Can Big Tech Keep Its Climate Commitments as Data Centers Scale?

Key Insights:

Every proxy season serves as a kind of weathervane for investor concerns, showing where shareholder pressure is building and which topics are moving from the margins into the mainstream. In 2025, one of the clearest signals came from climate-related shareholder proposals filed at Amazon, Meta, and Alphabet. Investors asked how these companies plan to reconcile their ambitious climate commitments with the growing electricity demand from artificial intelligence (AI) and cloud computing, as well as whether the renewable energy procurement strategies underpinning those commitments are still credible as energy needs accelerate. 

This marks an important shift. For years, many large technology companies have maintained “100% renewable” narratives by using market-based instruments such as renewable energy certificates (RECs) and virtual power purchase agreements (VPPAs). Yet as data centers expand at unprecedented speed, investors increasingly question whether these instruments can keep pace with actual energy consumption, or whether they mask ongoing reliance on fossil fuels at the grid level. These tensions now sit at the center of shareholder engagement.

These proposals were among the most supported climate resolutions of the year in the US and symbolized a broader evolution in investor expectations: transparency is no longer enough; credibility is now the benchmark. Although none of the resolutions received majority support, their relatively high support levels suggest that investors view data center-driven emissions as a pressing climate issue for the sector and they want to know how companies intend to meet the growing demand while maintaining their climate commitments. 

Data centers are the backbone of the digital economy, powering AI training, cloud computing, search, video streaming, and social media. However, they are also among the fastest-growing sources of electricity demand and increasingly a driver of rising corporate emissions.

The International Energy Agency (IEA) projects that global data center electricity consumption could more than double by 2030, rising from around 460 terawatt-hours (TWh) in 2022 to over 1,000 TWh by the end of the decade.¹ Specifically, the impact is going to be significant in the United States, with estimates that data centers may comprise 7% to 12% of total US electricity consumption by 2028.² 

AI is a key driver of this trend. Training a large AI model can consume several gigawatt-hours of electricity, equivalent to the annual use of thousands of households.³ Even after training, running these models (known as inference) requires constant, energy-intensive computation across massive server farms. 

Crucially, while companies often highlight efficiency improvements in their operations, these gains are being overwhelmed by the pace of expansion. 

For investors, this creates a fundamental credibility gap. While companies like Amazon, Meta and Alphabet have made ambitious climate pledges, the surge in energy consumption among these tech companies, driven in large part by AI, has cast doubt on whether those commitments remain achievable. 

Notably, Alphabet disclosed that its emissions were up nearly 50% since 2019, pointing to data center electricity as a key driver,⁴ while Meta’s location-based emissions have also more than doubled since 2019.⁵ Amazon, despite being the world’s largest corporate buyer of renewables, reported a footprint of nearly 68 million tons of CO₂ equivalent in 2024, with Amazon Web Services (AWS) data centers responsible for the bulk of its electricity demand.⁶

Digital Infrastructure Expansion Meets the Limits of Renewable Energy Procurement 

These shareholder resolutions reflect a growing demand for greater accountability around tech companies’ climate commitments while they pursue greater AI adoption. However, investors are also calling into question the credibility of traditional emissions reporting methods, particularly around the procurement of renewable energy (see Table 1).

At Amazon, investors questioned how the company’s USD 150 billion data center expansion can coexist with its 2040 net zero target.⁷ AWS’s concentration in Virginia, where utilities are planning new gas plants,⁸ raises doubts about whether the company’s renewable energy use claims match operational reality. 

At Meta, investors criticized the company’s strategy, which relies largely on RECs, which often do not lead to new renewable energy capacity.⁹ In several US regions, Meta’s energy demands have directly delayed the retirement of coal plants or prompted new gas capacity.¹⁰ 

At Alphabet, the proposal focused less on whether the company has set ambitious goals, and more on whether those goals remain realistic.¹¹ Emissions rose 13% in 2023 alone, driven by AI workloads outpacing renewable energy additions.¹² Investors asked for scenario analyses, stress testing, and disclosure of expected emissions trajectories —  tools that would clarify whether Alphabet’s climate plan remains on track.

For investors, these resolutions underscore that the risk is not abstract. Overstating renewable energy performance can distort climate metrics, mask future liabilities, and erode trust. 

Table 1. 2025 Shareholder Proposals at Tech Companies

^{Source: ESG Voting Policy Overlay, Morningstar Proxy Voting Database.}

^{Note: Data as of October 16, 2025.}

How Companies Source Clean Energy and Why It Matters 

When a tech company says it runs on “100% renewable energy,” it does not necessarily mean every server is constantly powered by wind or solar. Instead, it depends on how the company matches its electricity use with renewable energy purchases. 

Annual matching is the most common approach. It involves a company adding up its annual electricity consumption and then purchasing the same amount of renewable energy certificates or contracts. This enables companies to, for instance, run their data centers on fossil fuels at night, while using daytime solar credits to balance the books by year’s end. This is often achieved through RECs or VPPAs:

• RECs are tradable credits representing one megawatt-hour of renewable electricity added to the grid. Companies buy them to offset their electricity use.
• VPPAs are long-term contracts where companies agree to buy renewable energy at a set price from a wind or solar farm. The electricity goes into the grid, but the company receives the RECs. 

These methods create an optics problem: a company may appear to use only renewable energy on paper, even if its data centers draw power from non-renewable sources for much of the day.

Hourly matching is a more rigorous alternative, in which electricity use is aligned with renewable generation hour-by-hour and within the same grid. These distinctions also tie to how emissions are reported, with market-based accounting reflecting contracted clean energy (RECs and VPPAs), and location-based accounting reflecting the emissions of the grid where electricity is actually consumed.

Figure 1 illustrates the gap between market- and location-based accounting across the tech companies under analysis. All three companies report far lower market-based emissions than location-based emissions because they purchase RECs or enter VPPAs.

For investors, understanding this distinction is essential. It would require companies to disclose both location- and market-based scope 2 emissions. Dual reporting provides a more accurate view of actual grid emissions and can mitigate over-reliance on market-based instruments that may not reflect real-world decarbonization. Investors should also examine how renewable matching is achieved and the instruments that are used to substantiate these claims. Without this transparency, renewable energy narratives risk concealing ongoing exposure to fossil-fuel-based grids.

Figure 1. Tech Companies 2024 Market vs. Location Scope 2 Emissions

_{Source: Companies' Corporate Reports¹⁴}

Policy Context: The Rules Are Changing and the Stakes Are High

The debate over clean energy is also unfolding in the standards that define corporate climate reporting. The Greenhouse Gas Protocol, the world’s most widely used standard, is revising its guidance for scope 2 emissions.¹⁵ At present, companies can either report through the market- or location-based method. Both have limitations: the market-based system may overstate climate progress if credits come from unrelated projects, while the location-based method overlooks the role of renewable procurement.

As a result, the GHG Protocol’s Independent Standards Board has launched a consultation on proposed revisions to close this credibility gap, including a proposal to move toward time- and location-specific reporting.¹⁶ 

In addition, the review is considering the introduction of a new metric focused on the marginal emissions impact of renewable purchases, sometimes called carbon matching.¹⁷ Carbon matching would measure how much a company’s renewable investments actually reduce emissions on the grid. For example, a REC from a solar farm in an already renewable-rich region may deliver little marginal avoided emissions benefit, while a VPPA that brings new wind power to a coal-dependent grid could deliver significant emissions reductions. By focusing on avoided emissions, standard-setters hope to distinguish between actions that simply look good on paper and those that genuinely accelerate grid decarbonization.¹⁸

However, tightening the rules raises questions of feasibility. Surveys show that nearly 80% of corporate clean energy buyers doubt they could meet strict hourly and regional matching requirements under existing contracts.¹⁹ To avoid setbacks, draft revisions include several exceptions, such as grandfathering existing renewable agreements, allowing companies to use estimated load profiles when precise hourly data is not available, and exempting smaller electricity users from the strictest requirements.²⁰

The revisions have also drawn attention to corporate lobbying. Amazon and Meta advocate for flexible accounting rules that would give credit for clean energy procurement even without strict alignment on time or geography.²¹ In contrast, Google and Microsoft have expressed support for more stringent, time-specific standards that align with their pursuit of hourly matching.²² 

For investors, understanding where companies position themselves in these debates is important. A company lobbying for flexible accounting rules may signal reliance on lower-impact instruments, while support for more stringent, time-specific standards suggests a higher-integrity strategy.

The review of proposed changes to the GHG Protocol is ongoing. Final revisions will incorporate stakeholder feedback, with updated scope 2 guidance expected no earlier than late 2027, followed by full implementation.

Conclusion: A Credibility Test for Corporate Climate Claims

The 2025 proxy season placed a spotlight on the tension between technological ambition and climate integrity, and the financial implications are significant. If the revised GHG Protocol requires stricter disclosure of hourly and location-based emissions, companies less reliant on market-based measures will be better positioned to demonstrate compliance. Those that have leaned heavily on low-quality RECs may face a sudden increase in reported emissions, potentially exposing them to reputational risks, investor pressure, and higher transition costs. For investors, understanding the robustness of a company’s energy procurement strategy is therefore not just a climate concern, it is a question of financial resilience.

References

1. International Energy Agency. 2025. Energy and AI. International Energy Agency, Paris. https://iea.blob.core.windows.net/assets/601eaec9-ba91-4623-819b-4ded331ec9e8/EnergyandAI.pdf. 
2. Poole, K., Paris, A., & Fisher, J. 2025. Compute and consequence: AI energy demand in a rapidly evolving grid landscape. As You Sow. https://static1.squarespace.com/static/59a706d4f5e2319b70240ef9/t/68c08723c6524e7b42a8e9ef/1757447971180/AsYouSow2025_Compute-Consequence_Final.pdf. 
3. O’Donnell, J., & Crownhart, C. 2025. We did the math on AI’s energy footprint. Here’s the story you haven’t heard. MIT Technology Review. https://www.technologyreview.com/2025/05/20/1116327/ai-energy-usage-climate-footprint-big-tech/. 
4. Hodgson, C. 2024. Google emissions jump nearly 50% over five years as AI use surges. Financial Times. https://www.ft.com/content/383719aa-df38-4ae3-ab0e-6279a897915e.  
5. As You Sow. 2025. Notice of Exempt Solicitation pursuant to Rule 14a 6(g): Proxy memo—Meta Platforms: Disclose a transition plan for data center energy use. U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1326801/000121465925006514/p428257px14a6g.htm. 
6. Amazon.com, Inc. 2025. 2024 Amazon Sustainability Report. (p.9-10) https://sustainability.aboutamazon.com/2024-amazon-sustainability-report.pdf.
7. Amazon.com, Inc. 2025.  Proxy statement (Form DEF 14A). U.S. Securities and Exchange Commission. https://www.sec.gov/ix?doc=/Archives/edgar/data/0001018724/000110465925033442/tm252295-1_def14a.htm.
8. Majority Action. 2025. Notice of exempt solicitation pursuant to Rule 14a 103 (Form PX14A6G). U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1018724/000199937125005942/amzn-px14a6g_051225.htm. 
9. Meta Platforms, Inc. 2025. Proxy statement (Form DEF 14A). U.S. Securities and Exchange Commission.  https://www.sec.gov/ix?doc=/Archives/edgar/data/0001326801/000132680125000040/meta-20250417.htm.
10. As You Sow. 2025. Notice of exempt solicitation pursuant to Rule 14a 103 (Form PX14A6G). U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1326801/000121465925006514/p428257px14a6g.htm. 
11. Alphabet Inc. 2025. Proxy statement (Form DEF 14A). U.S. Securities and Exchange Commission. https://www.sec.gov/ix?doc=/Archives/edgar/data/0001652044/000130817925000511/goog012701-def14a.htm.
12. Trillium Asset Management, LLC. 2025. Notice of exempt solicitation pursuant to Rule 14a 103 (Form PX14A6G). U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1652044/000121465925006528/w429250px14a6g.htm. 
13. Adjusted Support: Companies are required to disclose in their proxy statements the number of shares of each share class beneficially owned or controlled by company insiders. For holdings of share classes with more than one vote per share, we calculate the number of votes controlled by insiders holding based on the number of shares owned or controlled and the number of votes each share gives its holder. We assume that insiders cast their votes in line with the board’s recommendation and subtract insider-controlled votes from the respective vote totals reported by companies in their 8-K filings.
14. Ernst & Young LLP. 2025. Independent Accountants’ Review Report (pp. 2–3). https://sustainability.aboutamazon.com/2024-ghg-verification-scope-1-2.pdf; Alphabet Inc. 2025. Environmental Report 2025 (p. 105). https://www.gstatic.com/gumdrop/sustainability/google-2025-environmental-report.pdf; Meta Platforms, Inc. 2025 Environmental Data Index 2025. (p. 4). https://sustainability.atmeta.com/wp-content/uploads/2025/10/Meta_2025-Environmental-Data-Index.pdf. 
15. Huckins, S. 2025. Scope 2 technical working group progress update. GHG Protocol. https://ghgprotocol.org/blog/scope-2-technical-working-group-progress-update. 
16. Huckins, S. 2025. Scope 2 standard advances: ISB approves consultation on market- and location-based revisions. GHG Protocol. https://ghgprotocol.org/blog/scope-2-standard-advances-isb-approves-consultation-market-and-location-based-revisions. 
17. Millot, J., & Smith, P. 2025. Scope 2 emissions explained: Tracking, reporting, and reducing impact. Carbon Direct. https://www.carbon-direct.com/insights/scope-2-emissions-explained-tracking-reporting-and-reducing-impact 
18. Huckins, S. 2025. Scope 2 standard advances: ISB approves consultation on market- and location-based revisions.
19. Mac Cormac, H. 2025. Proposed changes to GHG Protocol Scope 2 guidelines. Morrison & Foerster LLP. https://www.mofo.com/resources/insights/250626-proposed-changes-to-ghg-protocol-scope-2-guidelines.
20. Ibid.
21. Action Speaks Louder. 2024. Hidden power, broken rules: How companies are gaming emissions reporting rules and undermining global climate targets. Action Speaks Louder. https://speakslouder.org/wp-content/uploads/2024/08/Hidden-Power-Broken-Rules_How-companies-are-gaming-emissions-reporting-rules-and-undermining-global-climate-targets-Action-Speaks-Louder.pdf 
22. Ibid.