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We Made Big Commitments at COP26. How Can Businesses Make Real Change Happen?

Photo for Robert CondonRobert Condon
Overhead view of forest

It has been over three months since COP26 2021. And between the holiday period and the new year rush that have come since, it is fair to say that the hype has died down.

I was lucky enough to attend the event. I came away with renewed confidence that businesses believe they can enact tangible change. And it is change that I believe cannot wait any longer. So now that we are firmly planted in 2022, it is time that companies stand up and start acting in line with the enthusiasm shown around the event. They no longer have a choice but to show their commitment and act in order to secure a more sustainable world.

They simply won’t win big contracts from Financial Times Stock Exchange (FTSE)-listed companies or governments if they don’t have a compelling sustainability story or “clear and credible” carbon reduction plans, as recently mandated by the U.K. government. Some are already responding. One in three of the largest public companies in G20 countries now has a net zero target, up from one in five in 2020. What’s more, pressure is coming from customers with most Brits (56%) believing that climate change will have a bigger impact on humanity than coronavirus.

So, where do we start to address the big commitments made at COP26? I believe with the innovative use of technology, embracing a hybrid working future and working together to drive more harmonized regulation and measurement, we—as business leaders—can help our communities and countries meet them. And there are three places I think we should start.

Digital Transformation and a Greener Economy Need to Go Hand in Hand

If you look at the targets set at COP26—including the U.K.’s “Glasgow Breakthroughs” aimed at speeding up affordable clean tech worldwide—and where we need to be in the next 10-20 years, most of the gains will be down to technology.

Investment in innovation is going to be vital. Thankfully, it’s where the market is going already with investors pouring record amounts of money into funds that aim to help the environment and promote social good in 2020. It is the companies or individuals that come up with innovative ideas to accelerate ESG that will be rewarded with investment, tax breaks and customers, which is why the international agreement on increased financing and investing of technology from developed countries to developing countries is so exciting.

But it isn’t just about creating the next big thing. As business leaders, we need to look to our own houses first. We must make sustainability intrinsic throughout any digital transformation project that we carry out.

How Virtualization and Multi-Cloud Can Deliver Sustainable Computing

We can make sustainability intrinsic by investing in technologies such as virtualization, which is the use of software to simulate hardware functionality and create multiple virtual machines on a single server. The benefit of this is that it allows for much more computation to be done with less energy. A study by Aurora Energy Research found that by increasing our use of virtualization technology, companies in Europe could reduce potential future computing emissions by 55% by 2040. And VMware’s own virtualization technologies have helped our customers to avoid putting more than 1.2 billion metric tons of carbon dioxide into the atmosphere since 2003. That’s equivalent to 28,000 trips to Mars and back in energy since 2003. This is all part of VMware’s ESG approach, which not only addresses our own internal operations but also supports our customers meet their own ESG goals.

On the flipside—if there were no progress around virtualization—European computing emissions could grow more than 250% over the next 20 years.

The advent of multi-cloud is also playing a central role in delivering sustainable computing by giving companies the opportunity to process data and move workloads on the most energy-efficient and carbon-efficient platforms available. Taking into account details such as the size of the data center that powers the cloud platform and even where it’s located—climate and the size of the local renewable energy market are important—will help customers choose the most sustainable option.

We have the technological capabilities at our fingertips. Now we need to innovate in our application of these capabilities and continually marry the need to digitally transform with the need to drive greater efficiencies.

The move to hybrid work offers a great opportunity here. By empowering and enabling employees to work from anywhere with modernized IT, we can naturally lower our carbon footprint while increasing our productivity. And how can we make sure we’re doing that in line with the COP26 commitments? Through measurement against regulations that harmonize across countries. How do we do that?

Enable a Greener Hybrid Era

The International Energy Agency recently did some calculations and found that “if everybody able to work from home worldwide were to do so for just one day a week, it would save around 1% of global oil consumption for road passenger transport per year. Taking into account the increase this would bring in energy use by households, the overall impact on global CO2 emissions would be an annual decline of 24 million tonnes (Mt)—equivalent to the bulk of Greater London’s annual CO2 emissions.”

It’s hard not to get excited by the potential here, particularly with 9 out of 10 companies looking to combine remote and on-site working in the post-pandemic future of work. It’s a call to action to us, as business leaders, to ensure that we put in place long-term solutions to support this future, both to support hybrid work practices and to seize the sustainability benefits it brings.

We’ve seen the impact of this approach and the savings it bring us. Our ESG team here at VMware has been able to estimate that the overall carbon impact of all VMware employees working from home is 2.5 times smaller than our pre-pandemic footprint, in which all VMware employees commuted to offices.

It does raise the question, however, of how companies measure themselves and benchmark their progress.

Influence Regulation for Greater Accountability

In its reporting on COP26, the Financial Times said, “The focus on voluntary corporate action risks weakening the drive for badly needed government policy interventions. Such concerns are driving pressure for the next chapter of the corporate response to climate change to be marked by fewer parties and press releases and by more verifiable standards, mandatory reporting and meaningful carbon prices.”

I couldn’t agree more. As business leaders, we need to work collaboratively with the government to implement standards that prioritize common definitions and obligations to drive greater direction, ownership and ultimately change. This includes the harmonisation of international standards and definitions. Without these, how do businesses know what to aim for? And how can they be held accountable?

A recent survey of global chief executives by Accenture and the UN Global Compact found that just 18% believe governments have given them the clarity they need to set goals in line with a 1.5°C (34.7°F) warming trajectory. We need stricter sustainability criteria within IT procurement for both the public and private sector. I think this starts with an independent data center registry to monitor emissions and create greater transparency with customers and investors about what they’re buying into.

Without the ability to measure properly and encourage real accountability, we simply won’t deliver on the changes we’ve agreed to.

Avoid the ESG “Sugar Rush”

Accountability to achieve ESG goals should also be held at the board level and businesses need to be measured on their achievements. Some companies are even starting to link board level bonuses with ESG momentum. In fact, almost half the annual bonus plans awarded to executives at the biggest U.K. firms now include an ESG component, up from about a third just over a year ago. And in the U.K. alone, mentions of net zero in corporate reports have increased 370% in two years according to Datamaran.

Corporate climate action is already accelerating but there is still more to do. At COP26, Mohamed Adow, of the thinktank Power Shift Africa, said, “[The] announcements are eye candy, but the sugar rush they provide are empty calories.” We need to avoid the rush, work together, be accountable and lead the way for concrete change that nourishes and sustains our world.

This blog is part of a new series looking at providing clarity around the increasingly popular and at times complicated topic of Environmental, Social and Governance (ESG). Read other blogs in our Down to Earth series.

If you’d like to hear more about how we are enabling our customers and partners to achieve their own ESG goals, visit ESG at VMware and also read our 2021 ESG Report

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