As more of us adapt our behaviour with climate change in mind, most activity has understandably been around how we heat and power our homes and travel around the world. But it is becoming increasingly clear that we also need to take a hard look at how we communicate and consume media.
Connecting people is one of our 20 investment themes as we believe access to communication tools and information, increasing amounts of which are online, is a pre-requisite of a more sustainable economy. The exponential rise in data and the need for connection between network carriers, enterprises and end users is driving ever-evolving infrastructure and growth in this area.
But as the digital world comes to encompass every conceivable field of human endeavour, we also have to be conscious of the potential environmental impact.
Source: The Shift Project 2018, as of Andrae & Edler 2015
New figures from think tank The Shift Project reveal that digital technologies now account for 4% of greenhouse gas (GHG) emissions, which is more than civil aviation, and this could double by 2025 as the energy required is increasing 9% a year. A few other figures highlight the scale of our global digital footprint:
- Online videos globally emit as much C02 as Spain (over 300 million tonnes per year)
- Online video services (like Netflix) account for 60% of global data flows and the GHG emissions of video-on-demand services like Netflix and Amazon Prime are equivalent to those of a country like Chile (more than 100 million tonnes per year)
According to The Shift Project, as people cannot see the pollution from selfies and videos streams, there is a perception these services are boundless; in reality, however, they suggest we need to move towards greater ‘data sobriety’ and the fear is that this means greater regulation.
New research shows the impact even a small change in online behavior can have, with data from OVO Energy claiming that sending just one less unnecessary email a day would save more than 16,000 tonnes of carbon a year, the equivalent of taking 3,300 diesel cars off the road. According to the report, excessive emailing contributes 23,475 tonnes of carbon a year to the UK's footprint.
This issue of rising data usage, and the amount of energy it requires, is one we have been tracking for several years. Traditionally, companies tended to have on-site server rooms, often in regular offices, and while these have evolved over time, they were not purpose built so cooling and ancillary power requirements make them highly inefficient.
Therefore, we see considerable resource benefits coming from the trend towards outsourced storage and processing, focusing on data centre operators that have low power usage effectiveness (PUE) and also use electricity from renewable sources.
We believe these co-location centres are vital for the digital economy and will increasingly underpin the infrastructure necessary for a more sustainable world. However, electricity used by data centres is expected to double approximately every five years and their emissions are already comparable to small countries. Energy now represents around two-thirds of the total data centre cost, greater than the hardware within them, mainly consumed by the ancillary systems such as cooling and Uninterrupted Power Supplies (UPS).
Investing in companies that are finding solutions to the world’s problems is central to our investment process and we believe those enabling significant energy and carbon dioxide savings for these centres should benefit from a sustained increase in demand. The technology industry in the US now emits more carbon than ever before, so more efficient data centres are vital: for the centres themselves, power is their biggest cost, giving further incentives to design and run their centres more efficiently.
We look at the world through the lens of 20 sustainable themes and companies in the data centre space represent a rare confluence of two of these, namely Connecting people and Improving the efficiency of energy use.
Held in our funds since 2011, US company Equinix runs co-location data centres, providing a gateway into important digital infrastructure such as public cloud computing networks. Equinix stands out as the only genuinely global player in this market and its centres have become an integral part of the plumbing for the digital economy. Its assets are almost impossible to copy, creating an important competitive advantage.
On top of this, the business is addressing critical environmental impacts of the technology industry. It discloses climate change impacts and mitigation efforts in a Carbon Disclosure Project (CDP) submission for example, and while no science-based targets are set so far the company anticipates doing this in the next two years.
Equinix has a long-term goal to reach 100% renewable energy, and in 2018 91% of purchased electricity came from renewable sources. The company also has a Global Energy Efficiency Program and completed 42 projects in 2018, upgrading and retrofitting chillers, control systems and a power supply.
We also hold InterXion across our European funds, a provider of carrier and cloud neutral co-location data centre services in Europe, supporting 1,800 customers through 50 data centres in 11 countries. While the company lags global peers on social and environmental reporting, it has good programmes in place operationally and runs all its centres on renewable energy. We continue to engage with the business on how its energy efficiency programmes work and encourage the company to report to the CDP.
Digital technologies and the internet have fundamentally changed the way many of us conduct our lives and Moore’s law on the rate of technical advance suggests far greater transitions to come. Providing broader access to this trend must be part of any sustainable world but it is vitally important, to paraphrase the UN’s 1987 Brundtland Report, that we are not compromising the future by meeting the needs of the present.
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