Investing in Big Tech: Ranking the tech giants’ climate commitments

The Clim8 Investment team doesn’t believe Big Tech (Google, Apple, Facebook and Microsoft) provides solutions to the climate crisis. Hence why we do not hold them in our Clim8 portfolios. More our team’s view on Big Tech here.

Still, we paid close attention to their recent climate commitments, taking the measure of Big Tech’s leadership to a net zero transition economy. And have ranked all four companies accordingly to provide clarity on the actual impact of such measures.

4. Facebook

• Net Zero by 2030
• Announcement: September 2020
• Science Based Target Initiative: Committed
• Climate Investment Pledge: n/a

Facebook comes in 4th place as although their pledge is ambitious it falls short in a number of areas.

Facebook is unique as its social networking sites have immense influence on people’s thoughts and behaviours. Its largest footprint is arguably on how it impacts climate change education and the release of their Climate Science Information Centre was very exciting. 

It was also however plagued by the sheer amount of climate misinformation spread via its algorithms and paid adverts. Unfortunately, no acknowledgement or strategy is outlined in tackling this as part of this announcement.

Facebook’s Net Zero commitment is holistic. It includes a commitment to set a Science Based Target (yet to be approved) and to invest in carbon removals as part of its offsetting strategy.

“Our approach to carbon removal builds on carbon credit purchases of more than 100,000 metric tons in 2019 from projects such as forest conservation.”

–Facebook Sustainability

This impressive offset number however amounts to less than half of their 2019 emissions — meaning they fall shy of achieving Carbon Neutral status. Unsurprisingly, they also failed to provide any transparency on the offset projects they support.

The criteria for their intended carbon removal strategy is welcomed, even if it lacks in detail: “When selecting carbon removal projects, we will prioritize those that demonstrate additionality, are designed for permanent impact, align with social and environmental co-benefits, and enable climate justice and equity. In addition, project benefits need to be quantified using recognized standards and assured by an accredited third-party verifier.” – Facebook Sustainability

Their climate action strategy is focused on energy efficiency and they have achieved 3rd party certification (LEED platinum). They unfortunately fail to break down what they mean by 100% renewable energy. Are they planning on developing their own projects, purchasing of Renewable Energy Credits (RECs) or simply source from a renewable energy provider? These details matter.

They are the only ones to talk about material sourcing for their data centres — also explained by the fact they procure very few other raw materials. Their purchasing of a natural fiber-filled polypropylene (NFFPP) — derived from renewable jute fibers — has apparently reduced their footprint substantially but it’s not disclosed by how much.

3. Google

• Carbon-free by 2030
• Announcement: September 2020
• Science Based Target Initiative: n/a
• Climate Investment Pledge: £10 million

Despite the somewhat comical wording, the Carbon-free commitment is ambitious: Google wants to bring their direct (Scope 1) and indirect (Scope 2) emissions to zero, 24/7.

Much like all of the large tech players, the big challenge here is the usage of fossil fuels to power data centres during those hours where the sun or wind don’t generate enough energy or as emergency backup.

Google is using its expertise to improve predictability of renewable energy. For example, through a collaboration with DeepMind they have developed a machine learning system that predicts power output from wind farms 36 hours in advance, which in turn makes it more valuable to the electricity grid.

In land-constrained countries Google is also showing creative ingenuity. For instance, by collaborating with local authorities for the placement of solar panels.

Google has been Carbon Neutral for over 12 years through the purchasing of renewable energy and over 19 million tCO2 carbon offsets with 40 carbon projects. They are now extending carbon offsets to cover all of their historical carbon emissions since their founding in 1998.

Unfortunately they only name one of the projects they have supported (a landfill gas project in upstate New York) and provide very little transparency on what they mean by ‘high quality’ offsets — a failed opportunity for shared learning. The only detail provided is a document from 2011 that describes in generic terms what offset projects are and what their due-diligence looks like.

To achieve their 2030 ambitions they will be exploring new tools “such as advanced nuclear, enhanced geothermal, green hydrogen, long-duration storage, or carbon capture.” – Google 24/7 by 2030

Where Google’s commitment lacks in ambition slightly is with regards to Scope 3, i.e. all other indirect emissions arising in the value chain. They manufacture far less physical products (e.g. Pixel Phones) than Microsoft or Apple, however, the lack of clear commitment on their Scope 3 (especially supply chain) emissions is a little disappointing. No mention of Science Based Targets either.

2. Apple

• Carbon Neutral for its supply chain and products by 2030
• Announcement: July 2020
• Science Based Target Initiative: n/a
• Climate Investment Pledge: undefined part of a $100 million Racial Equity and Justice Initiative Fund

This announcement is all about its products which is very exciting as this is by far their most material impact category (76% of emissions are in product manufacturing and a further 19% are the result of transport and use related to products).

They have already been Carbon Neutral for their Scope 1 (direct greenhouse gas emissions) and Scope 2 emissions (indirect emissions resulting from the use of electricity), and have recently extended this to parts of Scope 3 including business travel and employee commuting.

They provide lots of transparency on their renewable energy strategy for electricity (Scope 2) outlying the breakdown of the energy generation they own (12%), where they have an equity stake (4%) and where they have long-term contracts (86%). Unlike Google, they have not made a specific commitment to running on clean energy 24/7.

To make their products more sustainable they plan on:

• Using 100% recycled materials: Which substantially reduces the footprint. For example, usage of 100% recycled aluminium in the enclosure of the 2019 MacBook Air helped cut the product’s carbon footprint by nearly half
• Driving energy efficiency: Both in the manufacturing of their products, their offices and for their data centres. They also make a fantastic statement: “Simply put, the cleanest energy is the energy we don’t use.” This also extends to developing more efficient and durable products, and ensuring all of their suppliers use green energy
• Enabling greener transport: Perhaps the vaguer of their pledges, they plan “to partner with our shipping suppliers to leverage fleet improvements, sustainable fuels, and supply chain efficiencies”

What is also particularly exciting is their communications around their products’ environmental impact through their environmental report cards — see an example for iPhone 12 here.

Their Carbon Neutral commitment is in fact aligned with a science-based Net Zero pledge, which involves an ambitious 75% reduction in emissions with a 2015 baseline. They plan to offset the remaining and unavoidable 25% through carbon removals. Carbon removal projects take carbon out of the atmosphere as opposed to avoiding them. Apple has decided here to focus on nature-based solutions that protect and restore forests, wetlands, and grasslands. Excitingly, they also disclose that they are supporting a mangrove restoration project in Colombia and a savannah conservation project in Kenya. Another win for transparency.

1. Microsoft

• Carbon Negative by 2030
• Announcement: January 2020
• Science Based Targets Initiative: Targets Set
• Climate Investment Pledge: $1 billion

Microsoft was the first to announce an ambitious climate commitment this year and what an announcement it was. Carbon Negative means they want to remove more carbon from the atmosphere than they emit, thus going beyond Net Zero. They are also the only tech giant to have an approved target from the Science Based Target Initiative.

Microsoft has been Carbon Neutral since 2012 (Scopes 1 & 2) and has pledged to remove all of its historical emissions since they were founded in 1975 by 2050— a display of true responsibility. Some of the carbon offset projects selected for this will hopefully be announced before the end of the year.

Previously, Microsoft has been very transparent about the carbon offset projects they’ve supported such as clean cookstoves in Kenya to forest protection in Indonesia.

They are currently pursuing LEED Platinum certification for their campuses (no mention of data centres like Facebook) and on the renewable energy front, although they don’t disclose the exact breakdown of their own projects they have developed and invested in a number of projects. They also aim to further “green the grids around the world.” For example, they offer backup generation to the grid in Wyoming and are piloting integrated energy storage batteries with GE in Ireland.

Their $1 billion Climate Innovation Fund is particularly noteworthy. It’s a meaningful amount of money and the fund has clear application criteria. They have already started deploying the money with their first investment ($50 million) in Energy Impact Partners in July 2020.

Microsoft is truly putting a price on carbon across the organisation and their supply chain. They are the only ones to have mandated that their suppliers report on their own Scope 1, 2 and 3 greenhouse gas emissions data by beginning of 2021. They have also set an internal carbon tax that is (actually!) being implemented.

‘Unlike some other companies, our internal carbon tax isn’t a “shadow fee” that is calculated but not charged. Our fee is paid by each division in our business based on its carbon emissions, and the funds are used to pay for sustainability improvements.’

–Microsoft

The Microsoft Sustainability Calculator provides cloud customers with transparency into their total carbon emissions — Scopes 1, 2 and 3 — resulting from their cloud usage. Microsoft is the only cloud provider to to provide this level of transparency.

Finally, they are also piloting Carbon Neutral Xboxes, meaning they have specifically calculated the lifecycle carbon emissions associated with an Xbox, actively reduced its impact where possible and offset the unavoidable emissions, e.g. relating to the product’s raw materials, logistics and/or transport. This is exciting as it’s bringing the conversation about climate change in consumers’ hands. After all, people care most about products, not companies.

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Today, Microsoft’s level of ambition and progress puts them comfortably in first place when it comes to climate action. Close monitoring of announcements relating to Apple’s supplier engagement initiatives, Google’s updates to their Scope 3 strategy and the specifics behind Facebook’s Science Based Target will be key to see if they can retain it.

As the climate crisis becomes more pronounced, we can and should expect bolder climate action from all companies. The ‘tech giants’ have an even greater responsibility as they have the knowledge, means and resources to lead the way. Let’s hope they live up to their commitments and inspire others to follow suit. Humanity desperately needs the good news.

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Author Emilien Hoet is Head of Climate Partner UK. ClimatePartner offer companies climate action solutions.

Capital at risk. Investing in stocks and shares involves a high degree of risk. Please note this information is for illustrative purposes only and it must not be construed as investment advice.