Data is essential to modern life. Any time you use a maps app to navigate, do a Teams meeting at work or watch a doctor call up your health records, data is being consumed.
Global data usage is set to grow as the use of digital services continues to expand. Since 2010 the number of internet users worldwide has more than doubled, while global internet traffic has expanded 25-fold.1
As new technologies such as artificial intelligence (AI), virtual reality and cloud gaming become increasingly prevalent, more and more data will be needed and generated. On average, a ChatGPT query needs ten times as much electricity to process as a Google search.2
This growing demand for digital services comes at a cost to the environment that is often forgotten. The physical infrastructure that powers the digital world is generally housed in anonymous-looking warehouses whose non-stop processes generate enormous amounts of heat and require constant cooling, which uses up huge quantities of energy and water. Data centres and data transmission networks are currently responsible for 1% of energy-related greenhouse-gas emissions.3
The good news is that companies are working hard to improve the energy efficiency of data centres. Since 2010, data centre energy use has grown only moderately despite the strong growth in demand for data centre services.4
This is thanks to efficiency improvements in semiconductors, IT hardware and cooling, as well as a shift away from small inefficient data centres to more efficient cloud and hyperscale data centres.
The shift to the cloud can be a significant factor in lessening energy consumption. According to a study published by Microsoft, Microsoft Cloud is between 22% and 93% more energy efficient than traditional enterprise data centres.5
At the same time, information and communication technology companies are major purchasers of renewable energy. Their investments in renewable projects not only lessen their environmental impact but also help to protect their businesses from power price volatility.6
Microsoft: Groundbreaking commitment to net zero
The company has signed purchase agreements for more than 5GW of renewable energy around the world, via fifteen individual deals in Europe, spanning Ireland, Denmark, Sweden and Spain.7
The company’s data centres are also taking other steps to be more sustainable. For example, the Microsoft data centre region in Sweden harvests rainwater for use in the facility while the servers are cooled only with outside air.8
Microsoft’s goal is to be carbon negative by 2030. In a groundbreaking move, it has also pledged that by 2050 it will remove from the environment all the carbon the company has emitted since it was founded in 1975 – either directly or by electrical consumption.9
Microsoft is a long-term holding within the Sustainable Global Equity Strategy. We believe its cloud computing and productivity software businesses continue to provide growth opportunities, while it is also well-positioned for the AI revolution.10 The fact that it is also a sustainability innovator makes it well-suited to the aims of our portfolio.
Click here to learn more about our Sustainable Global Equity Strategy.
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This information does not constitute a solicitation or offer to any person to buy or sell any related securities or financial instruments.
1 https://www.iea.org/energy-system/buildings/data-centres-and-data-transmission-networks
2https://www.goldmansachs.com/intelligence/pages/AI-poised-to-drive-160-increase-in-power-demand.html
3 https://www.iea.org/energy-system/buildings/data-centres-and-data-transmission-networks
4 https://www.iea.org/energy-system/buildings/data-centres-and-data-transmission-networks
5 Microsoft, The greening of IT
6 https://www.iea.org/energy-system/buildings/data-centres-and-data-transmission-networks
10 Federated Hermes, Sustainable Global Equity Annual Report 2023
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