Climate and environmental impacts

At COP26 in Glasgow in 2021, the UN's Intergovernmental Panel on Climate Change (IPCC) once again highlighted in a report that emissions of climate-affecting gases are not decreasing at the rate needed to achieve the Paris Agreement's goal of limiting the temperature increase to 1.5 degrees. The global pace of transition needs to increase and Sweden must ensure that the Swedish climate targets are in line with the Paris Agreement's 1.5 degree target.

The tech industry can contribute by reducing its own emissions - and through products and services that enable other actors to reduce theirs.

The European Commission estimates the tech sector's share of global carbon emissions to be just over 2%, but there are also studies that show the tech sector's impact could be as high as 2.1-3.9% of total carbon emissions. The European Commission has also projected that the sector's emissions, if no action is taken to reduce them, could increase the world's total carbon emissions by 2040, as a result of increased digitalization.

The overall impact of the tech sector on global carbon emissions depends on the extent to which the sector can substitute more traditional, carbon-intensive activities and the extent to which it offers or contributes new activities that increase electricity use and how this electricity is produced. The former can reduce overall emissions while the latter, in the worst case, can increase them.

At the same time, increased digitalization can lead to emission reductions in other sectors, for example, the deployment and use of 5G technology has the potential to reduce global emissions by 15%.

Many tech companies want to report their climate performance in a transparent and credible way. Many companies use the Greenhouse Gas Protocol (GHG Protocol) for their reporting, which is the world's most widely used standard for calculating and reporting greenhouse gas emissions across the value chain:

Scope 1: All emissions from the company itself that are within its control. This includes, for example, emissions from fuels in factories owned by the company, heating produced by the company itself and company cars.

Scope 2: Indirect emissions from, for example, the consumption of electricity, district heating and district cooling.

Scope 3: The indirect GHG emissions, other than purchased energy, that occur outside the company's boundaries. These emissions are often divided into so-called upstream and downstream emissions depending on whether they occur upstream or downstream of the company's own operations in the chain (illustrated in Figure 1 below).

Most of Swedish tech companies' greenhouse gas emissions are in what is known as Scope 3.

To obtain Scope 3 data, companies need to work with their suppliers, employees and sometimes even customers, which means that it is a more extensive effort associated with several assumptions. At the same time, actively working to reduce Scope 3 emissions is the effort that has the greatest overall impact.

It is also becoming more common for tech companies to work with what is known as non-emissions (sometimes referred to as Scope 4). These calculations highlight the potential of digitalization to help companies become providers of fossil-free solutions.

The non-profit association Digitaliseringskonsulterna31 is working within the framework of its roadmap for Fossil Free Sweden to develop its own framework to be able to report the industry's positive and negative contributions within Scopes 1-4, including omitted emissions.

Similar work is also underway in the EU, where a number of tech companies have taken the initiative to form the European Green Digital Coalition.

While the tech sector faces the challenge of reducing its own sector's emissions, there is a unique opportunity to reduce the emissions and energy use of other sectors as well, thereby contributing to a lower net total even if its own sector's share increases in the future.

Data centers are essential to the functioning of much of what we take for granted in our modern societies. Increasing demand for processing power and cloud storage is a trend that has accelerated, and more and more of our lives involve processing and storing data. At the same time, data centers account for a large share of the tech industry's energy use and there are significant gains to be made by planning, building and operating data centers more efficiently, as well as integrating them more into urban planning and harnessing the heat generated by, for example, heating homes or industries via district heating networks.

The number of internet users worldwide has more than doubled since 2010. Over the same period, global internet traffic has increased fifteen-fold, representing an increase of almost 30% per year. According to the International Data Corporation, an estimated 64.2 zettabytes (trillions of gigabytes) of data were created, collected, copied and consumed in 2020. This is an increase of almost 5 000% in just ten years. As a result, the workloads of the world's data centers have increased tenfold.

The tech industry faces a number of challenges to meet this demand in the most climate and environmentally sustainable way possible.

Swedish data centers are among the most energy efficient in the world and many Swedish data center companies have a clear sustainability focus in their work. They plan, build and operate data centers efficiently with as little environmental impact as possible.

Cooling of data centers is a cause of high energy consumption and internationally there is a great demand for energy efficient data centers. Sweden stands out with a cold climate that reduces the need for cooling and a low climate impact due to a virtually fossil-free electricity mix. Sweden also has a lower risk of natural disasters and a stable political climate. Locating data centers in Sweden reduces the tech sector's international carbon footprint.

Sweden is very well placed to be the location for the data centers and other network solutions required to meet the exponential increase in data handling and internet use. But there is a challenge in optimally utilizing the capacity of the facilities
. Development must be stimulated so that more
companies and other players choose to share the capacity of data centers, for example by renting existing ones. The reduced energy tax has made it easier for a number of international companies to choose to locate data centers here, which is positive from a sustainability perspective.
However, the current design of the energy tax does not promote joint, more efficient use of the facilities.

Chemicals are all around us. The fact that IT products contain chemicals means that the tech industry needs to address this throughout a product's life cycle: in its manufacture, during its use and when it is recycled or incinerated. Improperly handled
chemicals risk leaching into the environment. Chemicals that are not tested and approved risk harming people who handle them, such as workers in component and final assembly factories.

The complexity of the IT industry's global supply chains, with the import and export of chemicals and components, means that even for manufacturers and retailers it can be difficult to know exactly what chemicals a product contains.

Manufacturers of products and services are responsible
for meeting all applicable legislation on, among other things, chemical content. Information on the chemical content of products
aims to create the conditions for risk reduction by providing all stages of production and handling with sufficient information to contribute to the development of products in accordance with the Environmental Code and in line with the environmental quality objective "non-toxic environment". Risks to humans and the environment may arise if the waste from these products is not properly managed during recycling. Therefore, it is important that structures are in place to safely recycle electronic waste.

The tech industry has and takes great responsibility for reducing the presence of harmful chemicals throughout a product's life cycle. As early as 2006, the tech industry developed an international and standardized environmental declaration for the content of different products, including chemicals. The declaration is continuously updated to make it easier for buyers to compare the content of different suppliers' products.

In Sweden, the collection and management of electronics is an important part of the so-called producer responsibility introduced in 2001. At that time, electronics producers, through their trade associations, including TechSverige, created a joint service to facilitate the recycling process, El-kretsen. El-kretsens task is to help producers fulfill their producer responsibility by offering a nationwide collection system to enable electronic products to be handled and recycled in accordance with applicable laws and regulations.

The Government's policy is that Sweden should take the lead in reducing undesirable chemicals in people's home environment and therefore introduced in 2017 a tax on chemicals in certain electronics manufactured, sold or brought into Sweden (the so-called electronics tax or chemicals tax). The aim of the tax is to encourage manufacturers of the taxed products to use better alternative chemicals, mainly in flame retardants.

On behalf of the Government, the Swedish Chemicals Agency and the Swedish Tax Agency have investigated the effect of the tax and what changes should be made to make the law more effective.

The authorities concluded that the tax has not achieved its environmental objectives, as it has not changed the overall use of flame retardants in electronics, is not cost-effective, has increased prices for consumers and is administratively burdensome for businesses.

The tax also hinders the tech industry's ability to reuse products via IT resellers. The tech industry supports the ambition to reduce undesirable chemicals, but the work to reduce these substances should instead be done at EU level. The law on electronics
tax should be abolished and Sweden should instead be a driving force
for common EU rules in the field of chemicals, as it has previously done successfully with the ban on PFAS substances.