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Changing the World, One Subscription At a Time

Tien Tzuo
CEO, Zuora

This week, Zuora launched our inaugural ESG (Environmental, Social, and Governance) Impact Report and I’m proud to say we are carbon neutral as of fiscal year 2022. That’s not all, we’ve also released our diversity statistics: 32% of women are in leadership roles, 41% of our employees are from underrepresented groups, 40% of our executive team members are women, and 40% identify as ethnic minorities.   

We’re also heavily involved in serving our communities. Our ZEO’s have volunteered in events like park clean-ups, participated in our matching gifts program to their favorite charities, and supported microbusinesses and families through our Kiva Lending Program. We’ve contributed $3 million worth of our Class A common stock to, supported organizations like Climb Hire, Dev/Mission and Upwardly Global to eliminate barriers of entry into the tech industry, and were honored as a Top Corporate Philanthropist by the San Francisco Business Times.

But our vision is bigger. The principles behind the report have always been part of Zuora and of our vision of The World Subscribed. That’s why we believe that you, the members of the Subscribed community, have the true power to make the world a better place by broadening access, increasing inclusion, bolstering sustainability, and building trust between customers and service providers. 

You may say, that is a broad remit. Is it truly possible? The answer is a resounding yes. Let’s see the impact that this community can have through the lens of the three legs of ESG.

The E (Environmental): Subscriptions are inherently sustainable. 

By moving people from ownership to usership, the Subscribed community can reduce the level of products consumed and therefore, junk and e-waste. In fact, we’re seeing more and more product companies moving to service models because they realize sustainable packaging alone won’t help them meaningfully lower greenhouse gas emissions. The natural solution to that problem are subscriptions, which embody the reuse, reduce, recycle process. 

For example, a few weeks back we talked to Decathalon, who is now offering “sports-as-a-service” where consumers no longer have to own any of the essential physical equipment for, say, skiing.This reduces the amount of new products that a consumer feels compelled to buy and engages them in the circular economy where sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products for as long as possible is good for the environment.

In the digital world, the shift to cloud computing is already having an impact. According to the International Energy Agency, data centers consume about 200 terawatt-hours of electricity (TWh), or nearly 1% of total global energy demand, contributing to 0.3% of all global emissions.  More and more of this is now shifting to green energy.  In 2021 alone, corporations purchased 31.1 gigawatts of clean power through long-term contracts called power purchase agreements (PPAs) that use solar-powered, wind-powered or hydro powered energy. It’s become expected practice to outline your green energy goals: AwS has declared a net-zero commitment by 2040, while Microsoft will be carbon negative by 2030. As subscriptions move services to the cloud, they have the power to enhance even more business operations to work off of renewable energy.

The S (Social): Subscriptions have the power to broaden access to goods and services, which in turn, empowers social equity. 

By launching new services with easier on-ramps, the Subscribed community is widening access to all sorts of important services. Need to be driven from point A to point B in time for a meeting? You can use the Uber app on your phone to get there. In fact, today, any new developer can now launch a product on Azure or Amazon Web Services, any artist can debut a song on the global soundstage, or a new media conglomerate can deliver verified news to the most underrepresented. Cloud based services are enabling the democratization of applications and services, which as a result, enables usership thanks to the subscription services that are launched.

Subscription experiences also have the possibility to encourage and enable social equity. Take Revolt as an example of a streaming media company that has the power to connect diverse creators with diverse audiences for even more equitable content for their customers. Or, think of Flexclub’s life-as-a-service, where having access to a car fleet rather than leasing a vehicle actually helps make ends meet for people living in countries where owning a car is difficult. 

The G (Governance): Trust and privacy are intrinsic to subscriptions. 

Trust and privacy are intrinsic to subscriptions. Why? Because subscriptions shift power to the users instead of treating them like a product. You can walk away or cancel a service you’re subscribed to at any time; no hard feelings. It forces the service provider to stay focused on delivering quality services, improving them over time, for the right price. If not, they lose users (customers) and as a result, lose business.

By contrast, advertising as your main business foundation is bad, because it treats the customer like a product, and in some cases, sells off their information for profit. Data collection in a subscription service isn’t about selling out your customers’ information, but building a relationship with a provider to get better experiences. It’s why Netflix needs to rethink incorporating ads into its service and why Twitter needs to think of a novel business strategy that moves them away from advertising.

Subscriptions also need to have regulatory and compliance requirements built into them.

According to the FTC, businesses that allow customers to sign up for automatically renewing subscriptions must comply with a patchwork of state and federal regulations. PCI (Payment and Card Industry) data compliance is also mandatory when it comes to recurring payment collections and requires security of sensitive financial information. In addition, a slew of global regulations require privacy of subscriber data, so no matter what, subscription businesses can’t sell that data (at least without severe legal repercussions). Don’t mess with subscriptions!  

Subscription companies have the power to make the world a better place, and the Subscribed community is an enabler. At Zuora, we’re doing our part. I’m proud of our first ever ESG Impact Report, and excited to continue moving forward with our efforts to power the World Subscribed, in ethical, equitable, and sustainable ways.

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