Reinvention of Technology Amidst a Crisis
Tech companies have, in the recent past, come out to show support for tackling the dooming climate crisis. For example, shortly before the COP26 UN summit in Glasgow last year, giants including Apple and Microsoft pledged to reach a carbon-neutral supply chain and carbon negative by 2030, respectively. Private players are essential to achieving the broader sustainability goals as they bridge gaps that governments cannot deliver on themselves. However, their ongoing partner contracts with significant oil and gas producers, like ExxonMobil, Chevron, and Suncor, raise doubts over the credibility of such commitments, and their combined power usage of more than 45 terawatt-hours a year from their data centers poses a deep-seated issue. In other words, action is necessary. The amount offset is not an accurate measurement but a small part of the equation. Scope 3 GHG emissions indicate the real impact of these firms as they take into account all indirect emissions, including employee commuting, waste management, and use of purchased capital goods, which collectively constitute a significant contributor to a company’s carbon footprint. GAFAM (Google, Apple, Facebook, Amazon, Microsoft) forms approximately 2 to 3 per cent of the global Scope 3 GHG emissions, and Amazon leads with over 45 million metric tons of carbon dioxide equivalent (MTCO2e). Companies often grapple with reducing such emissions due to their immeasurability, which is worrying on a large scale.
Can Big Tech be trusted?
For years, firms mastered manipulation and treated their audience’s attention as a scarce commodity. Therefore, it is not hard to believe that our decisions are greatly affected by the tech we use. Shifting gears can be challenging, and this is not unknown to corporations but used to their advantage. The Big 5 tends to command unprecedented levels of dominance, making up to 18 per cent, in value, of the S&P 500 by market capitalization. Such figures indicate a cycle that we cannot fix unless pledges are followed through with consistent progress. This invokes the fundamental question, how much truth is there to these “carbon offset” and “net-zero” claims? Research by NewClimate Institution and Carbon Market Watch evaluated 25 major companies across different sectors and geographies to assess their transparency and integrity rating. On average, the most prominent firms planned to reduce absolute carbon emissions by only 40 per cent, not 100 per cent, as mentioned in their pledges. Shockingly, none of the companies scored a high integrity rating, with even Apple and Sony in the moderate range. Lead author of the study, Thomas Day, also said, “We set out to uncover as many replicable good practices as possible, but we were frankly surprised and disappointed at the overall integrity of the companies’ claims.” Carbon offsets are, therefore, simply a license to pollute, with companies buying carbon credits from organizations that plan to minimize such effects through clean energy and other sustainable practices. Carbon contracts are not always under standardized rates or made with ethical parties. Quite often, the companies themselves tend to forgo the occurrence of any moral hazard. Therefore, we must not consider promises of this nature at face value without climate disclosure. The 2022 UN report also recognized these false pledges, emphasizing regulatory action. Secretary-General António Guterres, at the recent Egypt COP27 summit, vowed that there would be “Zero tolerance for net zero greenwashing.” This is proof enough that more light needs to be shed on the issue of accountability concerning the climate crisis, which can be destructive if not dealt with sooner.
Climate tech, emerging as a maturing asset class, has seen a strong investment surge since last year. This investment class currently stands at a staggering $73.86 billion. Globally, 160 climate tech unicorns have come to the fore, with companies valued at over $1 billion. PwC’s State of Climate Tech 2022 report echoed the same trend, suggesting that over $50 billion was injected as VC funding this year. While this is a step forward in the right direction, the funding falls short of the $1 trillion required to curb climate change.
To collectively reach the 1.5-degree celsius target set by world leaders at COP26, businesses need to curb their net Scopes 1, 2, and 3 emissions. As opposed to just the net zero targets, entities can establish trust by setting defined guidelines using the Science Based Targets initiative. COP27 builds on the ambitious targets of the Glasgow summit to check for accountability, and SBTi metrics can aid in striking that balance between optimism and reality. There is a dire need for integrating sustainable tech through greater climate financing by governments and private institutions. Along with these measures, we can utilize the substantial power of Big tech for accelerated change. Climate crisis, as we know it, is a result of such institutions and their actions, and only by making structural changes can we reach our climate goals.