Executive Summary

Aside from the clear environmental and social benefits that green software affords, there are a range of business incentives. Businesses have much to gain from implementing sustainability measures, from brand resilience to employee recruitment and retention. There are also incentives directly tied to green software itself, including ESG compliance, cost reduction, and streamlined development.

By financing, resourcing and applying green software principles, businesses can:

Appeal to consumers:

Corporate social responsibility is important to consumers who overwhelmingly state that they want to support environmentally-conscious companies. However, according to a study by the Wharton School of Business, there is a major disconnect between consumers’ interest in sustainability and retail executives’ views. The same Wharton study states, “consumers across all generations—from Baby Boomers to Gen Z—are now willing to spend more for sustainable products.” If executives want to stay up on current consumer trends and maintain business viability, then sustainability will be a necessary part of that calculus. Popular consumer products such as Xbox have begun to include carbon-aware features, making such features more of a consumer expectation.

Consumers are also willing to pay more for greener technology, including green software. According to a poll conducted by GSF Executive Director Asim Hussain, 72% of software practitioners would be willing to pay more for cloud computing services that are Net-Zero and powered by 100% carbon-free energy (CFE). Specifically, 23% said they would pay 5% more, 28% would pay 10% more, and 18% would pay 25% more.

More broadly, results from a 2021 IBM survey showed that 50% of consumers were willing to pay more for a sustainable brand or sustainable products. A more recent poll surveying 16,000 consumers in 2022 found that 49% paid an average premium of 59% more for products branded as sustainable or socially responsible in the last 12 months.

Green software will also be a factor in organizations reaching their net zero goals, as corporations and other organizations will require tools to reduce, measure, and report their scope 1, 2, and 3 emissions.

Retain employees:

According to the SOGS survey, 92% of software practitioners are concerned about climate change. Because sustainability is important to employees, especially millennials and younger generations, it will be a crucial aspect of employee recruitment and retention for companies.

Sustainability is key for employee recruitment and retention. According to a 2019 study conducted by Fast Company, 40% of millennials said they have chosen to work for an employer before because of their strong sustainability performance. 30% of respondents also said they had chosen to leave a job because of poor sustainability performance.

There is a dire need for more climate-related knowledge and talent in the tech industry, and sustainability is a growing field. By supporting green software initiatives in the workplace, organizational leaders can attract and retain talented employees.

Comply with regulation and appeal to investors:

Regulatory changes position sustainability as an important consideration. The prevalence of software-focused legislation has experienced a 4X increase in the last decade, with 40% of countries having introduced some form of regulation by 2021. There are also formalized standards for green software emerging. Companies must measure and report their emissions, and ESG compliance demands accuracy in calculation. Investors increasingly care about this, and ESG compliance is a factor in Blackrock’s assessment of companies to invest in. With investors considering green software as a positive marker for investment, companies applying green software principles and measuring emissions across their applications could be better positioned for increased funding.

63% of CEOs do not rate sustainability as a top priority. While businesses might be wary of the ROI of investing in sustainability measures, a 2022 Morningstar report found that companies with the best ESG scores had returns of 33%, or 8% higher than the broader U.S. market. There is a clear ROI on sustainability measures. A Gartner study found that 85% of investors considered ESG factors in their investments in 2020.

Green software is also a market differentiator. AWS will make data about Scope 3 GHG emissions freely available to customers in early 2024. Such transparency around reporting is poised to become an expectation for both consumers and investors. In 2024, the EU’s Corporate Sustainability Reporting Directive will require businesses to track their environmental data.

There is a business case for making software greener. Accenture’s 2022 report on Uniting Tech and Sustainability finds that businesses that have integrated their IT Strategy with their sustainability and business strategy far outperform their competitors in total shareholder value.

Reduce costs:

Incorporating green software into larger sustainability initiatives can reduce energy costs for companies.

ThoughtWorks presents Etsy as a case study for how a company can use green cloud optimizations to reduce business costs. “Moving to a flexible cloud-based infrastructure enabled Etsy to reduce major idle time and associated energy consumption. As Etsy was transitioning from co-located data centers to the cloud, its combined energy consumption decreased by an estimated 13% (from 7330 MWh in 2018 to 6376 MWh in 2019) at the same time as their business grew.” Optimization reduces the cost of compute.

Another example of the cost reduction afforded by sustainability measures is “[w]hen Savills wanted to improve energy efficiencies at one of its offices in Dublin, the firm called on climate tech company IES to carry out an assessment. IES Consulting used a monitoring-based commissioning approach and its iScan data analytics platform to improve energy efficiency through the correct operation of the building’s systems.” Savills is poised to save €108,000 annually and reduce their carbon footprint by 302 tonnes per year as a result of the changes they made.

Green software principles must be a part of the user experience. Accenture found that thoughtful, green UX design can streamline the user experience while driving down business costs. There is a strong correlation between GreenOps and FinOps. Green software practices lead to the optimized and more efficient use of computing resources, which in turn lowers the cost of ownership of IT.

Streamline development:

Green software is vital for a net zero future. Green software has proven to make code and operations more efficient as it involves improving efficiencies across the development, deployment, usage, and maintenance stages. Greener, more efficient software creates a better customer experience as various components work better and faster. Cutting down on zombies, or unused technologies, code that is no longer needed, or data that is redundant streamlines development and reduces operating costs, along with emissions. Holly Cummings outlines some strategies for eliminating the wasteful environmental impact of cloud zombies. Minimizing stranded power in the datacenter cuts costs and makes operations more efficient.

According to IBM, “Using green coding empowers programmers to simplify elaborate infrastructures and can ultimately save time, reducing the amount of code software engineers write.”

Green software is a growing field that demands CEO attention. According to the SOGS survey, 26% of respondents say that sustainability or green software, specifically, is part of their official role. While there is a clear business case for green software, such initiatives can only succeed with ample C-suite support. 63% of CEOs do not yet rate sustainability as a high priority, despite its urgency for business and the climate. If CEOs step up and take action now, they will be ahead of the curve in appealing to investors and consumers alike, reducing costs, retaining employees, and fostering climate-focused innovation.