Cisco Differentiates with Purpose

Delivering outcome-based credentials for environmental, social and corporate governance

As we enter 2022, the call for meaningful environmental, social and corporate governance (ESG) strategies presents a new competitive front for responsible business operations. This brings opportunities to deliver solutions that embrace social accountability with calculable benefits for well-being in all spheres of operation and interaction.

In 2021, sustainability challenges came to the foreground as the world continued to feel the impact of the pandemic. Societal unrest, compounded by the ravaging effects of human activity and over-consumption on the planet, have laid bare the deficit to overcome. Corporate social responsibility, corporate citizenship and ESG goals have become the lodestar for organizations looking to minimize negative contributions and effect positive change. But with the worldwide inequity that the pandemic has exposed so glaringly, it’s tempting to be cynical about the pledges made by organizations for improving the well-being of their employees and communities they operate in.

Sifting out meaningless rhetoric requires a concerted effort to measure and validate the impact of ESG support services — more so if sought-after outcomes of greater equity, diversity and environmental restoration are to be believed. Equally important is demonstrating coordinated purpose toward delivering sustainable operations that have an eye on the future well-being of the planet.

An Evolution That’s Propelling Cisco Forward

Cisco’s mission statement focusses on its purpose to “power an inclusive future for all”. In December 2021, the company released its Purpose Report, an annual review and audit of Cisco’s progress. This is helping guide the work the company does to serve its customers, partners, employees and communities.

A significant benefit of the 2021 Purpose Report is in helping the company demonstrate that it’s meeting a goal set in 2016 of positively having an impact on 1 billion people by 2025 through various initiatives, such as grants to non-profit organizations and training programmes including the Cisco Networking Academy. With 680 million people reported to have benefited so far, Cisco looks to be on course to meet its target.

The report highlights other notable achievements for Cisco in 2021, such as a 60% reduction in global Scope 1 and 2 greenhouse gas emissions compared with its first recorded figures in fiscal 2007, reaching this target one year early. Like many of its peers in the IT market, Cisco’s efforts in environmental sustainability centre on reaching net zero for all scopes of greenhouse gas emissions by 2040.

Other achievements included having 85% of energy coming from renewable sources, giving $477 million in cash and in-kind contributions to community programmes and the Cisco Foundation being equivalent to 3.6% of pre-tax profit. A full list of these achievements, along with access to the 2021 Purpose Report, can be found in a blog summary on Cisco’s website.

2001: a Sustainability Odyssey for Cisco

Back in 2001, Cisco was an early signatory of the United Nations Global Compact, a voluntary initiative founded in 2000 providing a framework for “chief executives to commit to implementing universal sustainability principles, support UN goals and report on progress”. Its 2021 Purpose Report marks 20 years of commitment to aligning the company’s business operations to the values espoused by the initiative.

But it’s Cisco’s ESG Reporting Hub that’s perhaps doing more to showcase the extent and impact of the company’s social and environmental programmes. This offers a well-thought-out portal that allows others to obtain clear insight into the company’s investments. As such, it reinforces the transparency the company sees as an important standout in the ESG market.

The Value of the United Nations Global Compact

The United Nations Global Compact is advertised as the world’s largest corporate sustainability initiative that acts as “a call to companies to align strategies and operations with universal principles on human rights, labour, environment and anti-corruption, and take action that advances societal goals”.

It’s an impressive initiative with ambitious, admirable goals and a clearly articulated mission statement supported by 10 guiding principles. But the areas covered — human rights, labour, the environment and anti-corruption — are rife with contentious issues and influenced by factors including government policy, regulatory reliability and financial capacity. Therefore, it’s understandable why such a well-aimed initiative may not sit well with every organization’s operational remit.

Although this article focusses on Cisco’s 2021 Purpose Report, it’s worth taking a look at the United Nations Global Compact website. It outlines in greater detail the goals of the initiative and the commitment expectations for those signed up to the charter. Readers will gain better insight into the credibility of a participant’s ESG capabilities through an independent marker to score their efforts.

The Timing Is Right for Accentuating a Sense of Purpose

At CCS Insight we’ve consistently highlighted how Cisco has in recent years pivoted from a reliance on network hardware and appliance solutions to a company where software, particularly software apps, plays a commanding role in its portfolio strategy. But its annual Purpose Report shows that Cisco has remained steadfast in its goals to make technology and communication networks more accessible to everyone. The network is still Cisco’s platform, and is how it continues to hold sway with its sizeable presence in the wider market. But it also serves to deliver greater security for Cisco’s customers and partners, providing deep insight and intelligence with an expansive mix of communication and connectivity options for the hybrid IT landscape.

Crucially, the Purpose Report offers an important benefit to Cisco’s wider goals in the security market.

Our Senior Leadership IT Investment Survey, 2021, conducted in July 2021 with 700 evenly split C-level IT and business respondents, found that strength in security technology was the most important aspect affecting businesses’ trust in a provider. But over a third of respondents pointed to suppliers’ commitment to environmental sustainability as a vital consideration of trust. This highlights the growing importance of sustainability in businesses’ decision-making, and is a crucial factor behind the rush to launch services that help businesses measure and track their own carbon footprint.

A Tough Field to Differentiate in

Cisco isn’t alone in demonstrating a commitment to broader societal engagement, whether through global educational programmes or fostering partnerships with regional and national governments and international governing bodies. You need only look at the flurry of “clean cloud” announcements from many of the hyperscale public cloud providers to notice this.

Microsoft and Google have trackers and calculators to help clients measure and minimize the environmental impact of their cloud workloads. Amazon Web Services will soon launch its own dashboard offering similar capabilities, and IBM is looking to advise its customers on how best to use cloud resources in the most efficient way, minimizing their need to support additional capacity.

All, like Cisco, have made pledges toward 100% renewable energy and net zero carbon operations by 2040 — and in some cases as early as 2030. Such goals reinforce a prediction announced at CCS Insight’s Predictions for 2022 and Beyond event, that clean cloud services will become a central battlefield in the public cloud market in 2022.

Organizations face growing pressure from all quarters — clients, public authorities, investors, workforces and consumers — to be part of the sustainability solution rather than the problem. Many are relying on software-based products and technology providers to be a force for good, spearheading ESG efforts. Technical solutions supporting the management and distribution of vaccines have shown the good that can be achieved through the support of the IT industry.

With that said, sustainability in IT and networking is a complex subject with many challenges, including controlling energy consumption at a time when data and network usage continues to rise and the role of vertical industries dominates. CCS Insight has been researching these issues in a series of reports looking at 5G and sustainability, listed below — these reports can only be accessed by CCS Insight clients; please contact us for more information.

As we continue our research into adoption of sustainability strategies and their effectiveness, we’ll provide greater context to the approaches chosen by IT providers such as Cisco.

Walking the Walk over Talking the Talk

An imperative for 2022 sustainability goals is to avoid spending too much time on the phrasing of an ESG mission statement, instead of committing to actions that deliver successful outcomes. However, although it’s important to identify and understand what it means to fully embrace social and environmental responsibility, few organizations have the luxury of doing so in the context of pressure to continuously deliver business growth.

During an analyst briefing at its 2020 Cisco Live online event, the company’s CEO Chuck Robbins acknowledged that in the face of shareholder and financial market pressures, it’s likely to be a tough balance to uphold investments in corporate social responsibility programmes. Depending on financial results, pragmatic adjustments will clearly be necessary, making strong communication crucial.

But the good news is that there’s growing unity between shareholders, workforce, investors, clients and consumers as they begin to understand the vital role that corporations such as Cisco can play in helping to enforce a change for good.

Getting in Pole Position for a 2022 Sustainability Drive

Although others in the tech industry have been more vocal in leading the ESG charge, Cisco’s long-standing report exposes a solid bedrock for taking quantifiable action in support of its corporate social responsibilities. The company has, with increasing vigour in recent years, expanded its support of technical and social change in emerging and developed markets through its Country Digital Acceleration programme.

In my view, the rebrand from Impact Report to Purpose Report is a smart move that links purpose to action to outcome with a quantifiable umbrella metric: did a specific outcome lead to or deliver an inclusive future for all?

Cisco’s ESG mission statement, Purpose Report and efforts to showcase its United Nations Global Compact membership more prominently go some way to addressing a perception of Cisco being fragmented in its ESG strategy, or at least in communicating its efforts. Leadership in ESG is about having a coordinated strategy, policies and activities — but it’s also important to present a holistic narrative, underlining progress, highlighting remaining challenges and maintaining a dialogue with the market.

In this regard Cisco is now doing better than many of its peers in the IT market. Various companies have been quick to present their ESG credentials; like Cisco itself, they’ve publicly outlined road maps and timescales to zero-carbon operations, with a number launching solutions and tools that help customers calculate the carbon footprint of their cloud workloads. But with its Purpose Report, Cisco has in place a yearly framework for assessing impact and achievements from many of the different ESG investments it’s made over the years. As the company has been setting goals and measuring progress and impact since 2005, it can identify areas of strength, weaknesses, opportunity and risk.

Cisco is well underway toward a leadership position in the ESG market, showing a tangible approach for auditing ESG goals. The company has built a demonstrable track record on ESG issues — but this is an area which is constantly evolving, meaning that it continues to be a work in progress.