VMware, a leading provider of multi-cloud services for all applications, is not just a tech giant but also a sustainability visionary. Specifically, VMware develops virtualization software. Virtualization software creates an abstraction layer over computer hardware that allows the hardware elements of a single computer— processors, memory, storage, and more— to be divided into multiple virtual computers, commonly called virtual machines (VMs). Virtualization is technology that you can use to create virtual representations of servers, storage, networks, and other physical machines. Virtual software mimics the functions of physical hardware to run multiple virtual machines simultaneously on a single physical machine. Virtualization is known for reducing the infrastructure needed to run workloads along with the energy and carbon footprint of the data center, hence the visionary part. Today, sustainability is a long-term commitment at VMware and a top priority for their customers, employees and stakeholders. All of this means sustainability is actually baked into the very core of VMware’s business model down to the product level.
In the company's 2023 ESG Report, Nicola Acutt, Chief Sustainability Officer and VP of ESG at VMware stated, "Every product we engineer, every customer we support and every employee we empower brings us one step closer to a more sustainable, equitable and secure future". She further explained that throughout VMware's ESG journey, the company has continually pushed itself to implement a smarter, systemwide approach while staying true to its core intent of serving the needs of its customers while growing its own resiliency. Acutt has consistently emphasized VMware’s holistic approach regarding the interconnected nature of global challenges and technology, stating, "it’s not a matter of investing in climate or energy, health or digitization. The world needs to invest in climate and energy and health and digitization—and when we do, the sum will be greater than the parts and we’ll all benefit." But the company doesn’t intend to end this approach by simply looking at its own operational impact. Acutt recently emphasized that the company's efforts to encourage its partners to embrace their own renewable energy goals is a top priority. This is done through the VMware Zero Carbon Committed (ZCC) program which connects customers to zero carbon committed providers.
The ZCC program is, at least in part, the result of shift change powered by the demands from all of VMware’s stakeholders - the board, employees, and customers. When addressing the customer driven demand, CEO Raghu Raghuram stated at an August 2022 VMware conference that “I would characterize it that in the past it was solely [about] the optional interest of the CIO because of their personal interest. Or they may have situated the data center in some urban context where the power costs are extremely high. Or the power company could not deliver the amount of power required to drive the data center. So that was the picture when we first started.” That perspective has now bubbled up to the top of the organization to the degree that Raghuram says now “that is changing actually. This is a conversation we have very regularly with my key leaders.”
How much is it changing? So much that VMware’s sustainability journey means that function itself sits in a completely unexpected place within the organization. CTO Kit Colbert explained in a June 2023 blog - “when VMware created a dedicated ESG team, we decided to locate it within the Office of the CTO (OCTO). At first glance, this might sound incongruous. On the surface, you might think an ESG team is better suited inside a function like human resources or operations. Why put an ESG team in a department focused on technology and innovation? Simple. VMware’s approach to outcome-driven ESG is innovative, and we wanted to set our ESG program up for maximum impact by placing this function in the heart of our organization's “innovation engine,” giving it the fuel needed to thrive and influence the entire enterprise. It has turned out to be the right decision.”
This perspective has allowed VMware to pursue sustainability from a completely different angle. Per Colbert, this allows the team to work “on ways to use AI to help reduce data center emissions. We also added a VMware “Green Score” to our VMware Aria Operations Cloud, which enables customers to track where they are in their decarbonization journey and how they progress over time.” It’s even allowed the team to consider novel projects like VMware’s Community Microgrid prototype. “The microgrid encompasses two buildings on VMware’s campus, supported by two 1 MWh batteries that integrate with existing rooftop solar panels and 100% renewable grid power. A partnership between the City of Palo Alto and VMware, the project’s goal is to test the potential of microgrids to advance energy resiliency and sustainability efforts at the community and corporate levels. Each microgrid can support the community’s Mobile Emergency Operations Center (MEOC), providing connectivity and power for its vehicles. Our list of sustainability initiatives continues to grow.” An example of the continued growth can be seen in VMware’s first ever sustainable software development workshop. When you put all of this together, you begin to understand Acutt’s description of their approach - VMware's "Smart Impact" approach. Acutt explains in their 2023 report that this “prioritizes the most significant topics within the 2030 Agenda to meet the needs of VMware customers, employees, and other stakeholders. This approach is about connecting business strategy with environmental and social impact, which Acutt sees as critical to resilience and long-term success.
That tie in between business strategy and sustainability is more aptly described by Nicola Peill-Moelter, Director of Sustainability Innovation as sustainable computing. In a February 2021 blog she defined the term as being about “minimizing the energy and carbon associated with running workloads. While datacenter efficiency is important, the industry figured out long ago how to use less than 0.1 watt for datacenter operations to support 1 watt of IT operation. Workloads are where the new opportunities for innovation lie. Workload energy efficiency is achieved by minimizing the on-premises and public-cloud infrastructure required to run workloads that meet their business requirements. And workload carbon efficiency means managing when and where workloads run to leverage low-carbon electricity.”
A Commitment to Renewable Energy
All of this thought process and effort bleeds directly over to VMware’s operational sustainability goals. VMware's operations are powered by 100% renewable energy, a target they first achieved in 2019. The company's strategy to reach 100% renewable energy involved a combination of opting into clean power through local utilities, locating assets in areas with renewable energy, and purchasing renewable energy credits (RECs) for areas where these options were not available. As of 2022, VMware has used that strategy to mitigate consumed 179,901 MWh of electricity, all of which was sourced from renewable energy. According to the 2023 Impact Report RECs or Environmental Attribute Certificates as they’re referred to in the report, accounted for about 50% of the strategy. This commitment to renewable energy has significantly reduced the company's Scope 2 emissions, contributing to its broader sustainability goals.
Maintaining the Momentum
Looking ahead, VMware plans to maintain its 100% renewable energy target. The company's strategy includes a phased approach over the next decade to achieve 100% renewable energy-powered and carbon-efficient VMware clouds. This commitment is part of VMware's broader 2030 Agenda, a decade-long Environmental, Social, and Governance (ESG) commitment to build a more sustainable, equitable, and secure future.
However, the journey to 100% renewable energy is not without its challenges. Risks include potential market fluctuations in the cost of renewable energy and the availability of renewable energy sources. Despite these challenges, VMware remains committed to its renewable energy goals, demonstrating the company's resilience and dedication to sustainability.
The Potential of RECs with Additionality
While VMware's achievements in renewable energy are commendable, the company's progress could potentially be in a number of ways enhanced by including Renewable Energy Credits (RECs) with additionality in their strategy. (Additionality refers to renewable energy projects that would not have been built without the specific investment from the REC purchaser, thus creating additional renewable energy capacity on the grid.)
Firstly, RECs with Additionality could increase the speed at which the grid can change to renewable energy. Second, they could mitigate costs over time associated with continued renewable energy procurement using RECs without additionality. Third, they could enable VMware to make a more impactful marketing claim for sustainability purposes. Fourth, RECs with additionality would provide scale to their emission reduction strategies needed to cover increased consumption of electricity as their business continues to grow. Lastly, and with broader significance, RECs with Additionality could be used in a manner that allows VMware’s suppliers to help them address their scope emission reduction needs and therefore further allow VMware to broaden their sustainability impact in their scope 3 mitigation strategy.
VMware's commitment to 100% renewable energy is a testament to the company's dedication to sustainability. The company's achievements in this area are a shining example of how businesses can contribute to a more sustainable future. By considering the inclusion of RECs with additionality in their renewable energy strategy, VMware could potentially enhance its sustainability efforts even further, paving the way for a greener future in the tech industry.