Our cross-practice examination of some of the expected themes for 2021 predicts environmental, social and governance (ESG) issues will continue to gain prominence through the Gregorian calendar year. As the Year of the Ox begins in the new lunar cycle though, I am intrigued to see how the interaction between the two headline-grabbing phenomena of ESG and Big Tech plays out in mainland China.
While currently two of the hottest boardroom buzzwords globally, both ESG and Big Tech bring substantive positives to business – realised and potential. But can their respective contributions to business complement each other, or will they clash horns like the beast of the moment in the Chinese zodiac?
Focussing on the “E” in “ESG”, at first glance, the steady development of green technologies like the electric vehicles which I examined last week is evidence that tech advancement is beneficial for the natural environment in the largest automotive market on the planet. It is therefore not a co-incidence that the national government in Beijing and its local branches have pushed policy incentives to drive EV take-up by China’s increasingly environmentally-conscious middle class.
On the other hand, however, as I have remarked before, the Chinese government’s 2020 policy shifts emphasised furthering the digital economy through huge investment in public and private digital infrastructure – in true China-style, “build back better and bigger” to morph the UN’s slogan.
However, as the article below illustrates well, Big Tech has a staggering impact on power usage. While the US has FAAMG, China has BAT and a host of other large tech players whose energy consumption will only increase, as their 5G networks and data centres power greater digitalisation in a market which already boasts 900 million+ internet users and the highest mobile penetration rate in the world.
In its forthcoming 14th Five Year Plan, the Chinese government will thus somehow need to use policy to guide industry towards:
- …better tech to develop…
- …greener and more efficient tech to then – and only then – foster…
- …a cleaner environment.
Considering that the IT sector already competes with the airline industry for position on the global emission’s blacklist, massive growth in China’s tech infrastructure is unlikely to accelerate the country in a straight line toward President Xi’s policy goal of net zero by 2060.
Navigating these detours in as efficient a manner as possible will require some expert ESG analysis and execution by Chinese regulators – and Mainland tech firms alike – if increasingly interested stakeholders are to be satisfied with the promises made.
Even though data centres have become more efficient — meaning that the same amount of electricity used in recent years now results in more computation — the growth in demand for data has outstripped these gains, particularly for the big tech companies.