Meta, a global leader in social technology, is rapidly growing its data center footprint to support expanded artificial intelligence operations. This expansion has caused Meta's electricity use to increase by 200% and its total greenhouse gas emissions to double since 2019.[1] To maintain its carbon neutrality claims, Meta purchases renewable energy certificates (RECs). However, RECs are an insufficient decarbonization tool as they do not generally result in new renewable energy capacity, leaving Meta’s data centers reliant on high-carbon energy. This reliance exposes Meta to risks including accusations of greenwashing, regulatory scrutiny, litigation, and potential restrictions on its license to operate in certain localities.[2]

While Meta is building some renewable capacity through Power Purchase Agreements, its growing energy consumption is outpacing these efforts, leaving the Company dependent on fossil fuel-generated power. Meta’s plan to “offset” its high-carbon energy use by purchasing RECs is problematic, as they simply reallocate existing clean energy from the grid without adding new renewable capacity and without achieving meaningful emissions reductions.[3]

In Louisiana, where Meta’s record-breaking data center is to be built, local utility Entergy plans to build three methane gas-powered combustion turbines to meet demand.[4] While Meta states it will purchase RECs and fund a solar project to offset the new fossil fuels being brought online, it has not provided a timeline, raising concerns about prolonged fossil fuel use to power the data center. Similarly, in Nebraska, Meta’s energy demands have delayed the retirement of a coal plant, a decision that will increase emissions and leave residents exposed to continuing health risks.[5] These examples illustrate investor concern that Meta lacks a plan to reduce reliance on fossil fuels for its data centers.

In contrast, Meta’s peer Alphabet has committed to 24/7 carbon-free energy on every grid where it operates.[6] This action will result in more carbon-free energy on the electrical grid and an overall decrease in emissions.

Investors continue to be concerned about increasing greenhouse gas emissions. In addition to risks outlined above, Meta faces significant physical risks from climate change. Heatwaves and water shortages have already led to significant power outages for competitors.[7] By prioritizing energy procurement strategies that result in new renewable capacity, Meta will be playing a critical role in reducing systemic risks of climate change and avoiding operational disruptions.

Therefore, by adopting an energy procurement strategy that results in actual emission reductions, Meta can reduce climate-related risks and ensure that the Company is actively contributing to the decarbonization trajectory of the regions in which it operates.