Decarbonising and digitisation

Earth Capital's Avent Bezuidenhoudt looks at our insatiable data usage

Throughout the pandemic, people were quick to point out the environmental benefits the global lockdowns triggered. Scientists and researchers marvelled at the largest annual drop in CO2 emissions, fish returned to Venice’s canals, goats took over the streets in one deserted Welsh seaside town, and those living in Jalandhar in northern Punjab, India, had their view of the Himalayas restored – something which had been hidden by pollution for the past 30 years.

Some went as far as claiming ‘nature is healing’ in our absence, all while blissfully unaware of the environmental impacts of a problem growing at an expeditious rate – our insatiable data usage.

We all know the pandemic supercharged the existing trends of digitisation in our professional and private lives. Ofcom reported the UK’s internet use surged to record levels in 2020 due to our newfound reliance on Zoom, FaceTime, and Teams, as well as our dependence on streaming services and games consoles to alleviate our lockdown-induced boredom.

See also: – Digital inclusion needed to drive network-wide sustainability

Emissions

However, there is a painful lack of understanding surrounding the nature and scale of our addiction to data, both generally and within the investment community. This is especially true for the latter, with tech companies rated among the least controversial operators by ESG-rating agencies.

To give this matter some context, French thinktank The Shift Project published their research into the carbon emissions from crucial tech infrastructure and the data servers that enable cloud computing. They found these emissions now exceed those of the pre-pandemic aviation industry, which generated almost 1Gt of CO2 in 2019.

It’s a problem that Big Tech is aware of but isn’t necessarily eager to highlight given that the annual energy consumption of the big five tech companies – Amazon, Google, Microsoft, Facebook and Apple – is around the same as New Zealand’s.

In an effort to curtail their environmental impact, Google pledged to power all of its data centres and campuses with carbon-free power and has said it will use its artificial intelligence enabled Carbon-Intelligent Computing Platform to shift energy demand to different datacentres based on the availability of renewable energy and the local temperatures.

Smaller tech companies that can’t leverage bespoke AI-backed solutions are also aiming to address this problem, with Dropbox recently promising to power datacentres using only renewable energy. 

Water

While the tech behemoths and their software solutions or green energy suppliers might offer some reassurance, we must not forget that this same infrastructure requires an extensive volume of clean, drinking-quality water to prevent overheating and ensure continued operation 24 hours a day, 365 days a year.

Only recently have people recognised the significance of this demand. In three of the most arid and water-scarce states in the USA, Google requested 2.3bn gallons of water to keep its data centres cool – enough to meet the annual water needs of c. 230,000 families.

With water levels in the Colorado River, a river that serves 40m people, falling to record lows and with the prospect of the first Federal water cuts looming, investors must switch on to this issue and undertake meaningful analysis of the environmental impacts of their technology investments. 

There is no catch-all solution to the digital economy’s thirst for our water, but it is clear we cannot justify datacentres in the desert, nor should investors tolerate them.

One operator that has gone some way to alleviating pressure on local resources is SoftIron, a company backed by Earth Capital that offers state-of-the-art hardware and software solutions for scale-out data centres, capable of delivering energy savings of 80% due to a massive reduction in heat generated by the racks which datacentres are comprised of. This, in turn, decreases the overall demand for water for cooling purposes while also extending the lifespan of these racks, which would previously burn out after three years of use. 

Need to respond

Society’s adoption of new technologies and habits will endure, as will the associated environmental impacts of our data usage, following the Covid-19 pandemic.

In our response to this issue, we should not seek to curtail new digital infrastructure or limit access to the internet. Indeed, internet access and cheap data are cornerstones of economic development, with mobile banking providing financial inclusion to millions and ed-tech revolutionising how our children learn.

Instead, investors need to delve beyond the headline ESG scores to understand the impact their digital investments have on the communities in which they operate, whether that’s water, energy use, or CO2 emissions.

This means developing an understanding of the data supply chains that underpin modern lives and engaging with management teams to seek their improvement, whether that be through software, hardware, or the use of renewable energy. 

With global data consumption expected to rise at 26.9% CAGR between 2020 and 2025, there is immeasurable opportunity but we place ourselves at peril if the environmental consequences develop at a similar pace.

Avatar

Natalie Kenway

Natalie is global head of ESG insight for ESG Clarity and has been an investment journalist for 16 years. She won Editor of the Year at the Aviva Investors Sustainability Media Awards 2021, and was Winner...