In 2024, the average global temperature exceeded the 1.5 degrees Celsius threshold above pre-industrial levels for the first time. Companies must speed up their net zero efforts to curtail the impact of worsening climate conditions. The tech sector contributes significantly to the trend of increasing carbon emissions and although tech companies have ambitious net zero targets, they are far from reaching actual net zero, says GlobalData, a leading data and analytics company.

GlobalData’s latest report, “Net Zero Strategies in the Tech Industry,” analyses the net zero strategies of the 20 largest tech companies globally, including consumer electronics manufacturers, semiconductor companies, software companies, and hyperscale cloud providers. The report found that despite tech companies having ambitious net zero targets, they are still far away from reaching actual net zero.

AI Data Centres

Growth in artificial intelligence (AI) has significantly increased the demand for data processing capabilities and capacity, leading to the expansion of data centres globally. These data centres consume vast amounts of energy and water and contribute significantly to CO2 emissions. Initiatives to make data centres more sustainable include increased use of renewable energy, new cooling technologies, and design optimization.

Carolina Pinto, Strategic Intelligence Analyst at GlobalData, comments: “The global efforts to adopt renewable energy is causing a huge strain on the existing energy supplies and electricity infrastructure. Growing data centre demand is only worsening this pressure."

“Data centre investment is unlikely to fall in the next five years. Alongside the increase in energy demand, construction and manufacturing emissions also significantly contribute to data centre-related pollution.”

Overreliance On Low-Quality Energy Certificates And Carbon Offsets

The primary net zero strategies in the tech industry are the transition to renewable energy to reduce energy-related emissions and the use of carbon offset credits to offset residual emissions. Although the transition to renewable energy is crucial to reduce emissions, many tech companies rely on untraceable energy attribute certificates to claim renewable energy use. All the leading tech giants also purchase carbon offsets to offset non-energy-related emissions, typically buying carbon offset credits from nature-based avoidance offsets.

The Science Based Targets initiative (SBTi) recommends that to reach net zero, companies should reduce emissions by 90% between 2020 and 2050 and offset 10% of the residual emissions. All tech companies that purchase carbon offsets offset a larger share of their emissions than recommended by SBTi. As a result, SBTi removed its approval of over 200 companies’ net zero commitments, including Microsoft, Netflix, and X in March 2024.

Pinto concludes: “While the tech industry is more advanced in its net zero journey than other industries, it is clear that many tech companies prioritize financial solutions over the adoption of more sustainable practices to reach net zero.”