Digital companies are getting greener, but AI is making climate targets harder to achieve

The digital economy sits at the centre of one of the defining environmental challenges of the twenty-first century. Technology companies are increasingly positioning themselves as champions of sustainability, investing heavily in renewable energy, improving transparency around carbon emissions, and setting ambitious climate targets. Yet a new international assessment suggests that progress is not happening quickly enough.

According to the latest Greening Digital Companies: Monitoring Emissions and Climate Commitments 2026 report, published by the International Telecommunication Union (ITU) and the World Benchmarking Alliance (WBA), digital companies continue to struggle to reduce greenhouse gas emissions at the pace required to meet global climate objectives. The report assesses 200 digital companies worldwide and examines emissions, electricity consumption, renewable energy usage, climate commitments and transition planning using publicly disclosed 2024 data. The findings highlight a growing tension between rapid technological expansion and environmental sustainability.

One of the most striking findings is the scale of the sector’s carbon footprint. In 2024, digital companies reported 301 million tonnes of operational greenhouse gas emissions from Scope 1 and Scope 2 sources. This represented approximately 0.8 per cent of global energy-related emissions and marked a 1.2 per cent increase compared with 2023. While the increase may appear modest, it raises concerns because the digital sector is expected to play a critical role in helping other industries reduce emissions through smarter technologies, automation and data-driven efficiencies.

The report also notes that Scope 3 emissions, those generated across supply chains, manufacturing activities and product use, accounted for around 76 per cent of total emissions among companies that disclosed such information. This demonstrates that the largest climate challenges often lie beyond companies’ direct operational control.

Scope 1 emissions arise from sources owned or controlled by an organisation, Scope 2 emissions relate to purchased electricity and energy, while Scope 3 emissions encompass indirect emissions across the wider value chain. For many technology firms, reducing emissions is no longer simply about greening data centres. It increasingly requires engagement with suppliers, manufacturers and logistics providers throughout global value chains.

Climate reporting is improving, but gaps remain

Transparency has improved significantly across the digital sector. The report found that 89 per cent of assessed companies now report Scope 1 emissions and 81 per cent disclose Scope 2 emissions. However, comprehensive reporting remains incomplete. Fewer than half of the companies assessed disclosed all relevant Scope 3 emissions. This limitation makes it difficult for investors, regulators and consumers to gain a complete picture of environmental performance.

The issue is particularly significant because Scope 3 emissions often dominate a company’s overall carbon footprint. From semiconductor manufacturing and electronics production to product operation and disposal, the indirect environmental consequences of digital technologies extend far beyond corporate offices and server facilities. As regulatory pressure increases globally, including through emerging sustainability reporting requirements in Europe, companies may find that partial disclosure is increasingly difficult to justify.

The energy demands of the digital world

A total of 163 companies reported consuming 494 terawatt-hours (TWh) of electricity during 2024. This represents roughly 1.7 per cent of total global electricity consumption. More notably, just ten companies accounted for 54 per cent of this electricity demand. Such concentration highlights the enormous influence that a relatively small group of technology firms exert on global energy systems.

The digital economy’s appetite for power is expected to continue rising as cloud computing, advanced data analytics and artificial intelligence become increasingly embedded in everyday business operations. This creates an urgent need to align digital infrastructure growth with clean energy development, ensuring that rising demand does not undermine progress towards decarbonisation. The International Energy Agency (IEA), for instance, has repeatedly highlighted the growing energy significance of data centres and AI-related infrastructure.

Technology companies remain some of the world’s largest purchasers of renewable electricity, helping to stimulate investment in wind, solar and other low-carbon energy sources. Nevertheless, the report found that only 25 of the 200 companies assessed had achieved 100 per cent renewable electricity sourcing.

While this demonstrates meaningful progress, it also indicates that many firms remain reliant upon electricity generated from fossil fuel sources. As digital infrastructure continues to expand, the pace of renewable energy adoption will become an increasingly important factor in determining the sector’s overall environmental impact. Corporate renewable electricity procurement has become a central component of sustainability strategies, particularly among hyperscale cloud providers and major telecommunications companies. Yet renewable procurement alone may not be sufficient if overall electricity demand continues to rise rapidly.

Artificial intelligence: solution and problem

Artificial intelligence emerges as one of the report’s most important themes. AI offers substantial opportunities to support climate action. Advanced algorithms can optimise energy use, improve industrial efficiency, enhance renewable energy forecasting and strengthen environmental monitoring. Across numerous sectors, AI-enabled systems are already helping organisations reduce waste and improve resource management. However, the report also highlights a less discussed reality: AI itself requires enormous amounts of computing power.

Major AI and cloud service providers experienced significant increases in operational emissions between 2020 and 2024, with some reporting emissions reaching up to 239 per cent of their 2020 levels. By comparison, fourteen major telecommunications operators collectively reduced emissions by 11 per cent over the same period. This divergence reflects the infrastructure requirements of modern AI systems. Training and operating large-scale machine learning models requires extensive data centre capacity, sophisticated hardware and substantial electricity consumption.

The challenge facing industry leaders is ensuring that AI growth remains compatible with climate commitments. Without corresponding investments in clean energy and improved efficiency, AI’s environmental footprint could continue to expand. The issue has become sufficiently important that organisations are increasingly incorporating AI-related sustainability considerations into broader discussions around digital development.

Another encouraging finding is the widespread adoption of emissions-reduction targets. The report found that 151 companies had established near-term climate targets covering Scope 1 and Scope 2 emissions. Most encouragingly, many of these targets have been aligned with recognised scientific methodologies.

However, target setting does not automatically translate into delivery. Of the targets reported, only 114 had been validated using science-based frameworks such as those developed by the Science Based Targets initiative, and only 85 were considered on track based on current progress. This gap between ambition and implementation reflects a broader challenge across sustainability programmes. Announcing a target is relatively straightforward; transforming business operations, supply chains and energy systems is considerably more difficult.

Only 81 companies, representing just 41 per cent of those assessed, demonstrated comprehensive plans describing how climate goals would actually be achieved. Effective transition plans typically include implementation strategies, governance structures, measurable objectives, investment pathways and stakeholder engagement processes. Without these elements, climate commitments may remain aspirational rather than operational.

The World Benchmarking Alliance has consistently emphasised that robust transition planning is essential for managing the economic, social and energy transformations required to support decarbonisation. In practical terms, climate success increasingly depends on governance, execution and accountability rather than headline commitments alone.