What is the impact of the company powering the AI revolution? 🤔

This week’s read time: 6 minutes

You are reading Green Digest Impact, a weekly newsletter dedicated to providing in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, our mission is to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.

WHY IT MATTERS

In the face of new regulations, understanding and measuring corporate impact has never been more critical. That’s why we will provide you with high-quality information and actionable data, crafted to inspire, inform, and drive change within the industry.

The insights and analyses presented in Green Digest Impact are brought to you by a partnership between Green Digest and Impaakt, a Swiss-based impact data provider. Contact Impaakt here to explore how they can assist you.

THIS WEEK’S COMPANY

Nvidia

This week we dive deep into Nvidia’s environmental and social impact.

Nvidia is a semiconductor company and a leading global manufacturer of high-end graphics processing units (GPUs). The company has experienced significant growth, especially in recent years, driven by the demand for gaming hardware and AI applications.

An interesting fact:

• The term GPU was popularized by Nvidia in 1999, who marketed its GeForce 256 as "the world's first 'GPU'.

Since then, Nvidia’s continuous innovation in chips took graphics from this:

to this:

COMPANY’S IMPACT

Nvidia’s overall impact score

Nvidia has a general impact score of +0.08 (on a scale from -5 to +5). Its impact is spread across 9 different UN Sustainable Development Goals (SDGs) and 10 different topics, split between positive and negative analyses.

As of 2023, the company held approximately 80% of the global market share in GPU semiconductor chips. Its semiconductor breakthroughs have significantly improved energy efficiency and advanced chip capacity and various industries utilize its products, including architecture, engineering, construction, automotive, scientific research, and many others. The company has been at the forefront of the AI revolution ever since its involvement in the advancement of Deep Learning (DL) through its GPUs in the 1990s which were used to run DL algorithms. ChatGPT is also based on the AI infrastructure that runs on NVIDIA’s GPUs.

In the socio-economic sphere, the company employs approximately 26,900 people and pays its employees above the industry average. However, women comprise only 19.2% of Nvidia’s total workforce and there’s a 0.5% gender pay gap. Furthermore, the company faced investigation by US lawmakers for selling advanced computer chips to the Chinese government, utilized for mass surveillance of Uyghurs - an ethnic minority in China who suffer severe human rights violations and abuses. A 2020 report found that Nvidia directly benefited Chinese surveillance companies, and its chips may have been used in devices for racial profiling and detection of Uyghurs by companies blacklisted by the US government.

Environmentally, Nvidia has a significant impact, with its annual GHG emissions exceeding 2.1 million metric tons of CO₂e (equivalent to over 414,000 homes’ electricity use for a year). The company also withdraws a substantial amount of water (795,000 m3), over 50% of which comes from high water-stressed areas. Furthermore, it generates a considerable amount of waste and e-waste each year.

_{*The impact score is current as of May 2024 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology at the end of this email.}

SCORES BY SDG

Nvidia’s impact scores by SDG

Positively, the company scores the highest in the Industry, Innovation, and Infrastructure SDG (2.91), followed by Partnership for the Goals (3.22), and Climate Action (0.35).

Negatively, the company scores the worst in the Peace, Justice, and Strong Institutions SDG (-4.34), followed by Gender Equality (-3.03), and Clean Water and Sanitation (-2.57).

You might question why the company maintains a positive overall score despite having more SDGs negatively impacted than positively. This is because each SDG carries its weight in the analysis. For Nvidia, SDG 9 (Industry, Innovation, and Infrastructure) has the most significant impact. This is where the company's innovative solutions make the most considerable difference.

The company also influences two SDGs (8 and 13) both positively and negatively, which effectively balance each other out. For instance, Nvidia negatively impacts the climate through substantial GHG emissions. However, it also positively contributes by providing innovative GPUs that enhance energy efficiency, ultimately leading to fewer emissions.

PEER GROUP COMPARISON

Nvidia’s scores by SASB Theme and compared to its competitors

The SASB^® Standards group sustainability topics into five “sustainability dimensions”: the environment, human capital, social capital, business model and innovation, and leadership and governance.

In the case of Nvidia, the selected themes in the graphic are the most impactful ones (Customer Welfare, Employee Engagement, Diversity & Inclusion, Human Rights & Community Relations, Ecological Impacts, GHG Emissions, Product Design & Lifecycle Management, Labor Practices, Water & Wastewater Management, Business Ethics, and Waste & Hazardous Materials Management).

Compared to its competitors, the company scores higher than the average in nearly all positive impact areas. However, it also scores lower in many negative impact areas.

CONCLUSION

Final words

So, Nvidia’s key social and environmental impact lies in …

its core business of providing products that enhance productivity and efficiency and its ability to offer highly innovative solutions, its role in powering the AI revolution, jobs created, etc. Negatively, Nvidia’s solutions have been used by surveillance companies involved in human rights violations. Additionally, Nvidia consumes a significant amount of water from high-stress water areas, produces waste and e-waste, and contributes to GHG emissions.

Its positive +0.08 score is a balance of all of these factors and topics.

If you want to delve deeper into Ndivia’s impact, you can explore it here.

Next week, we move forward to another industry, analyzing the impact of Nestlé, the largest publicly held food company in the world. 🟢

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METHODOLOGY & SCORES

Crafted from rigorous, fact-based data, our impact scores are powered by Impaakt, a pioneering Swiss-based financial data provider focused on tangible impact over mere intentions. Impaakt scores are powered by stakeholders, ensuring corporates, investors and consumers receive robust, impartial insights to make informed decisions on where to allocate their resources.

Key Features of Our Impact Analysis:

• Comprehensive Research: Our analyses span thousands of companies across various sectors, focusing on the tangible impacts of their business operations, products, processes, and innovations.

• Live, Dynamic Scores: Reflecting the latest in reports and research, our impact scores are continually updated, providing a current view of each company's footprint.

• Zero Tolerance for Greenwashing: By including stakeholders in assessing actions only once the impact occurs, we ensure our assessments reflect the voice of global society, free from greenwashing, and from empty promises and intentions.