Why is Sustainability Important?
Corporate Environmental, Social, and Governance (ESG) metrics have enjoyed a meteoric rise in popularity over the past several years. According to a 2022 McKinsey study, more than 90% of the S&P 500, including Hewlett Packard Enterprise (HPE), now publish ESG reports in some form or fashion, as do approximately 70% of the Russell 1000.¹ It's not hard to understand why. According to a survey from PwC, over 80% of corporate buyers report that their purchasing criteria will soon start favoring vendors and suppliers with clearer environmental and sustainability stories.²
Beyond these immediate impacts on revenue, investors and shareholders are also holding board members and executives accountable for ESG initiatives. Harvard Law recently found that nearly two-thirds (63%) of all global investors favor fund managers who integrate ESG criteria into their capital allocation decisions.³ PwC reaches similar conclusions, citing expectations that by 2026, 21.5% of all global assets under management – nearly 34 trillion dollars – will come with ESG considerations.⁴
And it doesn't stop there! Government and regulatory bodies have also entered the fray. In a number of jurisdictions, reporting ESG elements is either mandatory (more common in Europe) or under active consideration (North America). Last year, the Securities and Exchange Commission started considering new rules that would require more detailed disclosure of climate-related risks and greenhouse gas emissions for publicly traded companies⁵, and in the quarters since, additional regulations on other facets of ESG reporting have also been proposed or are pending.⁶
It's no wonder then that when customers, vendors, suppliers, investors, shareholders, board members, executives, regulators – the entire chain of modern corporate accountability – deem a topic important, it almost by definition is.
How is Hewlett Packard Pathfinder Contributing?
Last year, Hewlett Packard Pathfinder began mapping the sustainability landscape. Since then, we've engaged with over 100 different startups that roughly fall into two broad categories: Carbon Accounting & Tracking and Carbon Capture & Sequestration.
At the moment, Pathfinder is prioritizing its exploration of the first category, Carbon Accounting & Tracking, which refers to the process of quantifying a company's environmental impact through measuring its greenhouse gas emissions. While there are many different techniques, the two most common rely on analyzing either activity-based data (e.g., shipping 100 widgets 100 miles via a fleet of 10 high efficiency diesel trucks), or spend-based data (e.g., paying a global shipping and transportation company $1M/year to do the same, but over unknown routes, and via unknown means). Sustainability experts will often prefer the activity-based carbon accounting over spend-based carbon accounting due to the higher confidence and granularity that naturally comes with fewer required assumptions.
Once a corporation understands the relationship between their operations and emissions, they can then begin taking actions to reduce their carbon footprint (e.g., transporting goods by an electric truck instead of a diesel truck).
The second category, Carbon Capture & Sequestration, refers to technologies that remove greenhouse gasses from the air directly, and can range from bio-inspired approaches (e.g., land management projects/reforestation or algae farms) to high-tech industrial-scale air purifiers that scrub CO2 out of the atmosphere, essentially turning it into chalk.
What's Next?
Hewlett Packard Pathfinder will continue working with internal stakeholders to evaluate investment and partnership opportunities. Clearly, sustainability matters to HPE’s customers and understanding their carbon footprint will inform their purchasing/workload placement decisions. We look forward to continued engagement in this space and helping our customers meet their carbon emission goals.
¹https://www.mckinsey.com/capabilities/sustainability/our-insights/does-esg-really-matter-and-why
³https://corpgov.law.harvard.edu/2022/06/17/esg-global-study-2022/
⁴https://www.pwc.com/gx/en/news-room/press-releases/2022/awm-revolution-2022-report.html
⁶https://www.sec.gov/news/press-release/2022-92
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