Munro Partners releases its annual Responsible Investment and stewardship report
Munro Partners has released its third annual Responsible Investment report. In it, it outlines how it uses stewardship to try to improve company performance through four case studies. Perhaps the most topical of these is its discussion with Amazon on how it will meet its ambitious clean energy goals amid an inflection in AI-led data centre power demand.
In summary, it says data centres are key to unlocking the promise of artificial intelligence (AI), but they require a lot of electricity. One estimate suggests that data centres, through the consumption of electricity, have a greater carbon footprint than aviation. Additionally, given the growth in AI-led demand, according to industry research, they are forecast to consume between 6.5% and 7.5% of US electricity (up from just 2.5% in 2022).
For the cloud providers, including Amazon’s AWS, managing their electricity needs while achieving their climate change goals – including net zero by 2040 for Amazon – becomes increasingly challenging.
During Munro’s in-person engagement with Amazon in March, it discussed how AWS is innovating to secure reliable carbon-free power. Amazon discussed its recent acquisition of a site at Talen Energy’s Susquehanna nuclear power plant, the first deal of its kind, to provide carbon-free baseload power. Munro also discussed Amazon’s status as the largest corporate purchaser of renewables PPAs (power purchase agreements), helping them towards their goal to secure 100% renewable energy by 2030. Munro indicated its support for these efforts.
Munro expects and is positioned for other innovative announcements not just from Amazon, but also cloud-provider peers Google and Microsoft – all of which have ambitious climate change goals. The recent announcement of Microsoft securing over 10GW of Brookfield’s renewables pipeline is another example. It is worth noting that these climate change goals were set before the AI-led rush for power, so they have become increasingly difficult to achieve. Munro will continue to monitor whether these companies can maintain their ambition. Overall, while its energy needs are rapidly increasing, Munro rates Amazon highly in its ESG analysis due to Amazon’s commitment to carbon-free power and their status as the largest corporate purchaser of PPAs.
The report also presents case studies on Costco’s supply chain emissions, and Munro’s engagement on safety disclosures and pay at founder-led companies.
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