Digital tech adds more than you think to global heating

“Earth’s vital signs are failing.”

That grim prognosis was declared at the beginning of COP 28, the United Nations climate summit, by UN Secretary General António Guterres. Initial discussions at the conference focused on climate-action progress and speeding up the energy transition. Still, there’s one important aspect of climate solutions that deserves a lot more attention than it’s getting in the media — the environmental impact of digitization.

At the UN climate conference in Dubai, the International Telecommunication Union discussed the need to “decarbonize digital” to accelerate the green transition. While digital technologies can play a pivotal role in expediting climate action and mitigating emissions, it’s essential to recognize that digital activity is a significantly underestimated source of carbon emissions.

Digital technologies contribute four per cent of greenhouse gas emissions (GHGs), surpassing emissions from industries like aviation, which are more prominently discussed in climate conversations.

Projections indicate this figure may double to eight per cent by 2025, with the digital carbon footprint anticipated to account for 14 per cent of global emissions by 2040. The need for climate action is more urgent than ever, and businesses have a big role to play.

With 2024 around the corner, there’s no better time for a renewed focus on climate efforts. While awareness of the impact of our digital activity needs to improve, sustainability both on and offline continues to be a growing concern. Here is a forecast of the sustainability trends that will be at the forefront of businesses in the coming year.

Employee-driven ethical demands

Last month, the federal government released a proposed bill with a greenwashing amendment to Canada’s Competition Act, which requires companies to back up any claims about their products’ environmental or climate benefits. This amendment is a step in the right direction, but it does not go far enough and is receiving pushback from some groups.

Greenwashing will be scrutinized more than ever and we can expect to see employees demanding more ethical business practices and more wariness when it comes to companies’ statements about their “net-zero” commitments.

As Jack Bruner, co-founder of the Carbon Neutral Club, recently said: “We’re seeing billions of dollars being invested in net-zero plans, but in many organizations, there’s a total disconnect between the operational change goals and the value shifts needed to support them.”

To bridge this gap, businesses can promote engagement within their organization by encouraging employees to take on roles as climate leaders. This involves actively participating in creating solutions to reduce the organization’s carbon footprint.

For example, at Redbrick, an employee established a partnership with Habitat for Humanity. Through this partnership, we donated our used office furniture, an initiative that not only reduces waste, but contributes to the community’s well-being.

AI’s renewable energy roadmap

On day one of COP28, the UN announced a partnership with Microsoft on an AI-powered tool to track whether countries are following through on their pledges to reduce fossil fuel emissions. While this is positive news and demonstrates artificial intelligence’s potential to help combat climate change, the energy the tool requires could make matters worse. Recent research found that global AI energy usage could account for the equivalent of that used by countries such as the Netherlands, Argentina and Sweden by 2027.

Data usage itself does not directly generate CO2 emissions, yet the infrastructure and processes essential for data transmission and storage consume significant amounts of energy. The training process for common large AI models can emit more than 626,000 pounds of carbon dioxide equivalent. As the adoption of generative AI skyrockets across industries, there will be increased pressure for leading AI companies to provide a roadmap for when renewable energy will be used to power the data centres associated with AI training.

Rise of climate businesses

We’re also going to see more companies realizing and building businesses that provide climate-related products and services — simply because they are good businesses.

Consumers are opening their wallets for products and brands that focus on environmental, social, and governance (ESG) initiatives. Products making ESG-related claims averaged 28 per cent cumulative growth over the past five-year period, compared to 20 per cent for products that made no such claims.

Additionally, businesses offering climate-friendly products and services are poised to disrupt established markets while actively seeking solutions. This trend will lead to a noticeable surge in progress, marked by a steep and exponential curve, among numerous climate-focused enterprises.

The decarbonization push is translating into once-in-a-civilization opportunities that are generating enormous tailwinds for startups focused on building solutions. In the U.S., grants, tax breaks and purchase orders are already hitting as a direct result of the trillion-dollar Inflation Reduction Act.

The business community has the potential to shape the transition to a net-zero future, and we will see investment in the climate space from both startup businesses and those that are already profitable and have significant market share.

A more sustainable future

Each of these trends shares a common overarching theme: accountability. As the understanding of climate change expands, there will be an increased demand for businesses to make a tangible impact.

While Guterres’ warning looms and the outcomes of COP28 remain to be seen, one thing is certain — our digital footprint is growing rapidly, and the onus is on us as business leaders to better understand our digital carbon footprint.

At the end of the day, companies don’t drive change — people do. It’s up to businesses to engage their employees and ask themselves: Do the company’s climate goals spark visionary work and ambitious action across the organization? If the answer is no, there’s more work to be done.

Marco Pimentel is the CMO at Redbrick, the parent organization to a portfolio of disruptive technology companies. Combining his passions for entrepreneurship and the outdoors, Pimentel has a podcast, Someone Like You, which discusses how to build a business that’s good for the planet, and Unless Ventures to invest in brands that create climate change solutions or produce better, sustainable goods.