Environmental, social and governance (ESG) factors should be key considerations for CTOs and technology leaders scaling next generation companies from day one. Investors are increasingly prioritizing startups that focus on ESG, with the growth of sustainable investing skyrocketing.
What’s driving this shift in mentality across every industry? It’s simple: Consumers are no longer willing to support companies that don’t prioritize sustainability. According to a survey conducted by IBM, the COVID-19 pandemic has elevated consumers’ focus on sustainability and their willingness to pay out of their own pockets for a sustainable future. In tandem, federal action on climate change is increasing, with the U.S. rejoining the Paris Climate Agreement and a recent executive order on climate commitments.
Over the past few years, we have seen an uptick in organizations setting long-term sustainability goals. However, CEOs and chief sustainability officers typically forecast these goals, and they are often long term and aspirational — leaving the near and midterm implementation of ESG programs to operations and technology teams.
Until recently, choosing cloud regions meant considering factors like cost and latency to end users. But carbon is another factor worth considering.
CTOs are a crucial part of the planning process, and in fact, can be the secret weapon to help their organization supercharge their ESG targets. Below are a few immediate steps that CTOs and technology leaders can take to achieve sustainability and make an ethical impact.
As more businesses digitize and more consumers use devices and cloud services, the energy needed by data centers continues to rise. In fact, data centers account for an estimated 1% of worldwide electricity usage. However, a forecast from IDC shows that the continued adoption of cloud computing could prevent the emission of more than 1 billion metric tons of carbon dioxide from 2021 through 2024.
Make compute workloads more efficient: First, it’s important to understand the links between computing, power consumption and greenhouse gas emissions from fossil fuels. Making your app and compute workloads more efficient will reduce costs and energy requirements, thus reducing the carbon footprint of those workloads. In the cloud, tools like compute instance auto scaling and sizing recommendations make sure you’re not running too many or overprovisioned cloud VMs based on demand. You can also move to serverless computing, which does much of this scaling work automatically.
Deploy compute workloads in regions with lower carbon intensity: Until recently, choosing cloud regions meant considering factors like cost and latency to end users. But carbon is another factor worth considering. While the compute capabilities of regions are similar, their carbon intensities typically vary. Some regions have access to more carbon-free energy production than others, and consequently the carbon intensity for each region is different.
So, choosing a cloud region with lower carbon intensity is often the simplest and most impactful step you can take. Alistair Scott, co-founder and CTO of cloud infrastructure startup Infracost, underscores this sentiment: “Engineers want to do the right thing and reduce waste, and I think cloud providers can help with that. The key is to provide information in workflow, so the people who are responsible for infraprovisioning can weigh the CO2 impact versus other factors such as cost and data residency before they deploy.”
Another step is to estimate your specific workload’s carbon footprint using open-source software like Cloud Carbon Footprint, a project sponsored by ThoughtWorks. Etsy has open-sourced a similar tool called Cloud Jewels that estimates energy consumption based on cloud usage information. This is helping them track progress toward their target of reducing their energy intensity by 25% by 2025.
Beyond reducing environmental impact, CTOs and technology leaders can have significant, direct and meaningful social impact.
Include societal benefits in the design of your products: As a CTO or technology founder, you can help ensure that societal benefits are prioritized in your product roadmaps. For example, if you’re a fintech CTO, you can add product features to expand access to credit in underserved populations. Startups like LoanWell are on a mission to increase access to capital for those typically left out of the financial system and make the loan origination process more efficient and equitable.
When thinking about product design, a product needs to be as useful and effective as it is sustainable. By thinking about sustainability and societal impact as a core element of product innovation, there is an opportunity to differentiate yourself in socially beneficial ways. For example, Lush has been a pioneer of package-free solutions, and launched Lush Lens — a virtual package app leveraging cameras on mobile phones and AI to overlay product information. The company hit 2 million scans in its efforts to tackle the beauty industry’s excessive use of (plastic) packaging.
Responsible AI practices should be ingrained in the culture to avoid social harms: Machine learning and artificial intelligence have become central to the advanced, personalized digital experiences everyone is accustomed to — from product and content recommendations to spam filtering, trend forecasting and other “smart” behaviors.
It is therefore critical to incorporate responsible AI practices, so benefits from AI and ML can be realized by your entire user base and that inadvertent harm can be avoided. Start by establishing clear principles for working with AI responsibly, and translate those principles into processes and procedures. Think about AI responsibility reviews the same way you think about code reviews, automated testing and UX design. As a technical leader or founder, you get to establish what the process is.
Promoting governance does not stop with the board and CEO; CTOs play an important role, too.
Create a diverse and inclusive technology team: Compared to individual decision-makers, diverse teams make better decisions 87% of the time. Additionally, Gartner research found that in a diverse workforce, performance improves by 12% and intent to stay by 20%.
It is important to reinforce and demonstrate why diversity, equity and inclusion is important within a technology team. One way you can do this is by using data to inform your DEI efforts. You can establish a voluntary internal program to collect demographics, including gender, race and ethnicity, and this data will provide a baseline for identifying diversity gaps and measuring improvements. Consider going further by baking these improvements into your employee performance process, such as objectives and key results (OKRs). Make everyone accountable from the start, not just HR.
These are just a few of the ways CTOs and technology leaders can contribute to ESG progress in their companies. The first step, however, is to recognize the many ways you as a technology leader can make an impact from day one.
Carbon tracking is very much the new hot thing in tech, and we’ve previously covered more generalist startups doing this at scale for companies, such as Plan A Earth out of Berlin.
But there’s clearly an opportunity to get deep into a vertical sector and tailor solutions to it.
That’s the plan of Vaayu, a carbon tracking platform aimed specifically at retailers. It has now raised $1.57 million in pre-seed funding in a round led by CapitalT. Several Angels also took part, including Atomico’s Angel Program, Planet Positive LP, Saarbrücker 21, Expedite Ventures, and NP-Hard Ventures.
Carbon tracking for the retail fashion industry, in particular, is urgently needed. Unfortunately, the fashion industry remains responsible for 10% of annual global carbon emissions, which ads up to more than all international flights and maritime shipping combined.
Vaayu says it integrates with various point-of-sale systems, such as Shopify and Webflow. It then pulls in data on logistics, operations, and packaging to monitor, measure, and reduce their carbon emissions. Normally, retailers calculate emissions once a year, which is obviously far less accurate.
Vaayu was founded in 2020 by Namrata Sandhu (CEO) former head of Sustainability at fashion retailer Zalando, as well as Anita Daminov (CPO) and Luca Schmid (CTO). Vaayu currently has 25 global brand customers, including Missoma, Armed Angels, and Organic Basics.
Commenting on the fundraise, Namrata Sandhu, CEO, Vaayu, said: “We have only nine short years left to achieve the UN’s goal of reducing carbon emissions by 50% by 2030 and as the third-largest contributor to global emissions, retailers need to take action — and fast. Vaayu is here to help retailers measure, monitor, and reduce their carbon footprint at scale across the entire supply chain — something that I know from my own experience can be complex and expensive.
Speaking to me over a call, Sandhu told me: “Putting the focus on retail basically allows us to automate the calculation, which means in three clicks you can get your carbon footprint right away. That then allows us to really accurate data, and with that, we can basically do reductions specific to the business but using software, rather than any kind of manual intervention or a kind of ‘intermediate’ state where you need to put together an Excel sheet. Because we focus on retail we can automate the entire process and also automate the reductions.”
“We are delighted to be backed by female-led CapitalT who understood us and our vision right from the start. We look forward to developing Vaayu further in the coming months so we can reach as many retailers as possible and help put the brakes on the impending climate crisis,” she added.
Janneke Niessen, founding partner, CapitalT commented: “We are very excited to join Vaayu on their mission to reduce carbon emission for retailers worldwide. The Vaayu product is very scalable and its quick and easy implementation allows for fast adoption. We are confident that with this experienced team, Vaayu will soon be one of the fastest-growing climate tech companies in Europe and the world.”
Bioengineering may soon provide compelling, low-carbon alternatives in industries where even the best methods produce significant emissions. Utilizing natural and engineered biological process has led to low-carbon textiles from AlgiKnit, cell-cultured premium meats from Orbillion and fuels captured from waste emissions via LanzaTech — and leaders from those companies will be joining us onstage for the Extreme Tech Challenge Global Finals on July 22.
We’re co-hosting the event, with panels like this one all day and a pitch-off that will feature a number of innovative startups with a sustainability angle.
I’ll be moderating a panel on using bioengineering to create change directly in industries with large carbon footprints: textiles, meat production and manufacturing.
AlgiKnit is a startup that is sourcing raw material for fabric from kelp, which is an eco-friendly alternative to textile crop monocultures and artificial materials like acrylic. CEO Aaron Nesser will speak to the challenge of breaking into this established industry and overcoming preconceived notions of what an algae-derived fabric might be like (spoiler: it’s like any other fabric).
Orbillion Bio is one of the new crop of alternative protein companies offering cell-cultured meats (just don’t call them “lab” or “vat” grown) to offset the incredibly wasteful livestock industry. But it’s more than just growing a steak — there are regulatory and market barriers aplenty that CEO Patricia Bubner can speak to, as well as the technical challenge.
LanzaTech works with factories to capture emissions as they’re emitted, collecting the useful particles that would otherwise clutter the atmosphere and repurposing them in the form of premium fuels. This is a delicate and complex process that needs to be a partnership, not just a retrofitting operation, so CEO Jennifer Holmgren will speak to their approach convincing the industry to work with them at the ground floor.
It should be a very interesting conversation, so tune in on July 22 to hear these and other industry leaders focused on sustainability discuss how innovation at the startup level can contribute to the fight against climate change. Plus it’s free!
As we become more and more aware of the kind of impact we are having on this planet we call our home, just about everything is having its CO2 impact measured. Who knew, until recently, that streaming Netflix might have a measurable impact on the environment, for instance. But given vast swathes of the Internet are populated by Web sites, as well as streaming services, then they too must have some sort of impact.
It transpires that a new service has identified how to gauge that, and now it’s raised Venture capital to scale.
Ryte raised €8.5 million ($10M) in a previously undisclosed round led by Bayern Kapital out of Munich and Octopus Investments out of London earlier this year for its Website User Experience Platform.
It has now launched the ‘Ryte Website Carbon KPI’, which claims to be able to help make 5% of all websites carbon neutral by 2023.
Ryte says it worked with data scientists and environmental experts to develop the ability to accurately measure the carbon impact of client’s websites. According to carbon transition thinktank, the Shift Project, the carbon footprint of our gadgets, the internet, and the systems supporting them accounts for about 3.7% of global greenhouse emissions. And this trend is rising rapidly as the world digitizes itself, especially post-pandemic.
Ryte has now engaged its Data Scientist, Katharina Meraner, who has a PhD in climate science and global warming, and input from Climate Partner, to launch this new service.
Andy Bruckschloegl, CEO of Ryte said: “There are currently 189 million active websites. Our goal is to make 5% of all active websites, or 9.5 million websites, climate neutral by the end of 2023 with the help of our platform, strong partners, social media activities, and much more. Time is ticking and making websites carbon neutral is really easy compared to other industries and processes.”
Ryte says it is also collaborating with a reforestation project in San Jose, Nicaragua, to allow its customers to offset their remaining emissions through the purchase of climate certificates.
Using a proprietary algorithm, Ryte says it measures the code of the entire website, average page size, as well as monthly traffic by channel then produces a calculation of the amount of CO2 it uses up.
Admittedly there are similar services but these are ad-hoc and not connected to a platform. A simple Google search will bring us sites like Websitecarbon, Ecosistant, and academic papers. But as far as I can tell, a startup like this hasn’t put this kind of service into their platform yet.
“Teaming up with Ryte will help raise awareness on how information technology contributes to climate change – while at the same time providing tools to make a difference. Ryte’s industry-leading carbon calculator enables thousands of website owners to understand their carbon footprint, to offset unavoidable carbon emissions and thus lay a basis for a comprehensive climate action strategy,” commented Tristan A. Foerster, Co-CEO ClimatePartner.