ServiceNow, a US based software company headquartered in Santa Clara, California. They specialize in developing cloud computing platforms to help companies manage digital workflows for enterprise operations. According to their 2023 Global Impact report, in 2021 they made significant strides in their commitment to environmental sustainability by achieving 100% renewable electricity procurement for its office and data center operations for the first time. This accomplishment has played a crucial role in reducing the company's scope 2 emissions and aligning with its ambitious goal of achieving net-zero greenhouse gas emissions by 2030. This is an acceleration of their original goal to reach the same target by 2050, a full two decades earlier.
In its 2022 Global Impact report, ServiceNow described their strategy for reaching the milestone. This included a combination of options: 5% was sourced through green utility tariffs, and 43% through co-location partners across their 30+ data center facilities, deployed globally, that now provide high-quality renewable electricity. The balance of the remaining 52% of their electricity demand was mitigated by the purchase of renewable energy certificates (RECs). According to their 2023 report, the purchase of RECs as a main part of the renewable energy procurement strategy continued in 2022 as well.
CFO Gina Mastantuono emphasized what drives the mission to reach these goals so quickly and the important role ESG plays in underpinning the company's strategy, decision-making framework, and culture. "ServiceNow has committed the full power of its people and platform to sustain our planet, create equitable opportunity, act with integrity, and be a catalyst for others as they pursue their own ESG goals,” said after the company announced reaching the milestone for the second consecutive year in 2022. "My mission is to ensure ESG underpins our strategy, decision-making framework, and culture. In times of change, challenge, and opportunity, we must exemplify responsible business leadership now and for decades to come."
ServiceNow's commitment to renewable electricity procurement has been instrumental in meeting its sustainability goals. With Kathy Mulvany, the former Senior Director of ESG and Global Impact (now Global Head of ESG at Pure Storage) leading the program after spending 22 years building the same at Cisco, the company has set ambitious targets to reduce absolute scope 1 and 2 GHG emissions by 70% by 2026 from a 2019 base year. By maintaining its 100% renewable target, ServiceNow can mitigate risks associated with its environmental footprint. Uniquely, ESG is not just a part of ServiceNow’s operations. In a 2021 article CEO Bill McDermott explained that ESG is also a part of the company’s business model.
“We are focused on leading with our purpose and making a positive impact on society – using our technology to help the world work better. We take this responsibility seriously, working in partnership with our customers to reinvent business models at digital speed. For example, we know ESG is part of every CEO’s agenda, but things are changing in record time. We developed an integrated solution for companies to activate their ESG strategy, programs, and initiatives – from reducing carbon emissions to enabling business resilience across the enterprise. ServiceNow’s goal is to help companies improve their ESG posture while driving greater environmental, social, and business impact for years to come.”
However, ServiceNow's progress could potentially be improved by including Renewable Energy Credits (RECs) with additionality in its strategy. RECs with additionality can have a positive impact on several aspects of the company's sustainability efforts:
1. Increasing the speed of grid transition to renewable energy: RECs with additionality can help accelerate the transition to renewable energy sources, as they provide a financial incentive for renewable energy projects that would not have been viable otherwise.
2. Mitigating costs over time: By using RECs with additionality, ServiceNow can mitigate the costs associated with continued renewable energy procurement, as these credits can help support new renewable energy projects and drive down the cost of renewable energy over time.
3. Enhancing marketing claims for sustainability: RECs with additionality can enable ServiceNow to make a more impactful marketing claim for its sustainability efforts, as these credits demonstrate a direct contribution to the growth of renewable energy capacity.
4. Scaling emission reduction strategies: As ServiceNow's business continues to grow and consume more electricity, RECs with additionality can provide the necessary scale to cover increased consumption and maintain the company's commitment to reducing emissions.
In conclusion, ServiceNow's achievement of 100% renewable electricity procurement is a commendable step towards environmental sustainability. By incorporating RECs with additionality into its strategy, the company can further enhance its positive impact on the environment and solidify its commitment to a sustainable future.