The climate crisis is a vendor-neutral issue. But a little bit of healthy competition in the environmental, social, and governance (ESG) arena can help discern which companies are serious about environmental issues and which are “just along for the ride,” Adrian Cockcroft, VP of sustainability architecture at Amazon, said during a question-and-answer session with VMware's Joe Baguley at the recent VMworld 2021 event.

At their core, environmental efforts are global efforts. “The United Nations is in the driving seat for a lot of this,” Cockcroft said, referencing the UN’s seventeen sustainable development goals aimed at bringing global citizens together to make the world a more equitable and sustainable place.

That sense of collaboration is also visible in the tech industry, he added. “We don't win by having a little bit less carbon than somebody else. We win by everybody using less carbon,” Cockcroft explained. “There should be more cooperation, sharing, and encouraging each other.”

Baguley, who is VP and CTO for VMware's Europe, Middle East, and Africa business, noted that despite the kumbaya energy sometimes associated with the environmental movement, competition still tends to seep into this issue when pressures of corporate ESG are involved.

“We've got that combination of [government] regulations, investor action, NGO pressure, company culture, and now consumer expectations,” Baguley said.

Those pressures present a new motivation for businesses to pursue ESG. “We have companies across all kinds of markets and all around the world that have decided [ESG] is a way to say, ‘We have a more aggressive [environmental] target,’” Cockcroft explained.

ESG’s competitive edge often brings clarity. “It gives you a way to see who are the leaders and innovators in this space and who was just along for the ride,” Cockcroft said.

Companies need a full understanding of the three scopes of emissions in order to successfully reach their net-zero targets, Cockcroft said. 

Scope one is simplest to measure and understand. “Scope one is the fuel you actually burn. It's the gas that you use to heat your house. It's the fuel you buy to put in your car that you actually consume.”

Scope two emissions come from “energy you buy,” which is usually electricity or heat, Cockcroft explained. 

The third scope of emissions is much more complicated to quantify and report. “Different businesses have different standard approaches, and it's very specific,” Cockcroft said. “Airlines have one way of thinking about scope three. Banks have another way.”

Banks, for example, own stakes in the houses they mortgage. Therefore, the emissions from the electricity used in those houses counts as part of the bank’s scope three emissions. 

A thoughtful and strategic corporate ESG plan is necessary in order to meaningfully impact the environment. Otherwise, it’s easy to make promises that won’t be fulfilled.

“It's very easy to come up with an optimization, which actually just externalizes [emissions] somewhere else,” Cockcroft said. “You know the balloon animals you get at kids’ parties? You squeeze one leg. The other leg gets bigger.”