Today, many businesses are realizing that sustainability is about more than just ticking a box on a corporate social responsibility (CSR) report. Climate change is a real business issue, and companies are feeling the heat – literally and figuratively. With new regulations pushing for greenhouse gas (GHG) reporting, organizations need to step up. Plus, as more businesses invest in AI and other digital technologies, they’re unintentionally increasing their digital emissions, which, thanks to the demands of data centers and cloud usage, account for around 2-3% of total global GHG emissions. One of the biggest challenges faced by organizations is measuring and managing their impact, especially their Scope 3 emissions. These are greenhouse gas emissions from activities that aren’t directly controlled or owned by the organization, but are still directly affected through the value chain. Fewer than 20% of FinOps teams are currently collaborating with sustainability teams or taking on the responsibility for cloud sustainability themselves, making it much more difficult to keep track of these Scope 3 considerations. However, there’s an appetite for change. 50% of business leaders expect this collaboration to become part of their roles soon.
With growing regulatory demands and consumer expectations urging businesses to cut down on emissions, it’s clear that companies must turn to FinOps to boost cloud efficiency while also supporting sustainability goals.
How FinOps Drives Cloud Sustainability
The main objective of a FinOps strategy is to keep cloud costs in check, so how exactly does FinOps fit into the sustainability picture? Interestingly, optimizing costs through FinOps can often lead to more environmentally sustainable practices with reducing waste emerging as the top priority for FinOps practitioners. Among businesses with cloud spending between $0-15 million, 48.5% said cutting waste is critical. That number jumps to 55.5% for companies spending between $15-100 million and stays strong at 52.1% for those exceeding $100 million.
FinOps teams can find ways to shrink carbon footprints by fine-tuning cloud usage – think workload management, right-sizing instances, and keeping an eye on idle resources. While spending on compute resources is often the area most focused on by FinOps teams, there are still plenty of opportunities to optimize other cloud expenses, like containers and licenses. Collaborating with sustainability teams can help accurately track cloud carbon emissions alongside financial metrics, making it easier to understand the impact of their decisions.
However, balancing financial optimization with sustainable choices comes with challenges and taking the sustainable route might not always align with FinOps objectives to cut costs.
Challenges in Balancing Cost and Sustainability
While FinOps solutions can be budget-friendly, they might not always be the greenest option. If environmental sustainability goals are the priority of your organisation, a GreenOps-orientated approach to cloud optimization may be more appropriate. GreenOps focuses on applying FinOps principles for cloud optimization to meet environmental, social, and governance (ESG) goals, even if that means spending a bit more.
For example, if a company chooses reserved discounts in a region powered by cheaper, non-green energy, it might save money but ramp up carbon emissions. On the other hand, choosing a greener region could lower environmental impact but may come with a higher price tag.
It’s essential for businesses to think about both cost and sustainability when making cloud decisions. Collaboration and open communication among teams can help prioritize actions that align with overall organizational goals, and the FinOps framework can guide these discussions effectively.
7 Practical Steps for Incorporating Sustainability into FinOps
Organizations looking to blend sustainability into cloud optimization should take these seven practical steps:
- Implement carbon accounting: Use available data from cloud providers to track carbon emissions, even if the data isn’t perfect.
- Align with corporate sustainability goals: Make sure that your cloud sustainability efforts support broader corporate goals, like emissions reduction targets and reporting requirements.
- Collaborate with engineering teams: Team up with engineering to design efficient workloads that cut down both costs and emissions.
- Request transparency in Scope 3 emissions: Encourage cloud providers to share data on Scope 3 emissions to help inform better optimization decisions.
- Work with a Managed Service Provider: Partnering with a Managed Service Provider will help to reduce cloud waste, and they will be able to provide insights that can help in environmental decision-making.
- Minimize data transfer: Cut down on data transfer across regions to reduce the additional emissions created when moving data around.
- Use monitoring tools: Whether they come from your cloud vendor or third-party solutions, monitoring tools like AI-powered technology can help track and calculate emissions, generating insights that help an organization take steps to reduce emissions.
FinOps and sustainability go hand in hand – focusing on one naturally supports the other.
To kickstart their FinOps journey, businesses can explore resources and certifications available on the FinOps Foundation website. Certifications like the FinOps Certified Practitioner equip teams with essential knowledge for managing cloud financials, and joining the FinOps Foundation community provides access to best practices, tools, and expert support.
By adopting FinOps, it’s possible for businesses to balance needs to drive both cost efficiency and sustainability, aligning financial objectives with commitments to a greener future. However, for the best chance of both sustainability success and cost optimisation, collaboration between engineers, FinOps, and sustainability teams is essential.