Green Pioneer or Greenwasher? The Tech Industry and Sustainability

Greenwashing is a watchword for sustainability leaders, as the consequences of being perceived to overstate environmental and ethical claims get tougher worldwide. Governments, including those in the US, UK and Australia, are legislating against greenwashing, and prosecutions are on the uptick against firms who make unsubstantiated sustainability claims.

The technology sector has its part to play in fighting the climate emergency, and can be viewed as being particularly vocal about sustainable changes and net zero achievements. Big tech firms like Google and Meta, for example, have rolled out well-publicised statements and initiatives around environmentalism and carbon elimination. At the same time, however, public scrutiny and discussion of companies’ claims and ethical stances are also mainstream news.

iResearch Services’ survey, encompassing 550 technology executives in 11 countries, reflected this appetite for making sustainable change in the technology sector, while concurrently expressing wariness around the environmental claims the industry can make.

98% of respondents said that sustainability is either important or very important to their own company. Yet, 91% believe that some, if not all, companies in the industry are guilty of greenwashing.

What might this gap mean for the industry, and what can the tech sector to do counter greenwashing?

The practice of greenwashing happens when companies overstate their claims about the sustainability of their products and services. Whereas intentional false advertising is legislated against, unintentional greenwashing can arise when companies don’t have a firm grasp on the sustainability of their own practices.

Window-dressing initiatives, for example, eliminating plastic straws on company premises, can start to look like greenwashing when the same firms do not use ethical suppliers or understand their own carbon footprint.

This is why transparency and accessibility of information are crucial in the fight against greenwashing, and the tech sector has some significant factors to consider when taking a clear look at its own carbon emission and sustainability journey.

Transparency and the Cloud

Some experts, whose detailed thoughts can be read in the report, are cautious about how far the finger should be pointed at tech as an industry when it comes to greenwashing. Alex Nicholson from PEGA cautioned that technology is not more or less guilty than any other sector. Indeed, fashion and finance have been prominent recently in prosecutions against greenwashing.

Alex also correctly pointed out that false advertising laws and regulations exist to protect the consumer from misleading claims. Nevertheless, she also states that there is a significant information black hole impeding tech companies’ accounting for their emissions.

She explained: “The largest cloud providers do not break out your footprint as a user. If you sit on a large cloud platform, they currently do not break out your carbon usage. If you are a tech company you do not know your true cloud footprint. It’s a huge problem.

“That’s transparency issue number one – the largest service providers in the tech industry do not offer full transparency on your usage within their platform. You are unable to tell your full story, based on the fact that they are gating that information.”

It’s a startling omission, particularly as cloud computing itself has been hailed as significant innovation in driving sustainable technology and business practices.

As Emanuel Kolta from GMSA Intelligence pointed out, cloud-based software has already changed the face of how we consume a great deal of media, and eliminated the need for the production and transportation of many physical objects.

He sees it enabling sustainable tech even further: “If you make the device, the user equipment, more “dumb”, your laptop can basically just be a screen and a keyboard and a transmitter and all the processing and all the memory will be in the cloud.

“It will allow companies to sell very “dumb” PCs, but you won’t have to touch that PC for another 40 years maybe because everything will be in the cloud, you will just need very good connectivity.”

This chimes in with the growing Right to Repair movement that calls for improved reuse, repair and recycling capabilities in consumer tech. In addition to the environmental goal of reducing waste, simpler, repairable devices also encourage sustainable development and access to tech and education in developing countries.

With the potential environmental and social benefits of cloud computing promising to be so beneficial, the energy consumption and carbon emissions of the cloud itself is a serious point for the tech industry to account for.

Understanding Scope 3

Our experts also point towards Scope Three emissions reporting as another crucial area that can be obfuscated with lack of understanding and available data.

Alex said: “Scope 3 is like a nesting doll that is very overwhelming to have to think about how to tackle, and no one has agreed on a unified way to approach Scope 3.”

Scope One encompasses direct emissions, and Scope Two the indirect variety, like those generated by the energy a business consumes. These are mandatory to report.

There is an information and understanding gap when it comes to Scope 3 as these emissions are more complex in nature, and as yet do not require mandatory reporting. This scope covers all indirect emissions in the business value chain, upstream and downstream. Business travel, employee commuting and business waste all fall under Scope 3. Mapping out the footprint of cloud usage would be an exercise in accounting for a Scope 3 emission.

Accounting for Scope 3 isn’t a challenge unique to the tech industry, as we need to refine and standardise metrics globally. However, the technology sector does have its own particular reporting issues. As Alex explained, there is a “glaring gap” between what hardware manufacturers are mandated to report, and the lack of requirements in the software industry.

She shared that one of the key aspects of understanding Scope 3 emission is quality supply chain management and auditing.

She explained: “That is something that I don’t know how much the tech industry has invested in if you’re not in a hardware environment. Hardware has much tighter supply chain needs because they have to be clear on their sourcing and environmental and social impacts of sourcing materials.

“[In] the software industry, we don’t have the same regulatory requirements on our supply chains, because very often our supply chains are based on services and partnerships.”

Transparency and consumer choice

As the technology sector establishes better and more easily understood and accessed metrics, consumers will be able to make more effective choices and help drive demand for truly sustainable action.

Emanuel said: “Whereas with a financial product you can use a single metric to define which is better for you – and there are well-known methods you can use to choose between different products – with sustainability, we don’t really have this educated consumer base yet, nor any well-accepted metrics.”

Clearer information, he says, will be crucial in “helping the general public to understand that when they choose between products, they have the chance to choose the one with the lower environmental footprint.”

With COP27 coming up in Egypt this November, unified global action on the climate emergency is top of the agenda for many leaders.

With this in mind, Alex wants to see technology firms go even further and to commit actively to better targets. This is another way of driving change beyond platitudes or “window-dressing” targets.

She said: “2050 [The Paris Agreement] feels to me a lot like the companies who in the early 2000s started saying 2020. It feels like we’re just pushing dates up. I’d love to see people who have made the 2050 commitments start to articulate what commitments they can meet earlier.”

The full scope of her thoughts, alongside those of other experts in the field, are in Part Two of How Sustainable is the Technology Sector? from iResearch Services.