Technology, Data Center & Semiconductor Sustainability Solutions

Large term, renewable energy projects that are bringing new power to the grid, like PPAs or VPPAs, can be higher-impact renewable energy options. However, there are other smaller scale impactful renewable energy options, like impact EACs or Peace Renewable Energy Credits (P-RECs)—EACs generated from renewable energy projects that support energy access in climate fragile regions.

Data centers, semiconductors, and other technology companies should ensure that they are only purchasing high-quality carbon credits. These are defined by strict criteria such as additionality, permanence, accurate quantification, third-party verification, and avoidance of double-counting.

Data center, semiconductor, and other technology companies can speed renewable energy adoption through supplier action programs that highlight engagement and education within their supply chains. There are a number of ways that organizations can accomplish this through providing resources on renewable procurement, regulatory requirements and more, to facilitating aggregated PPAs among suppliers with smaller energy loads.

Another method is through utilizing 3Degree’s Supplier REach, an innovative tool that enables suppliers to activate their renewable energy journey.

The biggest scope 3 emission hot spots for data centers, computer software, and other tech companies are typically their upstream supply chains, which can include an organization’s purchased goods and services, hardware manufacturing, and data center energy use. For technology companies that produce electronics, use of sold products is also typically a hotspot.

One of the best solutions available to technology organizations is supplier engagement and education. Examples of supplier engagement include increasing supply chain transparency, mapping all supplier tiers, identifying emissions hotspots, and encouraging direct and indirect suppliers to use renewable energy and improve efficiency.

Data center, semiconductor, and other technology organizations face an evolving global landscape of climate-related regulations and reporting requirements, many of which involve mandatory climate disclosures. These have become standard and compliance is critical for risk management, market competitiveness, and investor trust.

Global climate regulations impacting data centers, semiconductor organizations, and others in the tech sector:

a. California Climate Bills: California passed two major climate disclosure laws in 2023—SB 253 and SB 261. SB 253 is the Climate Corporate Data Accountability Act and it requires all U.S.-based data center, semiconductor and other technology organizations that are doing business in California with total annual revenues over $1 billion to disclose their GHG emissions across all three scopes each year, following the GHGP. SB 261 requires large companies that do business in California with greater than $500 million in revenue to publish climate-related financial risk disclosures every two years. Later, SB 219 was published with key amendments to the earlier climate bills around the timeline, scope 3 reporting, reporting mechanics, and the penalty structure.

b. SEC Climate-Related Disclosures Rule: In the US this rule is stayed, however, if it was in effect, it would require public data center, semiconductor, and other technology companies to disclose climate-related risks, governance structures, risk management strategies, and the material impacts of climate issues on financial performance in their annual reports. There was also growing emphasis on transparent reporting of scope 1 and scope 2 GHG emissions, and select scope 3 emissions, where material.

c. EU Energy Efficiency Directive (EED) & EU Taxonomy: Data centers operating in Europe need to report on a variety of matters including energy performance, renewable energy sourcing, cooling and waste heat metrics, and water usage.

d. Corporate Sustainability Reporting Directive (CSRD): Both data center, semiconductor, and other tech companies based in the EU and many non-EU-based but with operations in Europe are required to report on sustainability matters, such as climate risk, decarbonization strategies, their scope 1, 2, and 3 emissions, and climate targets, based on standardized frameworks.

e. Corporate Sustainability Due Diligence Directive (CSDDD or CSDD Directive): The CSDD Directive establishes mandatory environmental and human rights due diligence requirements for large companies operating in the EU, including many major data center, semiconductor and other technology organizations. Along with the main objectives, technology organizations will face new compliance requirements specific to the sector for responsible innovation, ethical sourcing, reduction of e-waste, and transparent reporting.

f. In Asia-Pacific, markets such as Japan, Singapore, and Australia are introducing climate disclosure requirements often aligned with Task Force on Climate-related Financial Disclosures (TCFD) and International Sustainability Standards Board (ISSB) frameworks for data center, semiconductor, and other technology companies.

Carbon credits and other carbon projects can enable data center, semiconductor, and other technology organizations to account for residual emissions in their carbon footprints by funding projects that remove, reduce, or avoid carbon dioxide equivalent emissions elsewhere. For instance, organizations can purchase carbon credits from accredited brokers or agencies, or invest in projects that directly capture or avoid GHG emissions, such as renewable energy installations, energy efficiency upgrades, or carbon capture and storage (CCS) technologies. Technology organizations are also paving the way by investing in innovative carbon removal technologies, such as methane abatement and biochar.

A great way that semiconductor, data center, and other technology companies can manage distributed energy and complex EAC portfolios is through EAC management. This involves delegating key elements of EAC sourcing, management, and accounting to a specialized advisor. These services can include ensuring accurate EAC delivery, organizing certificates across countries and registries, handling certificate retirement and providing documentation for GHG accounting, audits, and compliance with standards bodies, like the International Sustainability Standards Board (ISSB), addressing EAC gaps at the end of a reporting period, and monitoring progress toward annual goals and key voluntary standards such as CDP, SBTi, and RE100.

Standards that can shape how software, semiconductor, and other technology companies set targets, measure emissions, and pursue verifiable decarbonization in line with current climate science include the GHGP and Science-Based Target Initiative (SBTi), among other standards.

a. The GHGP provides a globally recognized methodology for measuring, managing, and reporting scope 1 (direct), scope 2 (indirect, including electricity usage), and scope 3 (value chain and downstream impacts) emissions for corporations. Many software, semiconductor, and other technology organizations use the GHGP standards to meet regulatory requirements and assure high levels of transparency. GHGP scope 2 guidance is of particular importance for technology organizations as energy use drives major emissions across the board, but particularly in data centers and computing hardware.

Note: The GHGP is currently in the process of updating its Scope 2 Guidance. The proposed changes center around strengthening requirements for both location- and market-based methods, like hourly matching and deliverability of electricity, and considering legacy clauses and feasibility provisions for ease transition for smaller buyers.

b. Software, semiconductor, and other technology organizations are increasingly setting science-based targets through SBTi, covering at least 95% of their scope 1 and scope 2 emissions, and introducing scope 3 targets if these represent 40% or more of their total footprint. SBTi-aligned goals are required to be revalidated every five years to reflect the latest climate science. While SBTi provides some sectors specific guidance, software, semiconductor, and other technology sectors are not included in that and are instructed to use SBTi’s Corporate Near-Term Criteria and/or Corporate Net-Zero Standard to set targets.