Environmental, social, and governance (ESG) imposed by world governments could have a detrimental effect on your business. In essence, ESG is another tool to control business activity that makes it difficult for SMEs to navigate financial pressures.
The increase in energy costs is piling on even more pressure. But cloud solutions provide an effective option that offers more protection to the environment and helps tomato SME’s more sustainable.
The figures speak for themselves. Studies show that data centers that power cloud computing use the equivalent of 17 million homes. It is estimated that cloud solutions can reduce the energy consumption of SMEs by up to 90%.
In contrast, in-house servers businesses use on-site lack energy efficiency. Estimates say even a single PC uses the equivalent of 13 US households.
The general consensus is that businesses need to make the switch from in-house storage to cloud storage. And ESG is designed to push business owners towards the same conclusion.
In-House Servers v Cloud Data Centers
In-house servers have been shown to guzzle energy. They are also a sizeable investment. In addition, to finding an appropriate space to house the server, you also need a team of skilled IT professionals on the payroll to maintain your business network.
The cost of in-house servers is a financial burden on many SMEs – especially when the only benefits are 100% privacy assurance, you can control your own backup and you can access it without relying on the internet.
It makes sense that some businesses are prepared to pay the extra costs for these benefits. But with the introduction of ESG, the financial risk could be too high.
ESG scores sway public opinion. These business ratings have already shown they influence investor decision-makers. Companies with higher ESG ratings attract more investment and generate higher returns.
These early warning signs are an indication that ESG ratings will also influence consumer decision-making. It is reported that 81% of consumers prefer to buy from environmentally-friendly companies.
Building Data Centers
It was only a few years ago the cloud data centers attracted criticism for the immense amount of energy they consume. And they do go through an incredible amount of electricity – 1% of the global energy use.
But studies show that when that figure is balanced out, data centers could actually save energy. Figures show that data centers are using the same amount of energy today as they were in 2010 – despite quadrupling the number of users.
This indicates that data centers won’t consume more energy even by hosting more users than initially thought. Subsequently, cloud computing has been chalked down as an energy-efficient alternative to in-house servers. The knock-on effect is a higher ESG rating for cloud users.
Conclusion
With the onus on SMEs to adopt sustainable business solutions, government policy is nudging decisions makers towards cloud solutions. But the cloud could mean the difference between the continuous running of your business and closure.