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Now let’s get to business. On a genuinely important topic that has been taken for granted by the tech sector. Let’s talk about climate.
– George
THE BIG TAKE
Big Tech needs to take climate seriously again
Climate and sustainability have been a great story for tech for a while. You might even say that Big Tech has been a bit smug about it. They tout being leaders in reaching carbon neutrality (Google was the first carbon-neutral business in the world in 2006) and setting ambitious targets for reaching full net zero (Google, Apple, Meta, and Microsoft are all targeting 2030, Amazon says 2040) and making significant investments in important areas like water positivity and reforestation.
It’s a great story for tech. And in my experience, their sustainability teams really mean it. I once witnessed someone shed literal tears while talking about the importance they could play in saving the world.
Looking ahead, there are two pillars of what tech companies are doing when it comes to combating climate change: 1) Get themselves to net zero, and 2) Get others to net zero. I think both need a bit of a revamp.
Get to Net Zero: Still a way to go, and about to get much harder.
Help others go Net Zero: A huge opportunity that should get more consideration.
Get to Net Zero
Despite many tech companies being carbon neutral in their own operations already, most won’t get there until at least 2030.
Studies suggest these commitments are “low integrity”. Companies are not truly addressing the full value chain of emissions, and in many cases, they’re relying too heavily on offsets, which it turns out don’t really do much.
Corporate Climate Responsibility Monitor assessment of pledges
Why are tech’s commitments seen as low integrity? Well, in a lot of ways tech is actually kinda bad for the climate. A recent report from Electronics Hub found that:
Samsung has the largest carbon footprint of any major tech company, emitting 20M metric tons of CO2 per year;
Amazon is the largest of the GAFAM emitters at 16M metric tons; and
TSMC emits the most per employee.
This doesn’t even touch on the various sustainability issues relating to mining and minerals, as it really only highlights the carbon-intensive nature of the tech hardware supply chain. But it’s not just hardware getting scrutiny. Attention to the software side is growing, too. Why?
Data centers are highly energy intensive.
Regulators are connecting climate to the ads ecosystem. An EU market investigation of AdTech noted a study suggesting that each ad impression leads to 1 gram of Scope 3 carbon emissions (emissions from assets not owned or controlled by the reporting organization but included in its value chain). Another compares every 1M ad impressions to a flight from Boston to London.
A company called Scope 3 launched to address scope 3 emissions in the media and advertising industry.
The carbon footprint of online ads
The real problem for tech: All of this is about to get much worse.
AI is rapidly accelerating the need for data centers since it is incredibly computationally intensive.
Emissions from AI model training:
The explosion of AI use is bad news for the world unless data centers become significantly more efficient — many companies are trying to make this happen. But currently, the computing power required doubles every 3-4 months. One study suggests that at least 8% of electricity production will be used for computation and associated cooling by 2030.
On top of this, there’s a growing focus on hardware that will make things worse still. After a16z’s famous call that “software is eating the world”, their next pronouncement in 2020 was that “it’s time to build”. Part of the concept is that the era of ever-growing software value is diminishing. And now things need to be built - from vaccines to housing, to transportation, and more.
Looking at the key technologies driving excitement today, look at all the things that will need building!
Space: The final frontier is a huge emerging industry and obviously requires a bunch of rockets.
Quantum computing: The manufacturing process is pretty intensive, as far as I understand it (which is not very much).
BioTech: Its manufacturing processes are again more carbon intensive than basic software.
Blockchain: If it returns, the other supposed revolution in technology is blockchain, which has well-documented environmental challenges.
Metaverse: Meta’s shift to hardware already creates supply chain headaches for the company. That is because the company isn’t used to having actually to make things, and it’s not used to the carbon footprints that come with doing so, either.
Altogether, the desire to capture the next era of growth will significantly raise the energy intensity of tech companies in ways that might well disrupt their existing Net Zero strategies.
Help others get to Net Zero:
So getting to Net Zero looks at risk for tech companies themselves. What about helping others? This is a massive, once-in-a-lifetime opportunity, and it feels like most of Big Tech is missing the forest for the trees.
Most are focused on releasing climate-friendly solutions in their existing product areas.
Meta wants to help tackle climate misinformation.
Google wants to empower people to make better decisions, like eco-friendly routing on Maps.
Amazon and Salesforce are selling sustainable cloud solutions.
While helpful and logical, these are missing the point a bit. The US and the EU are set to spend literal trillions of dollars on climate change over the next decade.
There is a land grab going on from companies that can provide solutions. It’s not just massive solar power or carbon capture projects; many of them are smaller technological solutions. Some of the tools are pretty incredible pieces of technology: continuous emissions monitoring cameras, plastics recycling detection tools, huge battery breakthroughs, software tools that monitor and optimize emissions performance, and much, much more.
The companies winning this money right now are the old guard. The manufacturers that have sat on the sidelines and watched Big Tech take all of the excitement and economic upside of the last decade of digitalization. It feels hard to justify that tech companies are spending billions on things like the metaverse or even adjacent things like wearables or payments tech with climate sitting right under their noses.
Scott Galloway said that Big Tech’s trillion-dollar market caps leave only a few sectors tech companies can target that would seriously move the needle. Let’s look at where that stands:
Government: We’ve seen that a lot already.
Healthcare: Every tech company and their dog is doing things in healthcare, from boring stuff like doing the same healthcare but better (Amazon), to tech like fitness and wearables, and to new frontiers like biotech.
Finance: Here again, we see tech companies pouring money into payments, crypto, and every other fintech idea you can conjure up.
And then there’s Cleantech: Here, tech companies are doing a lot, but there’s not much in terms of big market intention. It’s all VC investments, CSR initiatives, and personal projects like Bill Gates-driven funding in the EU. There's no business strategy to become a real player in this space.
So, this is a call to action. It’s time for tech to rethink their own net-zero strategies as the next wave of technologies emerges. And it's time to recognize the gaping trillion-dollar market just begging for a major tech entrant.
HMM, INTERESTING
Top 5 - The eye-catching reads
The FTC goes in on generative AI: I’ll just quote directly - “Should you even be making or selling it? If you develop or offer a synthetic media or generative AI product, consider at the design stage and thereafter the reasonably foreseeable – and often obvious – ways it could be misused for fraud or cause other harm. Then ask yourself whether such risks are high enough that you shouldn’t offer the product at all. It’s become a meme, but here we’ll paraphrase Dr. Ian Malcolm, the Jeff Goldblum character in “Jurassic Park,” who admonished executives for being so preoccupied with whether they could build something that they didn’t stop to think if they should.”
The Journal of Influencer Law: A book review that calls back to a prescient 2020 study of social media influencer law. It forms a call to action for more study of this area of the law that I highly endorse.
Meta’s Superapp play is gaining steam in Brazil: Meta got a payments license, another step towards the super app strategy they and others are pursuing, alongside subscriptions, in the wake of regulatory pushback to targeted ads.
Daphne Keller is the smartest person on speech: A new paper on platform transparency and the first amendment. She goes into the transparency issues at play in the NetChoice cases and how they might affect users’ speech.
Great read in Wired: “A unique experiment that could make social media better”: Academic researchers work with Big Tech to find other things to optimize for other than engagement.
AND, FINALLY
My top charts of the week
Netflix and YouTube are a large share of internet traffic
Suddenly interesting again as regulators in the EU and India try to make tech companies pay for their telecoms network usage.
Republicans and Democrats differ (surprise!) on what to regulate
Where they differ most and least is interesting. Republicans are around or below 50% for internet, technology, and social media regulation. Democrats are close to a majority on advertising. Exactly the same numbers for news media!
Australians love charts
ACCC maps out the interconnectedness of different companies and key product areas as part of their ongoing Digital Platform Services Inquiry
