OPINION- Big tech is undervaluing and neglecting the climate crisis

By Zach Slater

The S&P 500’s growth over the last couple of years has, for the most part, been driven by seven companies. Amazon, Apple, Alphabet (Google), Meta, Nvidia, Microsoft, and Tesla accounted for over 110% of the Stock market’s growth in 2023, and saw ballooning valuations in 2024 as a result of an ever-escalating Artificial Intelligence Arms race within the sector. All of the “Magnificent 7” companies have made commitments to reducing emissions and achieving Net Zero. However I believe that many of those in positions of power within these companies still refuse to see the climate crisis for the threat it actually is, and instead they take measures in line with an outdated way of thinking about the global situation.

For one, they are attacking and pushing back against measures of emission accountability. The Security and Exchange Commission (the regulatory body of the United States overseeing investor protection) proposed rules that would require companies to disclose their emissions as away to inform investors of their environmental impact in 2023. The rules were eventually passed but in a watered-down state due to a multi-million dollar lobbying campaign from the tech sector. Out of the three types of emissions initially proposed to be declared, two made it through. Scope 1 emissions, the direct emissions produced from sources owned by a company, using fuel in vehicles/appliances owned by the company, manufacturing, etc. Scope 2 emissions are the use of purchased energy. The declaration of Scope 3 emissions, however, was cut from the SEC rule changes, after incessant lobbying on the part of America’s largest businesses. Scope 3 emissions include all indirect emissions outside of purchased fuel, including chartered planes, and almost the entire supply chain, the extraction and production of purchased materials, transportation of purchased fuels, use of sold products, and transport and disposal of waste. Lobbyists claimed these emissions were not in the company’s direct control and too hard to check and thus shouldn’t be declared in any shape or form, despite the fact numerous agencies and methods exist, well affordable by those that lobbied against the SEC. These Scope 3 emissions are estimated to make up over 70% of a business’s carbon footprint, with “dirty supply chains” having a major part to play in both local pollution and global warming.

These companies claim to be supporting net zero but vehemently oppose any accountability in actually achieving the target. They aim to be technically carbon neutral rather than actual. Not only does this SEC rule change undermine progress being made within the industry to lower emissions and clean up a business’s environmental impact, but it also fails to do the job the SEC is there for, protecting
investors. It opens the way for superficially eco-conscious corporations to mislead those wishing to invest in greener stocks by appearing to be lowering their emissions when at least 70% of them are not accounted for. Short-sightedness and a lack of willingness to improve accountability from the lobbying of the tech industry has undermined the initiative of net zero. Even when it’s in the interests of the millions of people employed in tech, with future savings and livelihood entrusted in pension schemes provided by the largest companies- sizeable proportion of these pensions are tied up in 401k retirement schemes, where a percentage of income is invested and can grow tax-free over time.

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However, much of this income that is invested gets put straight into harmful fossil fuel companies, with no choice on the part of the pension holder. This issue branches further out of tech too, with 99% of Americans being forced to invest in fossil fuels via their retirement plans, with 401ks making up roughly 20% of all money invested in fossil fuel companies. Not only does this accelerate the decline of the climate, but it is not even a good investment. A report from the University of Waterloo earlier this year found huge potential earnings missed out on via these schemes because the tech giants providing the schemes defaulted to investment in carbon-intensive, deforesting industries that have seen inconsistent growth
over the last decade. If you invested $10,000 in fossil fuels a decade ago, today you would have $10,004, a loss with inflation. If you invested in the S&P 500 minus the fossil fuel industry, then you would have $34,851. Compared to fossil-fuel-free portfolios, the pensions are worth a combined $5 billion across the largest tech corporations, including Amazon ($570 mil), Google ($1.16 billion), Apple ($470 million), Microsoft ($898 million), Meta ($304million) and more. At Google specifically the majority of workers’ deferred wages are invested through the Plan’s “default” option, a series of target-date funds that are heavily exposed to high-carbon fossil fuels have been a primary driver of index returns historically but are becoming more speculative and random, seeing surges through world events out of their control such as post COVID uptick in usage and Russia’s invasion of Ukraine. Climate-damaging practices are often done out of greed, but there is no financial incentive to keep investing as much of pensions in fossil fuels as is done so. 77% of Americans want their pensions out of fossil fuels, and want fossil-fuel- free pensions to be the default to protect those who are unaware of where their retirement plan is being invested in.

The current structure contributes to climate change, creates systemic investment risk, and has performed poorly in the long term, hurting employees and the planet. Perhaps what’s driving this indifference to the gravity of the climate crisis is the way that global warming is viewed by these companies. Big tech has a grip on social media, with Tesla’s CEO owning Twitter (sorry, X) and Meta owning Facebook, Instagram, Threads and WhatsApp, and in some cases climate change reporting has faced an algorithmic roadblock. Fo example the Kansas Reflector published a piece in April of this year explaining how when they attempted to promote a climate change documentary via Facebook, they discovered that discussing the
climate crisis is categorized as “Ads about Social Issues, Elections or Politics” (We’ve faced the same restriction on ads promoting New Climate Journal- Ed.) Clearly Meta does not view climate change as an apolitical issue, still giving validity to “both sides” of the climate “debate” by suppressing the sharing of pro-climate materials under the guise of it being “political”. When the Kansas reflector reported on Meta’s block of their promotion, they found that their site flagged as a phishing site and got stopped from using the site. Whilst Meta’s representatives apologised for the “technical glitch” on this occasion, others have reported issues in promoting and raising awareness about climate change through their platforms.

It’s clear that tech is making slow progress on reducing their environmental impact. With how large a part these companies play in the world’s financial ecosystem, more effort needs to be put in to tackling the climate crisis, and more accountability taken by those at the top of the economic ladder.

Zach Slater is an 18 year old environmentalist and writer for the New Climate Journal from the UK, currently on a gap year.