Internet Giants Ignoring Energy Consumption, Carbon Management at Their Risk

Internet and social networking giants such as Amazon, Facebook and Netflix need to adopt a strategic approach to energy use and carbon management, according to independent analyst firm Verdantix.

"Carbon Strategy Benchmark: Internet Sector," assesses the carbon and energy strategies of the world’s 14 largest Internet and social networking firms.

The analysis examined Chinese players Alibaba, Baidu and Tencent alongside Akamai, Amazon, Apple, eBay, Expedia, Facebook, Google, Netflix, Priceline, Salesforce and Yahoo!.

"Due to their rapid growth and global prominence, internet and social networking firms such as Facebook and Google will be confronted by a barrage of energy and carbon emissions challenges," says Verdantix Director, David Metcalfe. "These include rising energy spends tied to exploding data centre usage, the potential negative impact of energy price volatility on financial results and public criticism of sustainability commitments by groups such as Greenpeace and the Beijing-based Institute of Public and Environmental Affairs. Big data centre users such as Amazon and Salesforce cannot ignore the closing jaws of mandatory carbon reporting indefinitely."

Carbon reporting laggards like Expedia and China’s Tencent also need to respond to a new challenge: how to use energy and carbon communications to achieve competitive differentiation.

The research finds that Akamai, Apple and eBay outpace their global competitors on energy efficiency enhancements and transparent disclosure of carbon emissions. Salesforce is also making positive steps by communicating greenhouse gas (GHG) reductions from cloud services and Google’s recent carbon footprint disclosure reinforced the strong pressure on the industry to act. By contrast, Amazon has rejected stakeholder requests for increased transparency on GHG emissions.

The Verdantix report exposes a widespread lack of transparency on the part of Internet companies. Only 4 of the 14 firms in the study – Akamai, Apple, eBay and Google – disclose GHG emissions from their data centers on a global basis.

None of the 14 global Internet giants covered in the analysis invest in an independent third party to verify their emissions data. 

The US EPA estimates data center energy consumption doubled between 2000-2006; the Department of Energy estimates that data centers consume as much as 3% of total US electricity.

"To remain competitive, the world’s largest internet and social networking firms need to keep energy costs under control and protect the brand with transparent carbon communications," comments Janet Lin, Verdantix Senior Manager.

"Alibaba and Facebook should deploy energy management software to enhance energy cost control and facilitate GHG reporting. Carbon management laggards should reduce brand risk by paying for assurance of their GHG inventory data. Given their stellar growth rates, the 14 firms in this study cannot deliver absolute reductions in carbon emissions through energy efficiency. Instead they should track performance against intensity metrics such as Carbon Usage Effectiveness in data centres. Risks from ignoring energy and carbon management will grow over time – not shrink," Lin adds.

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