Digital transformation has wildly changed the world around us, adding an abundance of technology to daily processes, and shifting the priorities and opinions of both enterprises and consumers alike. One such shift happening currently, at both an organization's level and consumer scale, is a new emphasis on sustainability when making decisions. This newfound importance of sustainability has entailed a transition towards more eco-friendly processes and products, and has been highlighted by the growth of environmental, social, and governance (ESG) standards, as well as net-zero programs.
ESG in the private sector is a set of criteria used to evaluate a company’s risks and practices, and are important to sustainable investing because they can help individuals or other corporations determine whether the company is in alignment with their values. The shift in investor requirements has already sparked swift growth of ESG-oriented technology across industries.
The global ESG-related assets under management (AuM) market is expected to grow from $18.4 trillion in 2022, to $33.9 trillion by 2026.
“This growth comes as no surprise,” said Ben McGahon, founder and CEO of Kalibr8, a Dublin-based global cloud optimization platform company whose offerings include automation and AI that makes it easy for MSPs to reduce their cloud expenses while also positioning those MSPs to drive more revenue by selling additional cloud-based applications to their end customers. “Increasingly, socially conscious investors and stakeholders, including employees, board members, customers, regulators, suppliers, and distributors want to know a company's stance on socioeconomic factors and its sustainability efforts before investing or buying from organizations.”
As for net-zero programs, these involve helping businesses achieve a state in which activities in their value chain result in no net impact on the climate. This means rapidly reducing emissions in line with science-based pathways and balancing any remaining emissions with carbon removals. These programs are becoming more common, as nations that make up around 40 percent of the world’s annual GDP have pledged to reach net zero emissions by 2050.
This is, however, no easy task, as the total investments necessary amount to $9.2 trillion per year until 2050, of which $6.5 trillion annually would go into low-emissions assets and enabling infrastructure.
Nonetheless, the endeavor is a worthwhile one, as not only does it help create a more sustainable planet, but research by Gartner estimates that the growing demand for net-zero offerings could generate more than $12 trillion of annual sales by 2030 across 11 value pools, including transport ($2.3 trillion to $2.7 trillion per year), power ($ 1.0 trillion to $1.5 trillion), and hydrogen ($650 billion to $850 billion)
“For enterprises across nearly all industries, both ESG standards and net-zero programs are quickly becoming an essential piece of the puzzle if they’d like to remain competitive,” McGahon commented. “ESG, or at least energy conservation, greener practices, and simple sustainability measures, are having a huge impact in the MSP industry where there is a growing level of consciousness, including cost consciousness as cloud expenses continue to climb, in some cases out of control. It’s a good thing when MSPs can improve their profitability while also pursuing a noble purpose.”
ESG and net-zero offerings can enhance an MSP’s image. A new report from 2023 found that 49 percent of CIOs look at carbon output, sustainability and energy efficiency when choosing new Managed Service Providers (MSPs) and suppliers, and that 20 percent say this is at least an important consideration when choosing new partners.
“For instance, adopting a net-zero, ESG prominent stance, MSPs can improve their ability to both attract and retain talent,” McGahon also explained.
According to a report by business media brand Fast Company, nearly 40 percent of millennials have taken a job with the company’s sustainability efforts a major factor in the decision.
“Net-zero programs can help MSPs stand out from the competition, which is essential given that there is a severe lack of IT professionals available to fill open positions,” McGahon said, “especially given the stunning growth of the MSP industry over the last ten years, and forecasts for continuing growth in the years to come.”
Furthermore, ESG standards can help MSPs drive down their own and their end-customers’ costs.
“Even small efforts toward sustainability – such as going paperless, recycling or making energy-efficient upgrades – can improve a business's bottom line and ROI,” McGahon said. “On top of this, companies that stay compliant with ESG-related regulations also have less exposure to fines, penalties and other business risks, which positively affects their bottom line.”
During this period of transition towards sustainability and technology, MSPs must ensure they are taking the right steps to not only improve their own ESG standing but provide the tools they can ring to their base.
“Today, we have the tools to ensure we go beyond green intentions; with our platform, reducing the amount of energy required for cloud computing, cloud services, cloud storage, networking and more is automated, and every savings is captured, analyzed, and reported on,” McGahon explained. “Our distributors, partners, and MSP customers can create a report for a net-zero or ESG audit in seconds. With greater transparency and proof of tangible outcomes, it is far easier to plan, implement, manage, measure, and demonstrate results from programs that benefit bottom lines considerably, while also burnishing the brands of those who put sustainable programs in place.”
Arti Loftus is an experienced Information Technology specialist with a demonstrated history of working in the research, writing, and editing industry with many published articles under her belt.
Edited by
Erik Linask
