ESG & IT: Why Sustainability Is Now a CIO Concern

February 19, 2025 shubham

Sustainability is no longer just a corporate buzzword. It has become a business imperative.

For years, Environmental, Social, and Governance (ESG) factors were mainly the concern of CEOs and investors. But now, CIOs are at the forefront of driving sustainability through technology.

Why? Because IT is one of the biggest contributors to carbon emissions, organizations are under pressure to reduce their environmental footprint. From data centres to cloud computing, technology leaders must rethink their strategies to align IT operations with ESG goals.

This shift is reshaping the role of the CIO, making sustainability a key part of IT decision-making. But what does this mean in practice? And how can CIOs lead the charge toward a greener future?

What is ESG and Why Does It Matter for IT?

ESG stands for Environmental, Social, and Governance—three critical factors that define a company’s impact on society and the planet.

Environmental – How a company reduces carbon emissions, energy consumption, and waste.
Social – How it treats employees, customers, and communities.
Governance – How it ensures ethical business practices and regulatory compliance.

For CIOs, the Environmental pillar is now a major concern. The tech industry is responsible for 2-4% of global carbon emissions—a figure that’s rising due to increasing data consumption, cloud usage, and AI processing power.

Organizations that fail to align IT with sustainability risk falling behind in an era where green technology is becoming a competitive advantage.

Why Sustainability is Now a CIO Concern

1. The Environmental Impact of IT Infrastructure

The tech industry has a hidden environmental cost. Consider these facts:

Data centres consume about 1% of global electricity—more than some countries.
AI training models require massive computing power, leading to high energy use.
E-waste is growing, with 50 million tons of electronic waste generated annually.

CIOs must take responsibility for making IT operations more energy-efficient, sustainable, and environmentally friendly.

2. Government Regulations and Compliance

Governments worldwide are implementing stricter climate regulations, and IT leaders must ensure compliance.

Some key regulations include:

EU Green Deal – Aim to make Europe climate-neutral by 2050.
SEC Climate Disclosure Rule – Requires U.S. companies to report carbon emissions.
Corporate Sustainability Reporting Directive (CSRD) – Mandates ESG reporting for large businesses.

CIOs who fail to adapt to these regulations risk facing fines, reputational damage, and operational setbacks.

3. Pressure from Investors and Stakeholders

Sustainability is now a top priority for investors. Companies with strong ESG practices attract more funding and enjoy better long-term growth.

According to a 2023 study:

90% of investors consider ESG factors when making decisions.
Companies with high ESG scores see a 10-20% increase in brand value.

CIOs must demonstrate that IT strategies align with sustainability goals, helping to secure stakeholder confidence and investment.

4. Rising Energy Costs and IT Budget Optimization

With energy prices soaring, IT departments are feeling the financial pressure. Data centres and cloud infrastructure consume vast amounts of electricity, leading to higher costs.

By adopting green IT practices, CIOs can:

Cut energy consumption and lower operational costs.
Improve IT efficiency with smarter resource management.
Reduce carbon footprints while maintaining performance.

5. Consumer Expectations and Corporate Reputation

Consumers today expect brands to be environmentally responsible.

70% of consumers prefer sustainable brands.
Businesses with ESG commitments see stronger customer loyalty.

Tech-driven companies that ignore sustainability may face public backlash, losing credibility in the market.

CIOs must ensure their IT policies align with corporate sustainability messaging to maintain customer trust.

How CIOs Can Drive Sustainable IT

Now that we understand why sustainability matters, let’s explore how CIOs can lead this transformation.

1. Optimize Data Centers for Energy Efficiency

Data centres are among the biggest energy consumers in IT. CIOs can take several steps to reduce their carbon footprint:

Move to Green Data Centers – Choose providers that use renewable energy sources.
Improve Cooling Systems – Advanced liquid cooling and AI-powered optimization can cut energy use.
Virtualization & Server Consolidation – Reducing physical servers saves power.

Companies like Google and Microsoft are already leading the way with carbon-neutral and zero-emission data centres.

2. Sustainable Cloud Computing

The cloud offers major sustainability benefits—but only if used efficiently. CIOs should:

Choose Green Cloud Providers – AWS, Microsoft Azure, and Google Cloud offer carbon-neutral solutions.
Implement Cloud Cost Optimization – Use auto-scaling and serverless computing to minimize waste.
Embrace Multi-Cloud Strategies – Distribute workloads based on energy efficiency.

A well-optimized cloud strategy cuts costs and reduces environmental impact.

3. Reduce IT Waste and Implement Circular Economy Practices

E-waste is a growing concern. CIOs can address this by:

Extending Hardware Lifecycles – Use refurbished and upgraded equipment instead of frequent replacements.
Implementing E-Waste Recycling Programs – Partner with vendors for responsible disposal and recycling.
Encouraging Sustainable Procurement – Buy from vendors with eco-friendly supply chains.

By reducing IT waste, companies can lower costs and support global sustainability efforts.

4. Green Software Development

Sustainability isn’t just about hardware—software also plays a role. CIOs should work with developers to:

Write energy-efficient code – Optimize applications to use fewer resources.
Use Carbon-Aware Computing – Schedule tasks during times of low carbon intensity.
Optimize AI Workloads – Reduce unnecessary AI model training to save energy.

Even small changes in software design can lead to massive energy savings.

5. Measure and Report-IT Sustainability Metrics

To track progress, CIOs must establish clear sustainability KPIs, such as:

The carbon footprint of IT operations.
Energy usage per cloud workload.
Data center power usage effectiveness (PUE).

Using AI-powered analytics, companies can gain insights into where they can improve sustainability efforts.

The Future of ESG in IT: What’s Next?

The role of CIOs in ESG and sustainability will only grow in the coming years. We can expect:

More Regulations and Mandatory ESG Reporting – Companies will need real-time IT sustainability monitoring.
Sustainable AI and Machine Learning – AI models will be optimized to reduce energy consumption.
Increased Investments in Green IT – Companies will allocate more budget for eco-friendly technology.
Carbon-Neutral IT Strategies – Businesses will aim for 100% renewable energy usage in IT.

Companies that embrace IT sustainability today will gain a competitive edge tomorrow.

Conclusion: Sustainability is the Future of IT

Sustainability is no longer just a corporate initiative—it’s a critical business strategy, and CIOs are leading the charge.

By adopting green data centres, optimizing cloud computing, implementing responsible IT procurement, and developing sustainable software, they can reduce energy costs, lower carbon emissions, ensure compliance with global regulations, enhance brand reputation, and attract sustainability-focused investors.

The real question isn’t whether IT should prioritize sustainability, but how quickly CIOs can take action. The future of IT is green—how prepared is your organization?