conscious of their environmental footprint and are demanding services that prioritize sustainability. These market demands and the EU's new proposed Corporate Sustainability Reporting Directive mandate companies to publish auditable, non-financial sustainability reports. These reports illuminate an organization's sustainability impact and targeted efforts to make a positive difference.

The evolution story of an application lifecycle in the Cloud Age

Let’s do a mental exercise by imagining the life story of an application created to service the business. It is 2008, and the application story begins, brought to life with the idea of servicing a new product line housed on-premises. With the introduction of Amazon EC2 by Amazon Web Services, the cloud was still in its infancy and by no means a default choice.

Initially, the application was relatively simple, small scale, and had a small carbon footprint. Fast-forward a decade, the application has grown alongside the service, transforming into a monolithic structure. This growth didn't just enlarge the application; it also became more intricate, interacting with various other applications, emphasizing its criticality, and prompting architects to establish a robust disaster recovery strategy. 

With digital transformation driving the maturity and growth of cloud computing around 2018, the decision was made to migrate an application from on-premises to the AWS cloud. While aligning with the company's digital strategy, this move also unintentionally reduced the application's carbon emissions since the AWS data centers' utility management is generally better optimized and employs renewable energy as much as possible. However, the 'lift-and-shift' migration, as in most of the migrations, did not fully leverage the event-driven OpEx model of the cloud due to a lack of substantial native cloud development. Optimization, too, was overlooked primarily due to a need for more visibility into resource utilization and other key performance indicators. Regrettably, over time, the application's carbon footprint has since swelled back to its 2018 levels, negating the benefits gained from the migration.

Before diving deeper, let's reflect on a few learnings:

• Migration to the cloud can significantly reduce the workload’s carbon footprint, even if it is lift and shift, just by leveraging the economies of scale AWS brings to the optimizations of their data center.
• With the OpEx model, consumers have the advantage of increasing resource utilization, thus increasing overall efficiency from both carbon emissions and cost perspectives.
• Optimization is a considerable part of the cloud operating model and, if neglected, can have a negative impact.

Embodied emissions contribute to a significant portion of IT solutions' carbon footprints, especially in cloud computing. The SBTi reporting guidelines highlight the importance of embodied emissions (Scope 3), projected to constitute over 80% of total emissions with the decline of Scope 1 & 2 emissions. This projection underscores the criticality of embodied carbon emission estimates in any Cloud ESG strategy.

Optimization as crowd jewel of cloud operating model

As cloud technology matures, an increasing array of 'Ops' specialties emerge, each focusing on specific aspects of the Cloud Operating Model. This evolution might appear divergent due to the growing complexity commonly seen with technological maturity. Yet, foreseeably, these 'Ops' subsets may begin to converge under overarching practices aimed at reducing complexity and streamlining applicability.

One such practice is Cloud Sustainability, a synthesis of FinOps and GreenOps, underpinned by a core mission of Cloud Optimization. The intersecting point of FinOps and GreenOps is resource optimization—a practice that both reduces carbon emissions and optimizes for cost. This union of optimization and Green Tech emphasizes the critical reality of our time: we're living amidst the sixth wave of innovation, marked by dwindling resources, as further elaborated on in an article entitled Riding the Sixth Wave of Innovation by Thomas Kruitbosch, Xebia’s CTO of Digitial Transformation.

Clean Energy and optimization become paramount as we step into this sixth wave of Innovation, steered by AI/ML and robotics. These technologies are inherently compute-intensive. Within the domain of cloud and IT, the ESG perspective focuses on the 'Environment' criterion, seeking to optimize and diminish the overall carbon footprint among all the GHG Protocol Scopes.

For organizations operating their workloads on the public cloud, the cloud carbon footprint becomes an integral part of their overall carbon footprint. The practice of tracking, optimizing, and reporting on this cloud carbon footprint is dubbed GreenOps.

Discover our Whitepaper on ESG & Cloud GreenOps

GreenOps is a facet of the cloud operating model fostering awareness and comprehension to act on Greenhouse Gases (GHG), quantified in CO2e, emitted, and embodied from resources deployed in the cloud. Key deliverables of GreenOps include:

• Visibility and reporting
• Targeted reduction in carbon emissions utilizing methodologies such as Science Based Targets SBTi 
• Inputs towards the Corporate Sustainability Reporting Directive (CSRD - EU regulations)

The GreenOps practice strives to deliver tangible and measurable insights to cloud users and stakeholders, cultivating awareness of carbon intensity. This awareness fosters understanding and accountability, serving as the inaugural steps toward impactful carbon emission reductions.

Building the GreenOps Framework

GreenOps, as a dimension of the cloud operating model, focuses on minimizing Greenhouse Gases (GHG) resulting from cloud-deployed resources. The framework is divided into two integral sections: Foundational and Advanced, each comprising specific principles and objectives.

1) Foundational (From Data to Information): 

The foundation section emphasizes the design principles for implementing the GreenOps practice:

• Data on cloud usage and emissions should originate from a definitive source with comprehensive documentation of the calculation method. The significance of this data extends to its utility as an input for CSRD under proposed EU regulations.  
• Developed systems should exhibit resilience and fault tolerance, preventing carbon emission data outages.
• A logging trail should accompany carbon emissions data, ensuring the traceability of changes for audit purposes.
• Data generated should be transformable into multidimensional reports shareable with stakeholders. Resource metadata information can be incorporated into the carbon emissions data to allocate carbon emissions effectively. This approach proves crucial in estimating the carbon emissions per application or business unit.
• Tailor reports to each stakeholder's perspective. For instance, a Business Unit owner may require a high-level overview, whereas an engineer may need detailed resource-level information.

The advanced section of the framework builds upon the foundation, focusing on policy, governance, optimization, and communication:

• Companies should align with the Paris Agreement to keep global temperatures below 1.5°C by adhering to guidelines from the GHG Protocol and SBTi. This approach introduces 'Cloud Carbon Allocation,' where emission targets are set at the organization level and distributed per application, department, or business unit.
• Governance policies should be established and enforced where necessary to remain under the allocated carbon emission budget. These policies should guide the implementation of energy-efficient architectures and services, such as AWS Graviton instances, that offer a better power-to-performance ratio.
• Cloud Carbon Optimization refers to the processes and best practices of optimizing cloud carbon emissions while maintaining performance and cost parameters. Optimization strategies should be developed based on the carbon emissions data collected during the foundation stage. Optimization of compute resources can be prioritized for the maximum impact, being the most carbon-intensive.

Effective communication forms the backbone of any operating model. Beyond reporting, other facets such as carbon budget breach escalation, policy definitions, and creating a standardized glossary contribute to effective and efficient communication. Stakeholder education is crucial for sharing best practices and industry standards, critical to a Greener Cloud.

Cloud Carbon Optimization

Cloud Carbon Optimization is a critical component of the broader sustainability strategy in cloud-based solutions. It aligns with the Science-Based Targets initiative (SBTi) to lower greenhouse gas emissions in the ICT sector. Cloud carbon optimization can be divided into four pillars:

1. Architectural Optimizations: This approach focuses on workload architecture in the cloud, exploring principles such as event-driven architecture and optimal resource utilization for specific use cases. For instance, using Transit Gateways in a multi-account structure in AWS can minimize the deployment of NAT Gateways, thereby saving energy and reducing the carbon footprint.
2. Usage Optimizations: This pillar emphasizes optimizing resource utilization through best practices like right-sizing, elasticity, and lifecycle management. A good example is using S3 Lifecycle Management policies in AWS, where objects can be moved between different S3 tiers, reducing energy consumption and thus minimizing the carbon footprint.
3. Workload Optimizations: This pillar focuses on optimizing the code and software aspects, like the resources deployed and the time taken to execute a single query. Using performance-oriented programming languages, such as Rust, can help achieve more energy-efficient scripting practices.
4. Geographical Optimizations: This approach looks at the carbon intensity of the electricity grid in the region where the workloads are deployed. A radical idea is to 'follow the sun,' where data centers' energy grids are powered by solar energy.

Case Study: Blonk's Implementation of GreenOps

Blonk, an international expert in food system sustainability that hosts its solutions on AWS, collaborated with Xebia to explore solutions to align their IT operations with their sustainability objectives. Xebia, as an AWS Premier Consulting Partner, is working and collaborating with Blonk to help with their cloud needs.

Blonk reached out to Xebia to explore a solution to gain insights into their full cloud carbon footprint (including embodied emissions). We looked into their AWS Customer Cloud Footprint tool but did not give any insights or meaningful metrics to steer on. In turn, Xebia opened the GreenOps solution to Blonk and took them through a journey of cloud sustainability. During the interactions with Blonk, Xebia defined four pain points as mentioned below:

1. How can I stay updated on real-time carbon emissions and take action?
2. Can the emissions be split into embodied and direct/indirect? This was quite important as AWS does not provide visibility into embodied emissions, which form over 80% of the overall cloud emissions.
3. To provide carbon emissions visibility throughout their product value chain, Blonk wanted to allocate carbon emissions per project.
4. Last but not least, cloud carbon emissions optimization and reduction was a priority, as well as visibility into the effect of the carbon emissions on the actions taken.

 With the above points defined, through Xebia's GreenOps approach, Blonk gained:

Improved Visibility: Blonk now has near-real-time insights into AWS carbon emissions, facilitating informed decisions.

Allocation of Carbon Emissions: Blonk can allocate cloud carbon emissions to project workloads, enabling targeted action plans for future carbon neutrality.

Optimization for GHG Reduction: Focusing on carbon-intensive services, Blonk has the potential to optimize resources, projecting a 10% reduction in cloud carbon footprint.

 This strategy led to significant cost reductions and environmental benefits equivalent to the CO2 absorption of 12 trees, highlighting the potential for companies to align their ICT operations with broader sustainability goals through an effective GreenOps strategy.

Xebia's GreenOps Dashboard Methodology

Focusing on the cloud carbon footprint, Xebia has created a solution that will provide carbon footprint data to the customer and deploy cloud ESG solutions in a separate dedicated AWS account. The enriched AWS Cost and Usage Report will act as a live dataset to create and refresh the reports and dashboards. The Xebia GreenOps solution offers complete transparency, and customers can make queries to the dataset.

Xebia's GreenOps Dashboard provides critical insights into the carbon footprint of cloud operations. It retrieves usage information from the AWS Cost & Usage Report (CUR), enriches it with CO2 equivalent and equivalent energy data, and loads it into an S3 bucket. Customers have full access to this data and can create various reports and dashboards in AWS native BI tools or export the data to their own BI tools for broader accessibility.

This approach ensures transparency and control, enabling companies to measure, manage, and reduce their cloud carbon footprint in line with the SBTi's targets.

The Way Forward

The future is defined by sustainability. Regardless of the field, every organization will play a part in molding the sustainable practices that will guide us into the future. Xebia, with its GreenOps methodology and a relentless pursuit of ESG excellence, is committed to leading this transformative shift in the ICT sector.

The value of strong ESG propositions is beyond just environmental impact; they drive economic value, too. As showcased in the McKinsey study on ESG referenced earlier, such recommendations create value in multiple ways. At Xebia, we've embodied this value creation through our comprehensive and innovative GreenOps methodology, assisting our clients in optimizing their cloud operations and significantly reducing their carbon footprint.

There's a vast, untapped potential in the digital infrastructure realm to revolutionize how we perceive energy use and emissions. The Xebia GreenOps methodology is our response to that call. It is not just a solution; it's a revolution already in motion. We envision a world where every byte processed in the cloud contributes to a sustainable future.

Through our GreenOps methodology, we help organizations gain visibility, control, and optimize their carbon footprint in the cloud. We don't just provide a roadmap; we walk together with organizations on their journey to sustainability. It's a long road, but the most exciting and the only way forward.

Join us in driving this transformation. Let's redefine how ICT contributes to a sustainable future. Together, we can create a world where digital progress and environmental stewardship go hand in hand. 

What is your next step? Reach out to Xebia's GreenOps team. Let's commence your journey toward a sustainable digital future.