Zoom Video Communications | Report on supply chain water risks at Zoom Video Communications

Status
Withdrawn
Previous AGM date
Resolution details
Lead filer
NorthStar Asset Management, Inc.
Resolution ask
Report on or disclose
ESG theme
  • Environment
  • Social
ESG sub-theme
  • Water and oceans
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Discretionary
Company HQ country
United States
Resolved clause
Shareholders urge the Board of Directors to issue a report to shareholders on water supply risk, at reasonable cost and omitting proprietary information, allowing investors to understand the magnitude and probability of water supply disruptions to operations, and any Company initiatives or strategies to mitigate new and existing water demands associated with the data centers it relies upon.
Whereas clause
Water scarcity poses significant business risks for Zoom Communications Inc. and the data centers it will rely on for expanding AI capacities.

According to the OECD, “The world faces a growing water disaster. For the first time in human history, the hydrological (water) cycle is out of balance, undermining an equitable and sustainable future for all.”[1]

Generative artificial intelligence (AI) is integral to our company’s strategy and financial goals. Zoom CEO, Eric Yuan stated that “almost everywhere, we think about how to leverage AI.”[2] Our data center services, leverage partnerships with cloud providers and colocation facilities to build AI models and embed generative AI capabilities.

Training AI models can demand significant water to cool data centers. Microsoft for instance, used approximately 700,000 liters of water to train GPT-3. By 2027, AI demand may require 4.2-6.6 billion cubic meters of water withdrawals annually—equivalent to California’s annual water use. Potable drinking water is often used, affecting local community supplies.

In its risk factor disclosures, Zoom recognizes drought as a material risk. Across the tech sector, 20% of U.S. data centers are in drought-prone areas, further impacting local water shortages.[3] With AI workloads expected to grow significantly by 2030, water scarcity risks to data centers stands poised to be even more material to the company’s strategy.

Investors are aware of potential data center technical and design strategies to reduce associated water demand,[4] but Zoom is not currently publishing adequate information regarding risks and mitigation measures for water scarcity. Informed investors should be asking our company:

• How will Zoom operations and financial performance be affected if drought and water stress eliminate functional water-cooling capacities at data centers?

• As new data centers are being built, to what extent is the company seeking technical designs that can substantially reduce the demand for water in cooling?

• As Zoom expands its AI capabilities and NextGen data centers, how will the company collaborate with data center providers to ensure its operations have no adverse effects on ground and surface water supplies for local communities?
Supporting statement
Shareholders recommend the report, at Board and management's discretion:

Assess and prioritize: vulnerabilities of current and planned data center locations or regions; technical solutions to reduce demand for water in cooling; competing demands for water from communities and agriculture;
Assess the risk that Zoom’s data centers in water stressed regions could trigger or contribute to regional water shortages; and
Disclose policies and plans to ensure sustainable supply of water for operations.




[1] https://economicsofwater.watercommission.org/report/economics-of-water.pdf

[2] https://observer.com/2024/09/zoom-eric-yuan-ai-shorter-work-weeks/

[3] https://www.npr.org/2022/08/30/1119938708/data-centers-backbone-of-the-digital-economy-face-waterscarcity-and-climate-ris

[4] https://www.techtarget.com/searchdatacenter/feature/Liquid-cooling-vs-air-cooling-in-the-data-center

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