Ritesh Kini
Microsoft
Key Insight: Carbon optimization is a growing concern for organizations, and Environmental, Social, and Governance (ESG) teams can leverage the culture of collaboration and waste reduction that FinOps teams have cultivated.
Cloud Service Providers are delivering more granular carbon emissions data and tooling that FinOps practitioners can use for reporting and optimization within a cloud, and FinOps vendors are beginning to offer sustainability features to optimize carbon across clouds.
The Intersection of Sustainability and FinOps
As more organizations become reliant on technology and cloud computing to deliver goods and services (1, 2), the impact of data centers on the environment has become central to the sustainability conversation (3, 4). Over the same time that cloud usage has increased, reports of climate change have led to government regulations aimed at remediation. More attention is being paid than ever before to harmonizing our appetite for technology with our need for a healthy planet Earth.
Data suggest that sustainability and FinOps practitioners are up to the task. Although less than 20% of FinOps teams are currently collaborating with sustainability teams, collaboration is expected to increase significantly (5). Additionally, a shift is anticipated in the level of collaboration; today, collaboration amounts to information sharing, but going forward, tighter collaboration with shared responsibilities is expected.
Just like in FinOps, engineering teams are a critical part of sustainability efforts, as they make infrastructure decisions that drive both costs and carbon emissions. But engineers will do more than just help with post-deployment optimizations; Engineers will be the key to transitioning the organization to environmentally-conscious software development, and define best practices for that effort.
Note: The FinOps Framework was updated in 2024 with several new Capabilities, including Cloud Sustainability and Architecting for Cloud, which reflect the role that IT teams have in establishing and maintaining sustainable cloud operations.
Leverage existing collaboration
FinOps practices inside organizations have already established the collaboration between business and technology teams that is necessary for both cost and carbon optimization. Sustainability efforts should leverage this connective tissue that FinOps has sewn across Finance, Procurement, Engineering, and Product teams.
Environmental, Social, and Governance (ESG) teams can work with FinOps and engineering teams to manage IT usage optimization efforts that bring the organization closer to its sustainability goals. The practice of FinOps has prepared these teams for analyzing tradeoffs among speed, cost, and quality, so they already have the skills to analyze tradeoffs among speed, carbon, and quality.
With the FinOps and engineering teams driving IT usage optimization, ESG teams can put their energy into other sustainability initiatives such as carbon offsetting. Sharing responsibilities across the organization puts each optimization effort into the hands of the people most able to make an impact.
Challenges for Practitioners
Data Granularity
Part of the challenge for practitioners has been obtaining carbon data for analysis. Unlike cost and usage data, which have nearly a decade of development (depending on the provider), sustainability reporting is still maturing. But major cloud providers are increasing carbon emissions data reporting and granularity to help practitioners understand optimization opportunities. Microsoft offers an Emissions Impact Dashboard and introduced Azure Carbon Optimization early this year. Google Cloud Platform (GCP) began offering a carbon tracker in 2021 called Carbon Footprint. Amazon Web Services (AWS) unveiled their Carbon Footprint Tool in early 2022.
Emissions Measurements
Another challenge is normalizing emissions data across providers. A large portion of carbon emissions from data centers comes from the use of electricity, so it makes sense that efforts to reduce emissions start with reducing the use of electricity. The Greenhouse Gas Protocol (GHG) gives two methods for companies to track and compare their emissions: market-based and location-based. The location-based method uses average emissions of the energy grid where consumption takes place. The market-based method is calculated by taking the location-based number and subtracting any renewable energy purchases for the workload. Different cloud providers report using different methods, and there is some disagreement in the industry about which the best method.
- AWS: market-based model
- Google Cloud: location-based model. (Market-based data is forthcoming.)
- Microsoft: market-based model
Steps to Get Started
Sustainability is a shared responsibility between providers and consumers. Cloud providers are doing their part to reduce the impact of their data centers on the environment, and are improving emissions reporting so that their customers can do their part: eliminating wasted usage.
In order to get started with carbon optimization, FinOps and ESG teams should work together to:
- Come to a shared understanding of carbon footprint using the data available
- Establish a vision and strategy for optimization
- Set goals for carbon reduction
- Empower engineering teams with the data to reduce carbon emissions
- Continually evaluate and work to improve data quality over time
FinOps teams can begin including carbon emissions in both their reporting and decisions-making, with the understanding that data may be incomplete or insufficiently granular now. As data improves, processes will already be in place to act on it.
Cloud Sustainability at Microsoft
Microsoft wants to help organizations establish a culture of sustainability, and believes that leveraging AI will be important to improve processes and automate tasks, leading to faster optimization. Microsoft has released a number of offerings for sustainability, ranging from a managed sustainability service to raw carbon data exports to get deep emissions insights using Microsoft Fabric.
Hear Ritesh Kini and Kiran Motwani from Microsoft talk with Mike Fuller, CTO at the FinOps Foundation, about Microsoft’s approach to sustainability and the tools they offer customers for carbon emissions reporting and optimization:
The FinOps Foundation discusses the intersection of FinOps and sustainability with Microsoft.
Emissions Impact Dashboard
Microsoft introduced a Sustainability Calculator back in 2020, which has since evolved into the Emissions Impact Dashboard (available for Azure and Microsoft 365). This Power BI dashboard gives high-level visibility and enables reporting of total carbon emissions. This dashboard helps organizations understand their total emissions, set goals for improvement, and identify business groups to prioritize for optimization.
Figure 1: Microsoft Emissions Impact Dashboard
Azure Carbon Optimization
Azure Carbon Optimization was introduced in Preview in January 2024 with more granular carbon emissions data to empower IT and developers to optimize carbon emissions for each resource. Available in the Azure Portal, Azure Carbon Optimization provides application developers with carbon emissions data at these granularities: subscription, resource group, resource, service, and location. Users can view pivots of data to understand where emissions are being generated from.
Azure Carbon Optimization also delivers recommendations at the resource level based on past usage that reduce both carbon emissions and cost. The recommendations include switching to more efficient SKUs or reducing idle or unused resources. You can view the estimated carbon savings and cost implications of each recommendation.
We believe that Azure Carbon Optimization is the first tool offered by IaaS providers that brings cost and carbon data together in the same view, which is critical for engineers to be able to act on the recommendations.
Figure 2: Azure Carbon Optimization
AWS Carbon Footprint Tool
AWS’s Carbon Footprint Tool lives under Cost & Usage Reports in the AWS Billing Console. This location in the product – the same place where you find cost management reports – reflects the synergy between carbon and cost optimization. The Tool displays total carbon emissions generated and saved (vs. running in your own datacenter) per month from all AWS resources, and splits your emissions by geography and service. It covers Scope 1 and 2 emissions as defined here. Carbon Footprint Tool shows users how their carbon footprint will reduce over time as AWS moves to more renewable energy sources, helping business Leadership meet carbon reporting requirements and understand if they’re on track to meet the organization’s sustainability goals.
Figure 3: AWS Carbon Footprint Tool
The AWS Carbon Footprint Tool is helpful for executives to track and report on carbon emissions, but it does not offer customers recommendations to optimize workloads for carbon efficiency today. In order to optimize for sustainability, users should review the Sustainability Pillar of the AWS Well Architected Framework and follow its sustainability best practices including:
- Region selection – use the AWS Regional Services Lists and the AWS Pricing Calculator to shortlist potential regions and calculate their costs before choosing a region using the location-based method or the market-based method.
- Alignment to demand – shutdown resources when not in use and scale workload infrastructure to meet needs
- Software and architecture – design software for dynamic usage and optimize code that consumes the most resources
- Data management – minimize data storage and movement, and use policy automation to manage lifecycles and remove data
- Hardware and services – use minimal hardware, instances with the least environmental impact, and switch to managed services
- Process and culture – operationalize sustainable development as a nonfunctional requirement
It’s notable that the central ideas in these recommendations existed in the 2020 AWS Well Architected Framework as part of the Cost Optimization Pillar before the Sustainability Pillar was added in late 2021. This isn’t surprising, as many of the activities that optimize costs will often also reduce carbon emissions. Operating in a more efficient region, stopping resources when they don’t need to be running, reducing data transfers, designing for dynamism, and choosing minimal hardware for your needs are all principles that optimize both cost and carbon.
In his AWS re:Invent 2023 Keynote, Dr. Werner Vogels, Amazon.com VP and CTO, discussed the relationship between cost and carbon, and the fact that frugal cloud architecture correlates with lower carbon emissions.
Google Carbon Footprint
Google Carbon Footprint is located in the Tools section in Google Cloud Console and shows carbon emissions by product, project, and geographic region per month for covered services. GCP’s Scope 1, 2, and 3 emissions are apportioned to each customer and reported as the customer’s Scope 3 emissions, as illustrated below.
Figure 4: Google Cloud methodology for carbon emissions calculation.
Google offers a high-level overview of emissions ideal for reporting progress on sustainability initiatives, but, like AWS’s, the dashboard does not bring cost, usage, and carbon data together to help engineers make optimization decisions.
Figure 5: Google Cloud Carbon Footprint Dashboard
Google recommends a set of processes and tools to optimize workloads for carbon emissions. After exporting emissions data BigQuery, Google recommends:
- Choosing suitable Region – Google displays a low CO2 icon next to carbon efficient regions in the Cloud Console to help you choose a carbon efficient region, especially for batch workloads. Google also offers a Region Picker that allows you to adjust the weight of carbon, cost, and data latency in the formula for recommended regions. The recommendations change in real time as you adjust the levers.
- Choosing suitable services – use scalable infrastructure and managed services that can better meet dynamic, complex needs
- Minimize idle resources – shut down resource that do not need to be running
Figure 6: Google Region Selection in Cloud Console
Figure 7: Google Region Picker
Many concepts that are central to FinOps – operating in efficient regions, reducing unnecessary consumption, and modernizing workloads – have the double positive effect of optimizing your environment for both cost and carbon emissions simultaneously.
FinOps Vendors
With cloud service providers delivering more granular carbon emissions data, FinOps tooling vendors and service providers are beginning to incorporate carbon emissions data and optimization functionality into their offerings. Third-party FinOps Independent Service Vendors (ISVs) such as Tanzu CloudHealth, and FinOps Service Providers like Accenture and Deloitte, bring users the ability to do multi-cloud carbon analyses.
Are you a FinOps tooling or service provider with support for carbon emissions data? Let us know. The FinOps Foundation maintains a database of FinOps vendors with features for Cloud Sustainability.
Looking Ahead
The relationship between FinOps and sustainability is clear, and sustainability teams should coordinate with FinOps Practitioners to leverage the collaboration and infrastructure best-practices they have established. Over time, we will see if sustainable cloud operations becomes a more central responsibility for FinOps teams, and how their data and tooling needs will evolve.
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