There are some compelling reasons lenders should switch their IT infrastructures to the Cloud, creating a greener business is just one of them. Steve Carruthers explains more.

All B2B industries can fall into the echo chamber trap, and it’s worth remembering it from time to time. Rather than focus my column this month on why our service makes your lives so much easier and more efficient – it does! – I will instead consider how everyone’s increasing proclivity to host their IT infrastructure in the cloud offers real opportunities to deliver greener practices.

Of course, cloud operations offer a lot more than better environmental practices, but my focus here is on something that many running businesses have not appreciated. For many of the population, understanding exactly how technology influences their lives and how it will influence their children's lives in the future boils down to smartphones getting smarter and cars driving themselves. Ultimately, how we interact with technology as consumers will be the defining feature of that understanding. Remembering that this user interface is just the tiniest tip of the iceberg, however, reveals the vastness of how technology shapes everything we do and how we do it and the opportunities to achieve something a little more profound with it.

Most people know about the cloud in the sense that it means storing data in a big, slightly fluffy conceptual way so that you can access it from anywhere through the internet. An awful lot of people know this is “green” in the sense that it wipes out the need for banks of servers based in offices, pumping out heat and often necessitating an energy-guzzling cooling system (often known as a desk fan).

Using less energy is the neatest way to cut carbon emissions. But this data is still stored somewhere physical, safeguarded by cloud providers in huge data centres around the world. The energy required to power and cool each data centre is enormous – so not so green?

Businesses can reduce their energy use by nearly 80 per cent and carbon emissions by 96 per cent by storing data in the cloud rather than operating their data centres.

At first, it might appear counterintuitive, but it makes sense environmentally. And it’s why total investment in global data centre infrastructure more than doubled in 2021 to £44billion, with the number of data centre transactions rising 64 per cent from 69 in 2020 to 113 in 2021, according to a report from global law firm DLA Piper. The firm said already this year, to 7 June 2022, a further 41 transactions have gone through, setting the pace for investment to double this year again.

The big players, known as ‘hyper scalers’, include Amazon Web Services, Facebook, Google and Microsoft, and they are investing billions in ever bigger data centres.

After an embarrassing moment when Facebook got egg on its face back in 2010 when it was discovered its data centres were run on coal-fired power station energy, there’s now a solid commitment to situating centres in locations where they can be powered by renewables – wind, solar, hydropower – and cooled more environmentally efficient.

A report commissioned by Amazon Web Services published last year claims that businesses in Europe can reduce their energy use by nearly 80 per cent and carbon emissions by 96 per cent by storing data in the cloud rather than operating their data centres.

According to the AWS report, a 1-megawatt corporate data centre can reduce emissions by about 1,079 metric tons of carbon dioxide a year - offsetting 50 households’ electricity emissions a year or taking 500 cars off the roads.

While hyper scale data centres – scale referring to volume of data as opposed to geographical footprint – use considerable amounts of energy, by aggregating many inefficient office-based servers, there is a significant energy saving overall. It also solves the conundrum of having an office in the middle of the city where direct access to renewable energy sources is limited while knowing your data storage is running on green.

Green mortgages to incentivise energy efficiency improvements are a step in the right direction but have further to evolve to drive meaningful change at scale.

The mortgage market, meanwhile, sits behind our housing market, servicing it almost invisibly.

I couldn’t tell you whether emissions generated by the mortgage sector, banks, building societies, mortgage advisers and all the fintechs knocking around are factored into domestic housing’s contributions.

I don’t need to tell you that being an environmentally conscientious business is no longer just a nice to have; it’s necessary and becoming more so.

But I can tell you there is more than one way to make a difference and tick your TCFD (task force on climate-related financial disclosure) box while you’re at it.

Switch to the cloud.

And the best part? It will save you time and money to boot.

This article first appeared in Mortgage Introducer.

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