IT and finance are perhaps the two most metrics-driven organizations in the average business. This phenomenon is understandable since each entity is awash in numbers that can be readily captured, recorded and compared. For finance, revenue, interest rates and costs can be tracked, categorized and analyzed just as tech leaders can readily capture uptime, spending, website visitors and dozens of other facts and figures that the leader might attempt to drive up or down.
Carbon is an emerging metric that is becoming relevant to both these organizations, and it can be a bit more challenging to measure and analyze than spending or data storage.
What is carbon?
Carbon is the catch-all term for greenhouse gas emissions, primarily carbon monoxide. Climate change, frequently referred to as global warming, is a contentious topic in many circles. However, if you take a systems view of the planet, it is inarguable that humanity, a large part of that system, must have some effect on the climate.
There is a robust and important debate about what degree of response this human impact on the planet requires, and there are extreme voices on each end of the spectrum that tend to dominate the conversation. Outside this fracas, many companies are striving to reduce their emissions, hopefully for the good of humanity. Still, cynics suggest they’re doing it for greenwashing and scoring points in press releases rather than helping the planet.
While there are important and fraught questions around carbon reduction, if you’re a tech leader at a large company, you’ve probably already had carbon reduction added to your agenda. As is often the case in the tech field, mid-size and smaller companies may soon find carbon reduction on their list of actions as well.
You’ll likely hear carbon reduction mentioned in the context of ESG, or environmental, social and governance standards. ESG metrics are relatively new to the financial scene but are driving how companies set their strategies and how the external market values a company. Formal ESG metrics and guidelines are pushing more companies to adopt carbon reduction as a metric.
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How does carbon impact tech leaders?
As tech leaders, we are likely on the shortlist of areas for carbon reduction. While carbon emission calculations can be complex, an intuitive rule of thumb is that the more energy-intensive an activity, the more carbon it produces. Refining and manufacturing, transportation, and managing and maintaining a large fleet of data centers and end-user IT are likely potential areas for meeting carbon reduction targets.
IT leaders may also be tasked with “instrumenting” the company, or selecting, implementing and maintaining tools that track carbon emissions, just as financial systems track debits and credits. These systems may even become intertwined at some point as governments, industry consortiums and individual companies consider assigning monetary value to carbon in the form of a tradable credit or tax.
Just as business and tech leaders are tasked with managing financial metrics, they may also be tasked with managing emissions metrics in the near future.
You’ll frequently hear scope mentioned when discussing carbon emissions, which is based on the Greenhouse Gas Protocol. While somewhat complex, the protocol defines three scopes for carbon emissions that essentially range from what’s in the company’s immediate control to what’s further outside the company’s management, then adds a layer of upstream activities and downstream activities.
For example, carbon emissions due to fuel that powers backup generators at your data center would be Scope 1 emissions. These are generally the easiest to track and manage since they’re all within the company’s direct control.
Scope 2 becomes a bit more complex, as it includes indirect emissions produced by the company’s activities. Factors like the electricity purchased from a utility that powers a data center’s servers and cooling equipment would be included in Scope 2, since the data center is under the company’s control.
As one might expect, Scope 3 emissions are more challenging to track, as they include activities outside the company’s control. Scope 3 covers upstream activities like business travel and emissions from leased equipment like end-user laptops and phones as well as the downstream emissions resulting from disposing of those assets.
Whether you agree with ESG objectives and the Greenhouse Gas protocol, it’s an interesting challenge to capture, categorize and track the emissions across these scopes and meaningfully track and report on them. As both a producer of emissions and the likely home for the tools and systems to track emissions across an organization, it’s worth familiarizing yourself with carbon tracking and mitigation basics.
Coming to the table prepared and knowledgeable about a topic that’s likely on the minds of your colleagues in the C-suite is one more way to demonstrate your capabilities and savvy as both a technical leader and strategic player.