Insights from Tech Nation & Tech Zero: How the tech sector can achieve net zero

23rd November 2022

Author: Tech Nation and Tech Zero

Read the full article on Tech Nation here.

Decarbonisation in practice

In 2021, even as COP26 highlighted the urgent need to keep global warming below 1.5℃, research by the British Chambers of Commerce showed that only a third of UK businesses had an environmental sustainability policy or were working to reduce carbon emissions.

A more recent survey by ESG_VC highlighted that decarbonisation practices are even more patchy across startups and scaleups in the UK, with only 11% measuring carbon emissions and 7% having a net zero strategy.

For small businesses like tech scaleups, implementing a net zero strategy can be challenging due to limited budget, resources and knowledge. Two-thirds of SMEs in the UK say they lack the knowledge and skills to take action, and just under half (48%) say they lack funding to do so, according to SME Climate Hub.

But another factor may also be holding back the tech sector in particular: a misconception that tech companies do not produce significant carbon emissions. Tech company CEOs are more likely than CEOs in any other sector to cite this reason for not making a net zero commitment; 74% of tech CEOs without a net zero strategy put themselves in this category compared to 57% across all sectors, revealed PwC’s Annual Global CEO Survey in 2022.

The Tech Zero initiative – led by Tech Nation and leading tech companies – aims to tackle both challenges, providing resources for startups and scaleups on their net zero strategies and obligating members to measure and publish their emissions annually. Doing so will inevitably dispel claims that tech companies do not have significant carbon footprints or significant work to do in order to reach net zero. Moreover, net zero service provider Supercritical has calculated that net zero plans should cost companies only £400 to £600 per employee per year – an achievable budget for many startups and scaleups.

Already there are noticeable shifts in attitudes, behaviour and commitments. Employees, investors and customers are increasingly asking companies to measure and reduce carbon emissions. Research by Supercritical found that 26% of employees want more opportunities to share feedback on their company’s climate action plan. At the same time, the majority of c-suite leaders (71%) are now feeling pressure from investors to implement sustainability plans, and three-quarters experience this pressure from both board members and customers, a 2022 Deloitte study found.

Nonetheless, setting net zero targets and plans is only the first step. According to Supercritical, even many of those that have made net zero commitments haven’t done robust carbon accounting. Only 35% of UK-based businesses with net zero targets have collected their emissions baseline data and are prepared to measure their emissions going forward.

For some sub-sectors in tech, this could soon become a practical problem. Healthtech companies, for example, must prove they are taking action on climate change in order to supply services or products to the NHS. From April 2023 NHS procurement conditions will become stricter; suppliers on contracts over £5m will have to publish carbon reduction plans and by 2030 suppliers will only qualify for NHS contracts if they can demonstrate their emissions reduction progress.

In practice, complete decarbonisation – producing no carbon emissions –  is likely to take years if not decades even for the most ambitious companies. In the interim, net zero targets will almost always require carbon removals alongside emission reductions. A review of 25 multinational companies which have made public climate pledges found that 19 already know they will rely on carbon removals to reach their targets.

This can also be assumed for startups and scaleups in tech; without investing in carbon removals few companies would achieve ambitious net zero targets, putting this emerging area in a pivotal role for scaleups’ net zero plans.

Collective Impact

Most tech companies – particularly startups and scaleups – find that the majority, if not all their emissions fall into ‘scope 3’ – indirect emissions from purchased goods and services including rented office spaces, as opposed to direct emissions from company cars or energy consumed by owned assets.

Though the emissions are ‘indirect’, they can actually be more straightforward to tackle than direct emissions, with policies and climate-driven decisions in operational areas like food, offices, travel and service providers. Unlike for owned assets producing direct emissions, changes can be implemented quickly or else purchasing power used to engage with suppliers on their own net zero plans.

Low-hanging fruit to reduce emissions include mandating only plant based meals at work events, reducing unnecessary travel particularly by flight, which is actively working towards net zero , and choosing a ‘green’ pension provider for employees.

If these policies were implemented across the entire tech sector in the UK, what would be the overall reduction in carbon emissions?

Assuming that the number of startups and tech companies currently following these policies is negligible overall, we’ve estimated the collective impact which could be achieved in each area.

In total, emissions reductions could reach 81.8m tonnes of CO2 if the entire tech sector were to implement policies on sustainable offices, green pensions, vegan food and reducing travel. This is equivalent to 17.6m petrol-powered cars driving for a year, 10.3m homes’ energy consumption for a year, or emissions from 206 natural gas power plants for a year. It would take 1.35bn tree seedlings planted for 10 years to remove this amount of carbon.

Sustainable offices

If the entire tech sector just leased offices which used 100% renewable energy (on-site or purchased), it would reduce emissions by up to 1.23m tonnes of CO2 each year.

This is equivalent to 265,000 petrol-powered cars driven for a year, 155,000 homes’ energy use for a year, or even emissions from 3 natural-gas power plants for a year. Other methods to avoid this amount of CO2 emitted would require 334 wind turbines running for a year or 53.2m bin liners worth of waste recycled rather than landfilled.  It would take 20.3m tree seedlings grown for 10 years to remove this amount of carbon.

This was calculated using:

• 0.38 tonnes CO2 per employee/desk in an office consuming a standard energy mix compared to 0.08 tonnes in an office consuming only renewable energy [source: Supercritical]
• 4.1m employees at UK startups and scaleups [source: Dealroom]
• Assumption that number of employees is roughly equivalent to number of desks in an office space
• Estimated potential reduction: 0.3 x 4.1m = 1.23m tonnes of CO2

Green pensions

If the entire tech community were to use sustainability-focused pension funds, it would reduce emissions by 78.72m tonnes of CO2 each year.

This is equivalent to 17m petrol-powered cars driven for a year, 9.9m homes’ energy use for a year, or emissions from 198 natural gas power plants for a year. Equivalent emissions could be avoided through 21,397 wind turbines running for a year or 3.4bn bin liners worth of waste recycled rather than landfilled. It would take 1.3bn tree seedlings grown for 10 years to remove this amount of carbon.

This was calculated using:

• The average pension finances 23 tonnes of CO2 emissions every year [source: Supercritical]
• Switching from standard pension to sustainable pension fund reduces emissions by 0.64 kg CO2 per £1 invested [source: Aviva study]
• With an average pension pot of £30k, potential reduction for average person would be 19.2 tonnes CO2 [source: Aviva study]
• 4.1m employees at UK startups and scaleups [source: Dealroom]
• Estimated potential reduction: 19.2 x 4.1m = 78.72m tonnes of CO2

Plant based  food

If all meals served at events hosted by or primarily attended by tech startups and scaleups were plant based, it would reduce emissions by 465k tonnes CO2 each year.

This is the equivalent of emissions from 100k petrol-powered vehicles driven for a year, or 58,573 homes’ energy use for a year, or 19m propane-fuelled home barbecues. Equivalent emissions could be avoided with 126 wind turbines running for a year or 20m bin liners worth of waste recycled instead of landfilled. It would take 7.7m tree seedlings grown for 10 years to remove this amount of carbon.

This was calculated using:

• Emissions from plant based meal: 1.9 kg CO2; emissions from fish/chicken meal: 4.1kg CO2 (0.0022 tonnes CO2 more than plant based meal); emissions from beef meal: 12.8kg CO2 (0.0109 tonnes CO2 more than plant based meal) [source: Supercritical]
• 4.1m employees at UK startups and scaleups [source: Dealroom]
• Assumption that on average a tech employee in the UK attends a work event with a meal once a fortnight, or 26 times a year
• Total tech sector meals each year: 4.1m x 26 = 106.6m
• Assumption that meals currently served at events are evenly split between beef, fish/chicken and plant based (35.5m of each)
• Estimated potential reduction: 35.5m x 0.0109 + 35.5m x 0.0022 = 465k tonnes CO2

Travel reductions

If tech employees reduced their business travel and hotel stays by half, and commute travel by a third, it would reduce emissions by 1.42m tonnes CO2 each year. This is the equivalent of emissions from 306k petrol-powered cars driving for a year, 179k homes’ energy consumption for a year, or 3.6k natural gas power plants. Equivalent emissions could be avoided with 386 wind turbines running for a year, or 61.5m bin liners worth of waste recycled instead of landfilled. It would take 23.5m tree seedlings grown for 10 years to remove this amount of carbon.

This was calculated using:

• Assumption that an average tech employee stays in a UK hotel 7 nights a year, a European hotel 3 nights a year and a US hotel 5 nights a year
• Average travel distance per person for business and commute purposes by car, train, bus, taxi and flight in 2019 [source: Government’s National Travel Survey and Civil Aviation Authority Passenger Survey]
• Assumption that 2019 is more representative of business travel generally than 2020 and 2021, due to the Covid19 pandemic.
•  4.1m employees at UK startups and scaleups [source: Dealroom]
• GHG Conversion Factors for hotels in Europe, US and UK, and travel by car, train, bus, taxi and flight. Note that for public shared transport (including flights) emissions are calculated using passenger km rather than overall emissions for the journey across all passengers [source: UK Government]
• Assumption that it’s feasible and reasonable for tech employees to reduce their business travel by half, their commute by a third and hotel stays by half, to be replaced with video calls or alternative communication.
• Calculations showed reductions: 97.4k tonnes CO2 for flights, 238.2k tonnes CO2 for business travel, 532.3k tonnes CO2 for commute travel, and 554.1k tonnes CO2 for hotel stays.

Call to action

Below are a series of tangible steps you can take to begin your decarbonisation journey. They are intended to guide good practice, and please bear in mind that any steps in the right direction are better than none; as many contributors to this report have stated, don’t let perfect be the enemy of good.

1. Commit to a net zero action plan

The first step in any net zero plan is to measure your emissions. These are categorised into scope 1, 2 and 3 emissions.

For tech companies, around 80% of emissions will fall into scope 3, so it’s important you measure as much as possible! It’s also important to make it clear if you’ve excluded any of your scope 3 emissions, and why (for example if you can’t get data on them or there are other limiting factors).

The next step is to set an ambitious but achievable net zero target and make a plan to get there. You should aim to halve your emissions across all scopes by 2030. This sounds daunting, but the first halving is often the simplest.

To take action:

• Measure your emissions yourself using online tools and resources.
  • To do it manually, Tech Zero provides a guide on how to calculate your emissions.
  • Use available resources including free tools from GoCardless and Carbon Footprint and a GHG emissions calculations tool by the Greenhouse Gas Protocol.
• Or, work with a carbon footprinting company to measure your emissions.
  • The following sustainability services have been recommended by Tech Zero members: Watershed, Altruistiq, Carbon Analytics, Compare Your Footprint, Lune, Patch, Spherics and Supercritical.

• Set science-based targets
  • If you are a larger company (500+ employees), set your target through the Science-based Targets Initiative (SBTi) to align your actions with environmental science.
  • If you are a smaller company, aim to at least halve your emissions across all scopes by 2030. You can also set targets with help from a carbon accountancy.
    • Look at your emissions measurements and identify what contributes the most CO₂.
    • Assess how you could reduce these emissions, and lay these solutions out in terms of time, effort and impact.
• Set interim targets, including what actions you’ll take in the next 12 months, the next 2-3 years, and by 2030.
• Sign-up to Tech Zero to receive support on your net zero journey and hold yourself accountable for your net zero commitments

2. Commit to net zero aligned offices

Making sure your office is a low-emission space is a fundamental part of your net zero strategy. Fortunately, many office spaces are now committing to net zero and actively decarbonising.

Net zero aligned office spaces should be:

• Using 100% renewable energy (ideally generated on-site through solar panels, for example, but it can also be by purchasing renewable energy from a provider)
• Ensuring AC systems are are well maintained, and are topped up with refrigerants with low Global Warming Potentials
• Being highly energy efficient as possible – for example, by using climate control facilities
• Measuring emissions, and having a clear reduction strategy
• Having a comprehensive recycling, compost and zero waste policy
• Uses sustainable materials in construction

To take action:

• Prepare an email to send out to your building manager or request a meeting, asking whether they have a net zero strategy in place and actions they have taken (in accordance with the above).
•  If the landlord has no intention to switch;
  • Request energy use break-down or estimates that cover your use within the building
  • Explore purchasing REGOS and RGGOs from TheBigCleanSwitch
  • Consider moving to a more sustainable office space

3. Commit to green pensions

The average pension finances 23 tonnes of CO2 emissions every year, so choosing the right pension can be a powerful tool in the fight against climate change.

According to the green pensions guide, pension funds should:

• Target net zero across its portfolio and halve emissions by 2030
• Invest in climate solutions
• Divest from companies that are not reducing emissions

To take action:

• Sign up to the green pensions charter.
• Set up a meeting with your pension provider, and ensure the default fund for your employees is covered by a net zero target.
• If it isn’t covered by a net zero target, look to switch providers. MakeMyMoneyMatter can help you understand the impact of your pension fund and communicate with them if necessary.

4. Reduce meat consumption

Meat consumption has an outsized negative impact on the environment: a meat-based diet produces double the carbon emissions of a vegetarian one.

These emissions mainly come from farmland management, land use change and methane from ruminant livestock (a greenhouse gas ~34x more potent than CO2). Changing their eating habits is one of the biggest ways an individual can influence their footprint. It doesn’t have to be an “all or nothing” approach: small changes can add up over time.

To take action:

• Arrange a lunch and learn or opt-in discussion to educate your team
• Run a survey or discussion to gather employee opinion and engagement potential
  Discuss practical next steps with your operations team e.g. purchasing more plant-based foods and milks for your office.

5. Review your business travel

The way a company travels can significantly impact their level of emissions and embedding sustainability policies early on is a great way to reduce their impact as companies scale and travel is more of a necessity. As an example, taking the train instead of a flight between London and Scotland could save about 250 kg CO2e.

A train-first policy is recommended for all companies.

To take action:

• Promote virtual meetings and invest in digital tools (Miro, Fellow etc.) and training that will make remote meetings more productive.
• Optimise unavoidable travel: Try to include numerous relevant meetings within a single trip
• Implement a 1-person travel policy for longer flights e.g. only send the most relevant team member to a conference
• Optimise unavoidable travel: Try to include numerous relevant meetings within a single trip.
• Promote virtual meetings and invest in digital tools (Miro, Fellow etc.) and training that will make remote meetings more productive.
• Implement an ‘essential only’ travel policy for longer flights e.g. only send the most relevant team member to a conference.

6. Engage with your suppliers

Within the tech sector, 80 – 100% of companies’ emissions come from their suppliers, counting towards scope 3 emissions. If scaling tech companies are going to achieve net zero, it will require collaboration and collective action.The best way to influence these emissions is to communicate with suppliers and encourage them to measure and reduce their own emissions, if suppliers have not already. Beyond this, it’s important to set standards for the suppliers a company works with moving forwards. The better a company understands their supply chain, the better a company will be at measuring their footprint and understanding where the hotspots lie.

To take action:

• Identify the suppliers that significantly contribute to your footprint
  Prepare an email that asks them:
  • If they have measured their emissions (and which emissions sources are included). If they haven’t, suggest companies or resources they can use
  • What their net zero target is, if they have one
  • Details of their carbon reduction and removal strategy
• Draft a procurement policy that requires suppliers to measure their footprint by 2024 and have a net zero target by 2025.

7. Reduce digital emissions

While we don’t typically associate the online world with being unsustainable, any time we visit a website or send an email, a small amount of carbon dioxide is emitted. Collectively, digital emissions today account for more than the global aviation industry, accounting for 4% of global emissions. It’s a reminder that small actions can create a huge impact both for the better and for the worse.

Fortunately, there are steps companies can take to tackle their digital emissions. Wholegrain Digital and Business Declares published the Digital Declutter Toolkit to specifically support companies measure and reduce their digital emissions. While a large part of a companies digital emissions rely on the sustainability of their cloud-based provider, companies can still take accountability to reduce emissions.

To take action:

• Clean out unused files from cloud storage drives and websites
• Avoid storing the same files in multiple places
• Select a cloud storage provider with a commitment to use 100% renewable energy

8. Reduce hardware emissions

As part of a company’s digital emissions strategy, companies can take action by reducing emissions associated with their hardware equipment used for the online world, such as mobiles, laptops and monitors. This can be done by extending the life of devices companies may already have and purchasing models with low environmental footprints, including refurbished items.

To take action:

• Set a goal to use your hardware for a minimum of four years before it’s retired and ensure your ops/IT team track against that metric
• When planning your hardware purchases, check product environmental reports e.g.Apple and Dell, and choose efficient options
• Consider purchasing refurbished laptops
• Work with professional repair services, to ensure long use of hardware

9. Invest in carbon removals

Scaling carbon removals is vital if the world is to reach net zero by 2050. Currently, 10 billion tonnes of CO2 emissions will need to be removed from the atmosphere annually if we are to reach that goal. To achieve this, permanent carbon removals need to be scaled by 20,000 times from today’s levels. Accordingly, while not to distract from emissions reduction, any investment that can be directed towards carbon removals has a disproportionately powerful effect in helping this market mature.

Alongside this, there is no single solution that has the ability to scale to 10 billion tonnes, so we need multiple methods to scale to a gigatonne plus level. A portfolio approach allows companies to invest in a variety of carbon removal methods, to ensure both nature based projects and technological carbon removals are supported.

Carbon removals come in two forms: natural solutions and technological solutions. Examples of natural solutions include afforestation, kelp farming, biochar and soil carbon sequestration. On the other hand, examples of technological solutions include direct air capture, which uses fans to filter carbon dioxide from the atmosphere and enhanced weathering, a method that involves storing carbon in the ocean through a chemical reaction that removes CO2 in the atmosphere.

To take action:

• Commit to a plan to invest in high-quality, long-term carbon removals, not avoidance offsets
• Set targets to increase the amount of long-term removals you purchase between now and your company’s net zero target year.
• Use trusted sustainability services to ensure your purchases are high quality. For example:
  • Patch connects you to the largest marketplace for trusted carbon removal projects, including biochar, mineralisation, kelp sequestration and more.
  • Supercritical vet and exclusively sell high-quality carbon removal (from biochar to direct air capture) because it’s the only legitimate route to net zero.
  • Sylvera can help you verify your carbon offsets and give you a better idea of the effect they’re having on the planet.
  • CUR8 works with nature and technological partners to build carbon removal portfolios that are durable and high quality.

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