With half the world now online, the growth of the digital ecosystem is transforming the way we live and do business in ways we are only just starting to comprehend.
Technology has a fundamental role to play in addressing climate change and reducing emissions, and the ICT sector itself is already facilitating emission reductions across all sectors. What's more, the Global e-Sustainability Initiative's (GeSI) #SMARTer2030 initiative reveals that ICT has the potential to reduce global CO2 emissions by 20% by 2030, hold emissions at 2015 levels, and decouple economic growth from emissions growth.
All this sounds promising, but what about the ecological footprint of the digital industry itself?
When compared with other sectors, the carbon footprint of ICT does not seem particularly significant, currently making up around 1.5% of total global greenhouse gas (GHG) emissions. However, according to a recent paper published in the Journal of Cleaner Production, this footprint will grow to account for as much as 14% of global emissions by 2040 – that's about half the emissions of the global transport sector.
As ICT's potential to drive low-carbon economic transformation and global climate action becomes more apparent, its growing emissions emerge as a barrier to overcome if the sector is to truly embrace its role as a climate-leading industry – and reap the associated financial opportunities.
"Telecommunications networks and data centers consume a lot of energy to serve you and most data centers continue to be powered by electricity generated by fossil fuels. It's the energy consumption we don't see", says paper co-author, Dr Lotfi Belkhir.
Smartphones are the major driver behind growing emissions from data centres and communication networks – by 2020, the footprint of smartphones alone will surpass the combined contribution of desktops, laptops and displays. These small, handheld devices take relatively little energy to operate, but 85% of their emissions come from their production chains. And as more and more people come online and have access to smartphones, more and more energy is required to power these data centres.
So how can key industry players and business address these challenges and embrace ICT's full potential as a climate-leading industry?
For starters, companies need to begin analysing their footprint utilising the GHG Protocol scopes to understand the emissions of their products across the entire value chain. While generally most emissions for ICT companies will come from energy consumption (scope 2), there are cases – e-commerce companies, for example – where scope 3 emissions, such as those from transport, are a major factor.
Understanding where emissions come from in the first place allows businesses to identify emission reduction opportunities in different parts of the value chain that will allow them to profit from improved climate performance.
While mapping emissions is the first step in any corporate emission reduction strategy, setting and accomplishing climate goals, such as Science Based Targets (SBTs), is the second.
As the digital ecosystem depends on energy, in this stage it is fundamental for ICT companies to commit to energy efficiency measures across networks and source renewable energy where possible. Here, companies can combine solutions to meet their targets:
The good news? Investing in renewables pays off!
Enterprises participating in the RE100 initiative consistently perform better than their competition on two key financial indicators: net profit margin, and EBIT margin. The difference is significant – and this is particularly true in the IT and telecommunications sector (up to 7.7 %).
The major industry players already know this, and technology companies are already the biggest buyers of clean energy. According to a report from BloombergNEF, many corporate sustainability plans promote actions that (1) reduce or offset emissions internally, and (2) incentivise the construction of new clean energy projects – yet these activities would not approach current levels without the opportunities for long-term savings.
Broader and more integrated carbon reduction strategy should also include carbon credits, which are an internationally recognised way for organisations to manage unavoidable carbon emissions.
While the growing influence of ICT on our lives is already apparent, the sector is only just beginning its sustainability journey.
By implementing low-carbon and sustainable practices to overcome existing obstacles such as those relating to energy, ICT companies can progress on this journey towards capitalising on its climate-leading potential.
Ensuring GHG emission reduction efforts are consistent with science and the goals of the Paris Agreement, companies in the digital sector can not only leverage a competitive advantage, but also send one very clear message to stakeholders:
Sustainability is key.
Is your ICT business looking to join the growing movement to reduce its carbon footprint and reap the environmental, social and financial benefits? Read more about South Pole's renewable energy solutions and get in touch with one of our experts here.
 Making Business Sense: How RE100 companies have an edge on their peers', 2018