Register now for your free virtual pass to the Low-Code/No-Code Summit this November 9. Hear from executives from Service Now, Credit Karma, Stitch Fix, Appian, and more. Learn more.
We’ve reached a turning point in corporate responsibility. Increasingly, global businesses are coming out and claiming that environmental, social and governance (ESG) initiatives are of immense importance to their future strategies. ESG efforts have gone far beyond “nice to have,” entering firmly into the realm of “must have.”
As extreme climate events take place with alarming regularity, calls for improved sustainability initiatives within business strategies will continue to grow louder. Companies are being forced to pursue more accurate and public accounting for their carbon emissions and to take demonstrable steps toward using more sustainable energy sources.
However, these seemingly positive developments come with a troubling caveat. A recent Google Cloud report found that 58% of executives anonymously surveyed felt that their companies were guilty of “greenwashing,” a term used against organizations that claim to be more environmentally friendly than they are. For executives in the U.S. market, the report found fears about greenwashing grew to a staggering 68%.
Greenwashing is particularly rampant in the tech industry. As the world continues to embrace all things digital, the companies that produce digital technology struggle to meet growing demand, often with only a glancing thought about the environmental impact of their supply chains.
Join today’s leading executives at the Low-Code/No-Code Summit virtually on November 9. Register for your free pass today.
Many of these companies talk a great game when it comes to their sustainability efforts. But exactly how much can we trust technology companies to really be making their processes greener?
Tech is more and more carbon-intensive
Technology companies’ environmental effects can be deceptive. On the one hand, it’s pretty clear that technology manufacturers have an environmental impact similar to that of many other manufacturers. But for the longest time, people thought that an online company like Twitter, say, or eBay would have less of an impact on the environment because so much of their business is conducted online.
We know now that it’s much more complicated and that even an entirely virtual company is going to have a significant carbon footprint from sources like computer servers and, for ecommerce companies, delivery vehicles. In fact, the technology sector is only becoming more carbon-intensive, despite widespread “green” claims.
The tech industry is responsible for a substantial amount of the world’s total global carbon emissions — nearly 5%. That’s more than the emissions from air transportation, although the impact of airplanes seems to be getting a lot more attention than tech these days. The problem with tech’s emissions is highlighted in the latest report from the Intergovernmental Panel on Climate Change, which found that, while digitalization can certainly enable a certain degree of emissions reductions, the process can also have “adverse side-effects unless appropriately governed.”
Particularly worrisome is tech’s contribution to greenhouse gas emissions (GHG), which are growing at an unprecedented pace relative to tech’s GDP weight. This is where some of the biggest tech companies need to be held accountable.
For example, as the tech industry continues to pursue innovation and ever more powerful devices for such services as data streaming, the production of new devices now accounts for more than half of IT’s overall global emissions. While Apple takes great public pride in having reduced the emissions from iPhone production by 15%, the company still creates a substantial carbon footprint throughout its products’ lifecycles.
Amazon: A symbol of greenwashing
Just as Apple struggles with greenwashing, so too does that other icon of modern technological progress, Amazon. Amazon’s most recent sustainable development report, published this August, reveals that, while the company has pursued a host of green initiatives, such as ordering nearly 100,000 electric vehicles, that still pales in comparison to the company’s 20% annual increase in emissions as a result of its exponential growth.
Amazon may in fact be the organization most guilty of greenwashing. One area in which the company engages in some creative environmental accounting is Amazon Web Services (AWS), which is projected to increase its indirect electricity-related emissions by 20% per year. AWS claims that it purchases “green” electricity, which the company says helps minimize the carbon footprint of its data centers.
In fact, when you use an electricity grid, it is actually impossible to distinguish between so-called “green” energies (wind or solar) and those that are decidedly less so (coal or gas). This accounting trick allows AWS to declare an environmental impact that is 90 to 95% lower than the physical reality. The company’s failure to fully report the impact of its ecommerce activity is even more problematic. All told, Amazon fails to quantify nearly 99% of its indirect emissions.
Skewing the statistics in such a way is certainly not unique to Amazon. Amazon is merely a recognizable and troubling example of what occurs in the tech industry as a whole, earning record-breaking income without being held fully accountable for its detrimental global impact.
The first step in addressing the carbon-emission crisis for tech is for companies to commit to carbon accounting. This could start with a simple carbon assessment and eventually progress to a systematic process of evaluating, recording and publicly reporting the company’s carbon emissions.
A full carbon-accounting process encompasses three different areas, or “scopes.” Scope 1 refers to direct emissions from sources that the company owns or controls. Scope 2 covers indirect emissions from the electricity, heating, cooling and other services that the company purchases. Scope 3 includes all of the indirect emissions that come from a company’s full supply chain.
Because Scope 3 emissions are also the most general category, they are often the most difficult to measure. And yet they might in fact make up the largest share of the company’s overall carbon emissions.
Amazon illustrates the importance of monitoring Scope 3 emissions. The company is essentially washing its hands of its indirect carbon footprint when it could be using its position as leverage to get its suppliers to contribute to its carbon-accounting process. The ecommerce giant should require each supplier to provide carbon reporting for its products and business operations so that Amazon can compile its own carbon balance sheet.
Once a tech company has calculated its full carbon impact, it must seek ways to reduce that impact. Only then can it move towards a more sustainable business model. One way to do this is to tackle the one habit most tech companies are guilty of: Encouraging overconsumption.
Apple is notorious for creating and marketing its products with a sort of built-in obsolescence. The company makes it extremely difficult for users to replace the lithium-ion batteries in their iPhones, with the unspoken goal of encouraging users to upgrade to the latest iPhone.
The company’s desktop computer, the iMac, while durable and capable of running for an extended amount of time, will eventually become incompatible with new and updated software, web browsers and peripheral accessories.
In short, even if your computer or iPhone is still functioning perfectly well, eventually it will become virtually useless as Apple releases software updates that older devices don’t qualify for. Clearly, this is ultimately an unsustainable practice.
Green regulation is the future of tech
As we know, a lot of what companies tout as sustainable practice is just so much marketing blather. And “net zero,” at least as it is currently practiced, is sadly a misnomer. According to a 2022 report by the Corporate Climate Responsibility Monitor, the “net zero” targets of 25 major companies actually resulted in only a 40% overall reduction in emissions from those companies.
Clearly, relying on companies to regulate themselves is not the answer. There’s a real need for increased regulation, not only to eliminate the greenwashing but to progress much more quickly toward the real end goal: preventing environmental catastrophe.
It’s time for government and businesses to work together to create practical and measurable metrics for companies to incorporate into their regular reporting processes. Companies need to account for carbon in the same way that they account for every penny that passes through their businesses. And then these numbers need to become public to keep these companies accountable.
Alexis Normand is co-founder and CEO of Greenly, which provides carbon assessment and accountability solutions for small to large companies.