Why should net zero matter to tech companies?
The world is counting on technologists to help innovate our way to net zero as attention turns from talking about climate change to taking measurable action.
From redefining how we approach agriculture, to digital tools that make energy systems more efficient and the internet of things making manufacturing greener, technology is central to almost all of the solutions that we hope will limit global heating and create a sustainable planet.
However, while the technology sector can unlock the net-zero transition, it must also lead by example, according to a Royal Society report that found digital technology’s estimated contribution to global emissions ranges from 1.4% to 5.9%.
Despite having a ‘clean’ veneer, the sector is starting to face greater scrutiny for its impact on the planet from regulators, investors and the media. With rules on climate reporting tightening and investors encouraging high standards among portfolio companies, the sector is under the spotlight for its own emissions.
Revelations around the environmental impact of cryptocurrency mining are one example of how the world is starting to pay attention to the carbon footprint of tech. Bitcoin, the most widely mined cryptocurrency network, uses 122.87 terawatt-hours of electricity every year, which is more than Argentina.
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The dark side of data centres
Another high-profile example of tech’s environmental impact is data centres, which can require enormous amounts of energy to run and maintain. As ‘smart data centre’ experts Data4 point out, “It is difficult to comprehend just how much energy is needed to cool IT infrastructures. As an example, a 1,000m2computer room in a data centre can easily consume 2MW.”
The energy efficiency of data centres is calculated using a measure called Power Usage Effectiveness (PUE). The closer the number gets to 1, the more efficient the data centre. At the moment, the average data centre runs at a PUE of about 1.5, but some leading edge companies like Huawei are designing centres that can achieve PUE of around 1.1. However, energy efficiency gains could be offset by increased use as data becomes increasingly central to lives and economies around the world.
Indeed, the European Commission (EC) thinks the ICT sector could account for 14% of global greenhouse gas emissions by 2040. However, this is offset to an extent by the sector’s potential to reduce global emissions by replacing more polluting systems and processes. The EC calculates that ICT could reduce global emissions by seven times more than the amount it creates.
Stepping up to the challenge
The tech community is not shying away from its responsibilities to get its own house in order.
Taking the example of data centres specifically, in January 2021, operators and industry associations in Europe launched the Climate Neutral Data Centre Pact, which aims to make data centres climate-neutral by 2030.
In the US, the tech sector led the charge for big companies committing to net zero ahead of the 2021 UN Climate Change Conference (COP26).
In the UK, 228 companies have signed up to the Tech Zero initiative, including household names such as Vodafone, Revolut, Starling Bank, Confused.com and Auto Trader. The ambitious project commits members to, among other things:
- measuring and publishing their emissions (direct, indirect and those within the business’s value chain);
- setting out their net zero plans within a year of joining, including a target and an interim date; and
- making a member of the executive team accountable for their net zero target.
Crucially, Tech Zero also acts as a knowledge-sharing platform for tech companies so that they do not need to reinvent the wheel on how to measure their emissions and create net zero plans.
All sectors are grappling with how to understand, measure and mitigate their emissions. Navigating the alphabet soup of different climate frameworks and reporting methodologies can be baffling.
One good way of systematising and improving a company’s environmental impact (as well as its social and governance performance) is through the B Corp process. Launched a decade ago, the B Corp movement aims to give companies the opportunity to examine how they are run and what they can do better.
Initially taken up by larger organisations, the B Corp system is increasingly popular with smaller businesses that can use the roadmap to certification as a helpful aid in improving the sustainability of their business. Even if they do not ultimately gain B Corp status, many businesses have benefited simply by examining their existing operations and spotting aspects that could be improved.
But for those not ready to take such a big step, signing up to industry taskforces and knowledge-sharing initiatives is a good place to start.
The opportunity in net zero
For many tech businesses, focus is now turning to analysing how they can take advantage of the opportunities as the economy transitions towards net zero.
A business that grasps the nettle of change has the opportunity to attract and retain talent, win new clients and grow revenues in new markets. In fact, according to the Bank of Scotland, “The journey to net zero will itself be a significant growth area of the economy… The Government’s Climate Change Committee has estimated that the total investment needed between now and 2050 is £1.4 trillion.”
Technology businesses have long turned their innovative energies to all kinds of challenges facing the world, and net zero is the biggest yet. But as the sector helps to chart the economy’s path to net zero, it is also asking some tough questions about what footprint it leaves along the way.
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