Tech Companies and Sustainability: How Eco-Friendly Technology has Changed the Tech Industry
Today we’ll dive into FAANG and view how eco-friendly tech and the race to become greener have changed the industry leaders.
FAANG - Who they are and how they’ve led the way to prioritizing sustainability
First of all, what does FAANG mean? FAANG is an acronym used to group together the American tech giants: Facebook (now Meta), Amazon, Apple, Netflix, and Google (under Alphabet). In part due to an inherent leadership in redesigning corporate responsibility due to their vast influence on the world, and in part because of the high pressure from investors, 83% of global tech companies are now reporting on sustainability. Today, 70% of technology companies report carbon reduction targets. Several leading technology companies have made public proclamations of their goal to become carbon neutral.
When looking at various Environmental, Social, and Governance (ESG) ratings, the analytics used by the financial world to assess companies’ sustainability performance, tech companies usually score quite high and it’s been well-reported that they have taken huge steps to greenify and de-carbonize their operations - but to what extent is this the case and is it enough?
Due to their vast influence on the world, and in part because of the high pressure from investors, 83% of global tech companies are now reporting on sustainability.
Due to their vast influence on the world, and in part because of the high pressure from investors, 83% of global tech companies are now reporting on sustainability.
Google began its ESG journey very early on:
Source: by Google, “Accelerating Climate Action at Google and Beyond - A progress update”, November 2022
In fact, it claims it has incorporated sustainability in all its operations since 1998 by always setting aspirational environmental goals. This allowed them to be the first major company to become carbon neutral. Google continues to lead the way with close attention to its energy consumption and emissions disclosures as well as a variety of projects to involve users and wider communities.
Meta
Meta instead started its journey a bit more recently, when in 2017 when Meta committed to reducing its emissions by 75% and powering global operations 100% with renewable energies by the end of 2020. It successfully achieved Net Zero by 2020. Its most recent sustainability report also follows through with an impressive analysis of its alignment with material ESG topics and the UN SDGs. The Net Zero goal is now extended to its entire supply chain by 2030.
In 2017 when Meta committed to reducing its emissions by 75% and powering global operations 100% with renewable energies by the end of 2020.
Apple
Apple also has an ambitious plan to make all its products carbon-neutral by 2030, after having achieved carbon-neutral status as a company in 2020. The Silicon Valley tech giant also already runs 100% on renewable energy using upcycled or recycled materials within its products. Yes, that’s right, your iPhone is made with 100% recycled gold plating, and 100% recycled rare earth elements; in addition, all magnet and antenna lines are made from upcycled water bottles.
Apple also has an ambitious plan to make all its products carbon-neutral by 2030, after having achieved carbon-neutral status as a company in 2020.
Netflix
Netflix claims it will achieve Net Zero by the end of 2022. Half of its emissions lie within the physical production of the stories you watch on Netflix, followed by corporate operations and purchased goods, and streaming. Since 2020, Netlifx diligently reports on its most material issues following the Sustainability Accounting Standards Board’s mapping - an important measure to lead efforts in standardization of ESG reporting for corporates.
Netflix claims it will achieve Net Zero by the end of 2022.
Amazon
Amazon, instead, is lagging behind, which may be due to the nature of its business which requires more complex strategies to obtain such ambitious goals as Net Zero. In fact, its current target to reach Net Zero is set for 2040. Nonetheless, in 2021, Amazon managed to get up to 85% of its energy consumption produced by renewable energy sources. However, Amazon has also been accused of greenwashing and large environmental damage. For example, it’s been reported that Amazon generates as much pollution as 180 gas-fired power plants might pump out annually and that for multiple years communities where Amazon builds warehouses called the company out for causing more smog, soot, and noise to their neighborhoods.
Here it’s important to keep in mind that although Amazon is an e-commerce platform, is also a company with >1 million employees globally, >180 warehouses, and an estimated 7.7 billion packages shipped in 2021. Differently from Meta and Google, Amazon faces a variety of large-scale environmental and social challenges.
Amazon’s current target to reach Net Zero is set for 2040. Nonetheless, in 2021, Amazon managed to get up to 85% of its energy consumption produced by renewable energy sources.
FAANG - Who’s actually going green?
Arguably, all FAANG companies are going green! It really depends on our definition here of what ‘going green’ really means. If it’s asking which companies are taking environmental issues seriously enough to measure themselves, set ambitious targets, and follow through on most of their promises, then all FAANG companies are putting in the necessary effort, at least on paper.
When we think of ‘going green’ as in actually revolutionizing the entire way of operating for a company so as to meet a variety of environmental targets like net zero, then we can start to clearly see some leaders over others. It seems quite clear that software-based companies are on top of the chain, with Meta having achieved Net Zero two years ago and Google's carbon neutrality since 2007. They’re followed by Apple and Netflix which have also recently achieved carbon neutrality by 2020 and Net Zero by 2022 respectively. Amazon sits at the bottom of this infamous list between setting its Net Zero target much later in 2040 as it simultaneously faces multiple accusations of causing environmental and social harm across its global operations.
But let’s not be so quick to judge…
It wouldn’t be fair to compare all these companies as equal simply based on market size and being part of the ever-expanding definition of tech companies - being tycoons in different industries, they can’t all be measured by the same standardized scale. As previously mentioned, It’s relatively much easier to achieve certain environmental goals when your only or main sources of emissions are your data centers. As opposed to a huge global and varied supply chain like Amazon.
Greenwashing and Elbow Grease - Where we need to do better
Nonetheless, just because it’s harder to do it, it doesn’t justify companies from greenwashing. For example, Amazon mentions multiple projects to decrease the use of single-use plastics. Its latest sustainability report states “we also improved the composition of our single-use plastic packaging to use less material and incorporate more recycled content. In 2021, we increased the recycled content of our plastic film bags from 25% to 50% and that of our plastic padded bags from 15% to over 40%. Through these collective efforts, we avoided over 30,000 tons of plastic across North America in 2021”. Yet, Oceana, an international NGO, exposed Amazon’s enormous and rapidly growing plastic pollution problem: The report found that Amazon’s estimated plastic packaging waste, in the form of air pillows alone, would circle the Earth more than 600 times.
Yet, Oceana, an international NGO, exposed Amazon’s enormous and rapidly growing plastic pollution problem: The report found that Amazon’s estimated plastic packaging waste, in the form of air pillows alone, would circle the Earth more than 600 times.
But greenwashing is not unique to Amazon. Apple too can be easily framed for its greenwashing: while it proudly proclaimed carbon-neutral status, you should know that this only applies to its direct operations, which account for a microscopic 1.5% of its carbon footprint when considering the entire supply chain.
It is also not ideal that Apple, like many other competitors, keeps releasing new iPhones every year and stops providing software updates to older models leaving them in the graveyard. “At present, in Europe, the average smartphone is kept for less than three years before it is thrown away. Extending their lives by just one year would save two million tonnes of emissions in Europe alone” (source).
Practical application - How we can take steps to do better
It can get quite depressing when you realize that a lot of the achievements mentioned by large corporations actually serve as a facade. You may feel upset or even betrayed by too-good-to-be-true marketing campaigns. The truth is that all companies are subject to the same capitalistic incentives for ever-growing expansion and for as much as there is increasingly strong public sentiment towards planet-unfriendly practices, this does not directly affect companies’ financial performance. This means that a shift is required in both individual behavior and market forces. “Sustainability needs to matter far more than size”. One positive takeaway is that we’re seeing an upwards trend in green firms – those working to grow their business in a way that either works with our Planet or works to change a system to create a more positive impact than past alternatives.
As consumers, we still play a role and can start by:
Supporting companies with higher supply chain transparency
As we’ve seen with the example of Apple, many companies ‘get away’ with boasting about grand achievements because they only report and account for their headquarters, rather than the entire supply chain. A big issue in corporate sustainability is the lack of ownership of the supply chain, where factories are usually subcontractors in developing countries with very little to no environmental and social standards for the extraction of materials and production of items. Before purchasing a product, find out how and where they source their materials.
2. Purchasing products made out of recycled or upcycled materials
Among different brands selling the same item, you’ll often find the company that is most dedicated to utilizing materials from alternative sources. As a consumer, you can actively decide to support one competitor among its peers by looking into the materials chosen to produce the product as well as the packaging.
3. Point the finger at unsustainable behaviors and greenwashing by corporates
We have access to one of the most powerful tools to influence people around the world: social media. We should use this to our advantage, to raise awareness of issues that matter to us. If you see it, say it! We may not live next to a factory and be able to report on labor rights issues, but even reporting the insane amount of plastic used for packaging from your Amazon delivery is a start.
Key Takeaways
Most tech companies around the world report on their sustainability performance. Many of them are pioneers in setting decarbonization targets and achieving them before other large companies in other industries.
It’s important to differentiate among tech companies, not all companies provide a software solution like Google or Meta. Apple and Amazon also have a complex supply chain that is exposed to a variety of ESG risks that do not affect software companies.
All companies are trying to make themselves look better than they truly are, a few greenwashing instances have been reported already, especially against Amazon.
Companies are also under a lot of pressure to keep growing at unsustainable rates - sustainability needs to matter far more than the size of the company.
You can support corporates to do better by purchasing from companies that have increased transparency on the supply chain and usage of recycled and upcycled materials in their products. You can also raise awareness on greenwashing through social media.
