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Financial Organizations Can Improve ESG Performance with Data Erasure

To improve environmental, social, and governance (ESG) performance, financial organizations must tackle “financed” and “operational” emissions. As a leading group of sustainability-focused banks has recently highlighted, however, there is no single prescribed way to reduce operational emissions. You have choices. Here’s why you should focus on data sanitization to drive sustainable outcomes.

Fredrik Forslund With more than 30 years of experience in IT security, Fred is a sought-after speaker and author on the topics of data sanitization, data center and cloud erasure, and sustainable IT asset reuse. As VP and GM, International, for Blancco Technology Group, he leads teams across EMEA and APAC, traveling often from his home base in Sweden. Previously, he led Blancco's data center and cloud erasure initiatives, served as director of the International Data Sanitization Consortium, and, before Blancco, co-founded SafeIT Security, a security software company focused on encryption and selective data erasure. He is also a co-author of the industry guide, Net Zeros and Ones: How Data Erasure Promotes Sustainability, Privacy, and Security.

The NZBA is banking on net zero

The Net-Zero Banking Alliance (NZBA) is an influential group of over 140 sustainable banks. It includes JPMorgan Chase, Bank of America, and Wells Fargo. In March 2024, the NZBA updated its Guidelines for Climate Target Setting for Banks. Despite some changes to its 2021 advice, the new document remained quiet on how its members should report on emissions arising from their operations.

Instead, the NZBA pointed to the international standards of the Greenhouse Gas (GHG) Protocol framework. “As defined by the GHG Protocol, banks’ own Scope 1, Scope 2 and non-category 15 Scope 3 (e.g., from business travel) emissions are not addressed in this document.”  

Why does this matter for banks and other financial organizations?  

Because although this leading group of banks sets out how its members should report on the emissions generated in connection with investments or loans (i.e., “financed emissions”), it does not outline how to report on operational emissions from business travel, employee commuting, or IT infrastructure.

“It is taken as given that banks shall target Net Zero in their own operations well before 2050.”

Net-Zero Banking Alliance, Guidelines for Climate Target Setting for Banks, Version 2

The NZBA advises self-governance on this matter. So, you may be wondering how to drive down operational emissions to meet this target. This article sets out some ways your organization can further its ESG goals with data sanitization. 

First, do you even need to report emissions?

Mandatory or voluntary—emissions reporting and reduction

The NZBA’s lack of direction on operational emissions is typical of the patchwork of reporting processes globally. For example, while some companies in the European Union must report on Scope 3 emissions and other factors as part of the Corporate Sustainability Reporting Directive (CSRD), there is no U.S. federal equivalent. In fact, the U.S. Securities & Exchange Commission (SEC) has scrapped mandatory Scope 3 reporting for U.S. public companies. 

While mandatory reporting is certain to increase in the coming years, more and more organizations are already embracing voluntary disclosures. They’re doing this not only to be ready for inevitable legal requirements, but also because they realize that consumers, investors, and partners expect commitment and transparency. For example, the Carbon Trust found that 45% of shoppers would leave a brand for refusing to measure its carbon footprint.

What’s useful to know in amongst this mass of information is that when it comes to reporting on and reducing emissions (whether mandatory or voluntary), there are many options and opportunities. You can become a net-zero bank, bakery, or sports stadium, and you can often achieve this in ways that are relevant to your circumstances.  

The question is, which sustainability efforts should you focus on?

To improve ESG, monitor across the value chain

First, let’s recap the difference between “operational” and “financed” emissions. Then, we’ll cover data sanitization strategies that cut emissions and provide reporting opportunities.  

The GHG Protocol suggests organizations should measure greenhouse gas emissions across the “full value chain.” This means looking beyond emissions caused by the organization’s direct action on the environment. Those activities are things like burning fossil fuels in company-owned facilities.  

To support this, it categorizes emissions reporting into Scopes 1, 2, and 3.

Scope 3 is typically the most complex as it covers all indirect emissions. This includes the actions of external partners, manufacturers, and even customers. According to the GHG Protocol, Scope 3 can account for over 90% of a company’s emissions. Even if Scope 3 reporting is not legally mandated in your territory, it is essential for greater transparency.  

Helpfully, the GHG Protocol allocates different business activities into Scope 3 categories. Category 15, which is what the NZBA guidance focuses on, is for financial investments. These investments or loans are known as financed emissions, meaning emissions generated from investment or lending to customers. A bank lending money to a company that mines fossil fuels, for example, will produce Scope 3 financed emissions.  

This leaves 14 other operational categories. Some of these can help financial organizations to inventory and reduce Scope 3 emissions.  

There are several examples of non-financed emissions across these categories. For example, organizations may be able to reduce indirect emissions that come from data center storage as part of Category 1: Purchased Goods and Services.

4 ways to reduce operational emissions with data sanitization

If you are a member of the NZBA, or another financial institution with sustainability goals, look to your data and IT assets to find a significant source of operational emissions that you can achievably monitor and reduce. Look at everything from cloud storage to the way you process used laptops. You can use them to reduce carbon emissions, target net zero, and improve ESG performance.

1. Get to grips with data storage and minimization  

The environmental costs of data storage are significant because it takes a huge amount of power to run data storage facilities.  

Technically, on-premise data center emissions are classified as Scope 2. But organizations using cloud storage or a hybrid of cloud and on-premise have Scope 3 considerations. The more data you store in any of these locations, the bigger your direct or indirect energy footprint.  

And, although cloud computing is more sustainable than on-premise data storage, the cloud is still a grave concern for global sustainability.

“The Cloud now has a greater carbon footprint than the airline industry. A single data center can consume the equivalent electricity of 50,000 homes.”

The Staggering Ecological Impacts of Computation and the Cloud, The MIT Press Reader

When organizations reduce the amount of data they store, both Scope 2 and 3 operational emissions diminish and help to improve ESG. 

Effective data classification is crucial here. Financial organizations need to know what data they hold and classify it appropriately. When it reaches end of life—due to compliance with data protection regulations, for example—it can be permanently erased. Data classification best practices include:  

• Setting out your organization’s criteria for data retention or deletion in advance  
• Working with internal subject-matter experts to develop classification systems that incorporate the specific context and requirements of the data within different business units  
• Paying attention to unstructured data such as files and emails through classification solutions   
• Regularly auditing data to adjust classification when required  

By classifying and erasing redundant, obsolete, and trivial (ROT) data, you can reduce the energy costs of on-premise and cloud-based storage. In turn, this will reduce Scope 2 and 3 emissions and improve ESG performance. 

Don’t forget that data minimization also makes enterprises more secure by reducing the amount of data that can be breached and keeps you compliant with data privacy regulations.

2. Reduce errors and increase efficiency with automation

Manually erasing data from end-of-life devices and active environments is time- and energy-consuming. It is also inefficient and prone to human error. Employees may end up routinely missing data that should be erased, which results in continued data bloat and emissions. Plus, it increases the number of workers needed to perform the same tasks, which creates financial costs for your organization. 

Data erasure software offers several ways to reduce emissions through automation. For active environments, solutions such as Blancco File Eraser can provide an automated, remote, and targeted erasure process. 

This allows you to build rules and routines for erasing files and folders. By minimizing the amount of unnecessary data you store, you can automatically reduce Scope 2 and 3 emissions through diminished energy costs. 

Remotely controlling these erasure routines also eliminates much of the need for IT technicians to travel, or for devices to be shipped to them.  

3. Leverage your supply chain to improve ESG

Driving better ESG outcomes is a team sport. Work with sustainability-focused organizations and individuals in Chief of Sustainability roles and you can achieve more. 

Actively choosing sustainable products and services simplifies Scope 3 monitoring and displays a deep commitment and alignment with sustainability goals. 

There are multiple ways to choose appropriate partners for your journey. Companies such as Ganni and Nespresso, for example, have focused on carbon insetting, which means working with other organizations to embed activities such as reforestation throughout your supply chain. 

Additionally, if you are evaluating the differences between vendors, ESG reporting may add another factor to consider as part of procurement. For example, a carbon-neutral vendor may stand out as being the most sustainable choice among its competitors. And, although sustainability credentials are unlikely to be the final decision-maker, they can help to differentiate the good from the great—and may make ESG reporting easier. 

4. Reduce e-waste and drive the circular economy

Whenever IT assets need to be replaced, you have a sustainability opportunity. These devices typically contain confidential or sensitive information. You will want to keep this secure for commercial or compliance reasons. Traditional approaches have been to degauss or physically shred devices. But these are imperfect solutions and data can be retained, which creates a security risk.  

Plus, device destruction is more likely to lead to devices being sent to landfill. This is a growing problem, with one 2022 study finding that GHG emissions from e-waste jumped by 53% between 2014 and 2020.  

The sustainable way to reduce upstream and downstream emissions is to securely erase IT assets with certified software. This means they can then be refurbished for a second life (or more). They can be used again within your business or sold downstream rather than becoming landfill. 

Whether you perform device erasures onsite or work with an IT asset disposition (ITAD) provider, reducing the operational impact of end-of-life IT assets is critical. A bonus of working with an ITAD is that they may provide granular reporting to improve your own ESG monitoring.  

If you perform in-house data erasure using Blancco’s solutions, however, you have an even greater ability to improve carbon reporting. Here’s how.   

ESG reporting? We’ve got you covered  

When it comes to IT asset disposition, many companies struggle to obtain reliable data. 

Let’s say that instead of physically destroying 1,000 laptops that have reached the end of their useful life within the business, you securely erase them and send them for refurbishment, reuse, or resale. What is the tangible impact of that positive action on your CO2 emissions? 

In addition to offering a sustainable data erasure solution through our software, Blancco has ESG reporting for the erasure of IT assets baked in.

Blancco Management Portal, which is the centralized platform our customers use, offers a granular ESG dashboard of the sustainability gains that come from data erasure.  

The sustainability calculator delivers insights into the number of devices erased by volume, weight, and the CO2 emissions avoided.  

Emissions reporting and reduction initiatives may be voluntary in some cases, but there’s no doubt that they are becoming an expected focus for global organizations. Taking these data sanitization steps will help you to make operational progress towards net zero in your IT infrastructure. 

Want to see how Blancco can support your sustainability goals? Take a free trial of our software and discover the greener data erasure solution.

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