This article was originally published on June 13, 2023, and was updated on August 8, 2023, with additional information.
Environmental sustainability has become a top 10 enterprise priority for CEOs, according to Gartner research. But to some technologists, that’s obvious even without the press releases. As global businesses digitally transform, IT vendors grow increasingly aware of the pressure to operate with their environmental impacts in mind.
Gartner analysts predict that by 2026, 75% of organizations will increase the amount of business they do with IT vendors that are focused on specific environmental, social and governance (ESG) goals “and will seek to replace vendors” that don’t demonstrate sustainability progress.
Despite the lip service given to prioritizing ESG, corporate sustainability isn’t as important to top-level executives as it was a year ago, according to the results of Google Cloud‘s latest Sustainability Survey.
The cloud provider's research found global enterprise executives place ESG efforts as their third most important business priority. That represents a change from last year’s survey, which identified ESG as executives’ No. 1 organizational concern.
[ Related: Hyperscaler sustainability scorecard: Rating Google’s, Microsoft’s and AWS’ environmental strategies ]But if you ask Mark Raskino, distinguished VP analyst at Gartner, sustainability is “beyond just greenwashing and beyond pretense,” which is something he wouldn’t have said a year ago. Raskino said CEO mindsets are changing, and they are seeing sustainability not “as a problem and a compliance cost, but as a business opportunity.”
Given the mixed messages floating through the tech industry, here’s a rundown of where some of the ecosystem’s biggest players stand in terms of their climate impact and environmental ambitions.
What do our ratings reflect?Our ratings are designed to evaluate the state of enterprise tech vendors’ environmental initiatives and impact based on their public data and disclosures. Vendors are scored based on net-zero commitments, areas of greenhouse gas (GHG) emissions reporting, total annual emissions totals, renewable energy commitments, total annual energy use and percentage of renewable energy.
Although sustainability is more than emissions and energy, those two are major quantitative metrics that can be studied in parallel across different companies. While we do highlight some smaller initiatives from these vendors, they aren’t included in scoring.
We calculated each vendor’s percentage score out of 20 possible points, then converted that into a five-point scale. Based on our methodology (see the end of this article), a score of:
- 100% = 🌿🌿🌿🌿🌿
- 85-99% = 🌿🌿🌿🌿
- 70-84% = 🌿🌿🌿
- 55-69% = 🌿🌿
- 40-54% = 🌿
- 0-39%= 0
Corporate sustainability programs should also be founded on insights from the scientific community to ensure that targets are realistic and genuinely impactful.
The Science-Based Targets initiative (SBTi), for example, is an organization supporting the 2015 Paris Agreement goal to limit global temperature rise to 1.5°C above pre-industrial levels. It offers enterprises validation on their ESG targets, which confirms that the company’s strategy to reach net-zero aligns with the Paris Agreement. Specifically, validated targets include at least 90% emissions reductions and no more than 10% carbon offsets.
Scope 1, 2 and 3 emissionsLarge companies with widely used products – especially those that operate behind the scenes of global connectivity and the internet as we know it – report the details of their scope 1, 2 and 3 emissions in an effort to wrangle that footprint down to net-zero, promote transparency and remain major players in a world adapting to the impacts of global temperature rise.
The GHG Protocol’s global standardized framework classifies scope 1 emissions as GHG emissions that come directly from sources owned or controlled by an organization. This includes stationary combustion sites like power plants, mobile combustion vehicles, fugitive emissions and process emissions.
Scope 2 emissions are considered indirect emissions and are typically associated with the electricity, steam, heat or cooling an organization purchases for its own use.
Scope 3 emissions include all indirect emissions not reported in scope 2 that occur in an enterprise’s upstream and downstream value chain. This tends to be the largest and most difficult category to accurately assess.
Upstream activities refer to the suppliers of an organization – or everything needed to create and produce their product. For example, purchased goods and services, including production-related products like materials and parts, and non-production-products like office supplies and furniture are upstream activities.
Downstream activities involve an organization’s customers – or everything needed to consume their product, including the energy customers use to operate a product or service. Customer use and end-of-life treatment of sold products, for example, are downstream activities that can prove difficult to accurately measure.
So far, we’ve looked at Dell Technologies, IBM, Cisco, VMware and Hewlett Packard Enterprise (HPE). Let us know what tech companies you think need an ESG reality check, and keep an eye out as we add reports on the rest of the industry's major players.
Dell Technologies: 🌿🌿Dell Technologies is a leader in power-hungry tech like data center storage, servers and personal laptops, and it was one of the first companies to be working toward an SBTi-validated environmental target.
LeadershipCassandra Garber, VP of ESG, leads sustainability at Dell Technologies and credits her marketing roots with helping her transition to ESG. Sustainability “is part marketing,” Garber noted. “It’s part inspirational storytelling. It’s part ideation, innovation. And then it’s this other part – data, performance, management, tracking, rigor and operationalizing these kinds of things,” she told SDxCentral.
“I've been on this journey as the [corporate sustainability] space has been on a really cool journey,” Garber added. She cited the way sustainability trends have shifted from the idea that efficiency can save businesses money, to the idea that sustainability can be a competitive differentiator, to integrating sustainability with planning and “truly making it part of everything you do.”
Nowadays, Garber sees the sustainability space as much more focused on innovation and “the role of a company in that journey to make the world a better place,” she said.
Sustainability commitmentsDell is committed to reach net-zero scope 1, 2 and 3 GHG emissions by 2050, with an interim goal of cutting 50% of its operational (scope 1 and 2) emissions by 2030 compared to a 2020 base year.
In its 2022 ESG report, Dell noted it successfully reduced its scope 1 and 2 emissions by 30%, or 86,600 MT of CO2e, in the past two years.
To address its scope 2 fossil-fuel based energy emissions, the company plans to source 75% renewable energy for all facilities by 2030 and reach 100% by 2040.
Dell reported 55% of its global energy use came from renewable sources in 2022, and the company says it increased the amount of energy generated from onsite solar panel installations by 82% compared to 2020.
In terms of upstream scope 3 emissions, Dell is targeting a 45% reduction in emissions from purchased goods and services by 2030.
After meeting its 2030 goal to reduce the energy intensity of its product by 80% in 2021, the company shifted its efforts toward reducing scope 3 emissions from customer use of Dell products by 30%.
The vendor also plans to scale its product take-back services, which should “accelerate recovery” of unused technology for refurbishment or reuse. “Extending [the] life of products and materials is one of our key priorities,” the report noted.
Dell’s environmental impactDell calculated more than 15 million MT of total GHG emissions in 2022, which excludes scope 3 emissions associated with purchased goods and services.
After altering its scope 3 reporting methodology, Dell’s purchased goods and services calculations needed more time than its other scope 3 categories, which totalled 15,103,200 MT of CO2e. Dell also reported 45,600 MT of direct scope 1 emissions and 158,100 MT of indirect scope 2 emissions.
In 2022, every area of Dell’s reported emissions increased compared to the previous year – except its scope 2 emissions and scope 3 emissions from upstream transportation.
IBM: 🌿IBM’s environmental reporting includes Red Hat’s impact, but 2022 data excludes the managed infrastructure business IBM spun off in 2021 under the name Kyndryl, which sent a majority of IBM’s data center operation-based emissions away with it.
Although IBM now deals mostly with colocation data centers, the electricity generated to power those sites still represents a substantial portion of IBM’s total energy use and associated emissions.
LeadershipSustainability at IBM is spearheaded by CSO Wayne Balta, though IBM CIO Kathryn Guarini and her team also contribute to finding “a balance of user experience, value to the business and sustainability in alignment with our goals that we’ve set for ourselves as a company,” Guarini told SDxCentral.
IBM centers its sustainability strategy around three pillars: implementing sustainable computing practices, reducing energy consumption and using technology “to provide data insights and optimization so that all aspects of our company can be in a position to understand and take action to improve sustainability,” Guarini said.
Sustainability commitmentsIBM is committed to achieve net-zero GHG emissions by 2030, with an interim goal to cut 65% of its scope 1, scope 2 and scope 3 emissions from energy consumption at colocation data centers by 2025 with a 2010 base year.
According to IBM, those targets should meet or exceed science-based recommendations on limiting global temperature rise to 1.5 degrees Celsius without relying on nature-based carbon offsets. However, this target isn’t yet validated by SBTi.
IBM’s net-zero strategy also involves using “feasible technologies” like direct air capture to remove its residual emissions and reach net zero after significant reductions. IBM is aiming to deal with less than 350,000 MT of residual emissions by 2030.
After meeting its previous renewable energy target, IBM is working toward sourcing 75% of its total energy use from renewable sources by 2025 – and 90% by 2030. As of 2022 reporting, the company is at 65.9% renewable energy, which includes contracted renewable energy purchases, on-site generation and IBM’s use of renewable grid energy from utilities.
Although renewable energy certificates (RECs) are an easy way for a company to increase its percentage of renewable energy on paper, the purchasing company doesn’t necessarily need to reduce the amount of fossil energy it uses in tandem. To that point, IBM notes it does not count its purchase of unbundled RECs toward its renewable energy goal “if IBM cannot credibly consume the electricity those certificates represent.”
IBM is also striving for a 20% improvement in data center cooling efficiency by 2025 and to reduce power consumption per unit of work delivered by its server products compared to previous generations.
IBM’s environmental impactIBM reported 79,000 MT of scope 1 emissions resulting from its use of fossil fuels for facilities operations and transportation and its use of refrigerants and chemicals that contribute to climate change.
The vendor took responsibility for 183,000 MT of scope 2 market-based emissions, but only reported scope 3 indirect emissions from electricity consumed at IBM’s colocation data centers, which totaled 169,000 MT in 2022. The vendor cited a lack of access to primary source data as the main challenge preventing more accurate value chain emissions reporting.
IBM provides “broad approximations” for 2021 scope 3 emissions from purchased goods and services (194,800 MT), customer use of sold products (272,000 MT), upstream leased assets (13,000 MT), business travel (37,000 MT) and employee commuting (15,000 MT), though these figures include the final 10 months before IBM completed the Kyndryl spin off.
Cisco: 🌿🌿Cisco has been a major name in the networking world for decades, and now the vendor has a foot in nearly every bucket of enterprise IT operations and services – from security and SD-WAN to video conferencing and networking gear.
Sustainability leadershipSustainability at Cisco is led by Mary de Wysocki, who was recently named chief sustainability officer (CSO). One of her main focuses is building a strategy for Cisco’s sequencing of investment to “connect the dots between our net-zero commitment [and] the customer solutions that are going to help our customers hit their [targets],” de Wysocki told SDxCentral.
Sustainability commitmentsIn order to address the growth of its carbon footprint and overall business, Cisco is aiming to reach net-zero greenhouse gas emissions by 2040. The networking vendor plans to achieve that SBTi-approved target by reducing its scope 1, 2 and 3 emissions by 90% compared to its 2019 emissions levels and offsetting the remaining emissions.
As an interim step leading up to net-zero, the vendor plans to achieve by 2025 a 90% reduction in its scope 1 and 2 emissions compared to 2019 levels. According to the company’s 2022 ESG report, Cisco has reached a 39% reduction in these operational emissions so far.
Cisco’s secondary interim target, set for 2030, aims to lower its scope 3 emissions from purchased goods and services; upstream transportation and distribution; and customer use of sold products by 30% compared to 2019 levels. As of 2022 reporting, Cisco has reached a 33% emissions reduction in this area.
Cisco’s environmental impact, scope 3 strategyAccording to Cisco’s most recent data, the company was responsible for 34,931 metric tons of scope 1 carbon dioxide equivalent (CO2e) emissions and 672,385 metric tons of scope 2 emissions in 2022. Cisco reported 17,837,665 metric tons of CO2e emissions in its scope 3 category, with a majority stemming from customer use of Cisco products or services.
Scope 3 represents a substantial portion of the vendor’s total emissions – equal to the annual impact of nearly 4 million gas-powered passenger vehicles – but the vendor is making progress. In 2021, for example, Cisco’s scope 3 emissions totaled more than 20 million metric tons of CO2e.
To further target scope 3 emissions, Cisco committed to ensure that by 2025, 80% of its component, manufacturing and logistics suppliers by spend will be working toward a public GHG emissions reduction goal. In 2022, the vendor reported 78% of its suppliers had targets in place.
Cisco is also aiming for 70% of those suppliers by spend to reach a waste diversion rate of zero at one or more sites by 2025. In 2022, the vendor reported 51% of its suppliers operate at least one certified zero-waste site.
VMware: 🌿 🌿 🌿 🌿Similar to Cisco, VMware’s success with virtualization fueled the company’s plans to expand into the multi-cloud world, where it aims to be the Switzerland figure of Kubernetes orchestration, among other things. And thanks to the nature of VMware’s virtualization-based rise to fame, the vendor tells a storied history of helping enterprise customers avoid carbon emissions.
Sustainability leadershipNicola Acutt leads sustainability at VMware as CSO and VP of ESG, reporting to the C-suite. In an interview with SDxCentral, Acutt described the nascent ESG space as akin to the old Wild West for its lack of regulatory consistency when it comes to measuring and reporting environmental impact.
To that point, she believes a bit of “healthy skepticism” is needed to hold companies accountable to their ESG commitments.
“There is no time for greenwashing and insincerity anymore,” Acutt said. “And companies that play that game will get called out in the world [in which] we’re operating.”
Sustainability commitmentsVMware’s 2030 Agenda highlights the vendor’s main focus areas and SBTi-approved emissions reduction targets, including its goal to reach net-zero emissions by 2030.
As an interim goal, the vendor aimed to cut its scope 1 and 2 emissions in half compared to a 2019 base year, and it reported a 169% reduction in its 2022 ESG report.
To address its scope 3 emissions, VMware has reduced employee commuting-related emissions by 88% and fuel/energy-related emissions by 75% compared to 2019 levels. The vendor also plans that by 2025, 75% of its suppliers by spend will have set their own science-based targets.
VMware’s environmental impact, scope 3 strategyNow that ESG proliferates corporate talking points, VMware is cashing in on its history of resource conservation. The company claims it has avoided 1.2 billion metric tons of CO2e over the last 20 years – and more than 150 million in 2022 alone.
VMware’s vSphere virtualization platform, for example, reduces the amount of physical servers that enterprises need and lowers energy consumption, which affects both customer operational emissions and VMware’s scope 3 category. But according to CTO Kit Colbert, those avoided emissions began as a “side effect” from the vendor’s pursuit of solving other problems. “We weren’t even trying to do that,” he shared during VMware Explore 2022.
Regardless of intention, that means the vendor has a far less challenging task in managing the scope 3 emissions from customer use of VMware products and services.
In terms of 2023 impact, VMware’s latest ESG report shows the vendor calculated 397,008 MT of carbon emissions overall, which is substantially less than Cisco.
VMware reported on scope 3 emissions from business travel (44,210 MT), employee commuting (25,815 MT), purchased goods and services (190,576 MT), capital goods (62,933 MT) and a catch-all category (68,891 MT) comprised of fuel and energy related activities, upstream transportation and distribution, waste generates, upstream leased assets and customer use of VMware products.
VMware claimed responsibility for 3,650 MT of scope 1 emissions, and while the vendor purchased enough energy attribute credits (EACs) in 2023 to cancel out its scope 2 market-based emissions, VMware reported 60,380 MT of scope 2 location-based emissions that result from the company’s fossil fuel-based grid energy use. The report notes another 844 MT of scope 2 emissions from cooling.
Hewlett Packard Enterprise: 🌿🌿Hewlett Packard Enterprise (HPE) claims it centers its sustainability efforts around decoupling business growth from environmental impact. “We have a significant responsibility and an intentional, focused plan to help our customers, suppliers and communities successfully transition to a zero-carbon future,” CEO Antonio Neri said.
Sustainability leadershipHPE’s CSO Monica Batchelder has been with the company for seven years and recently transitioned to her role as executive sustainability leader.
As CSO, Batchelder holds “a business transformation role,” she told SDxCentral. “It’s no longer a siloed team that drives isolated strategy from the business strategy. It’s a team that works across the entire organization to actually drive our business strategy through sustainability,” she said.
Sustainability commitmentsHPE aims to reach net-zero GHG emissions by 2040, an accelerated timeline compared to its original 2050 target. Specifically, this target includes a 90% reduction in scope 1, 2 and 3 emissions based on 2020 levels, and offsets will account for the remaining 10%.
To achieve net-zero, the company plans to cut 70% of its scope 1 and 2 emissions by 2030. According to HPE’s most recent reporting, its scope 1 and 2 emissions are down by 21% compared to a 2020 base year.
The vendor credits that 21% reduction to effective management of its energy-related impacts. In 2022 HPE reported 52% of its total energy used was sourced from renewable resources – three years ahead of its 2025 target – and the vendor aims to use 100% renewable energy by 2030.
As an interim step to net-zero by 2040, HPE hopes to reduce scope 3 emissions by 42% through a focus on emissions resulting from the use of its sold products, upstream distribution and transportation and its supply chain activities.
HPE also committed to help 80% of its product suppliers set science-based targets by 2030, which will impact the vendor’s scope 3 emissions. As of 2022 reporting, 39% of HPE suppliers set scope 1 and 2 reduction targets, and another 41% of suppliers plan to set a science-based target in the next two years.
HPE’s environmental impactDespite HPE’s environmental ambitions, it reported a 9% increase in scope 1, 2 and 3 emissions in 2022, which it notes is proportional with product revenue growth.
HPE claimed responsibility for 33,362 MT of scope 1 emissions, 392,014 MT of scope 2 emissions from purchased electricity and cooling and 9,495,092 MT of scope 3 emissions. That final category represents 98.5% of HPE’s total footprint.
In its ESG report, HPE noted the increased demand for its products and services contributed to a 5% increase in its scope 3 emissions and a 9% increase in product revenue from 2021 to 2022. The company claims, however, that its overall scope 3 number remained consistent on a year-over-year basis despite the business’ growth.
For example, the vendor reported it grew 2.6% from 2021 to 2022, but its emissions only increased by 0.3% – without the help of any carbon offsets. To that point, HPE claims its value chain carbon intensity (MT CO2e/$ million of net revenue) decreased 2% from 2021 to 2022.
Methodology
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