Comparing what is spent on share buybacks vs the cost of decarbonising the grid

When doing some research this week, I came across what I think is a pretty eye opening stat.

Tech firms spent twice as much money buying up their own shares in the last 18 months, as it would cost to buy out and shutdown every coal fired coal plant on earth, and replace them with clean energy.

I’ll try to work through the numbers with you in this post.

In a report from the RMI (the Rocky Mountain Institute, an energy think tank)  and Carbon Tracker (a climate finance specialist think tank) there was a really mind blowing figure – they estimate that for $116 billion we could buy and retire every coal plant around the world, and replace them with clean energy.

The full article by Justin Guay is worth a read too. Sure, the cost of money is higher in 2023 and in 2020 because interest rates are higher, but at least it gives us a reference figure to come back to. Let’s compare that to how money is spent inside the tech firms, on something that might ensure nice high salaries for tech execs, but might not be as socially useful as the alternatives – like share buy-backs, which until the mid 1980s weren’t even legal.

How much money was spent on tech firm buy-backs in 2022?

Here’s a quick sample. It’s not all of them, and I did these in a hurry:

$60bn Google“In FY 2022, Google repurchased $59.3B of its shares” – From Seeking Alpha, a finance website.

$10bn for Amazon“Yesterday the company announced that the Board has approved a 20-for-1 split of the e-commerce giant’s common stock and authorized a $10 billion buyback plan” – as above.

$28bn for Microsoft“During fiscal years 2022 and 2021, we repurchased 95 million shares and 101 million shares of our common stock for $28.0 billion and $23.0 billion, respectively, through our share repurchase programs” from Microsoft’s annual report.

$90bn for apple  – “Apple bought back almost $90 billion worth of its shares in fiscal 2022, which ended in September” from Forbes.

So that’s $188bn in 2022 alone, for four companies.

How about 2023?

Here’s how much they allocated to buybacks in a recent quarter in 2023 – about 48 billion USD:

  • Apple spent $19.6 billion on buybacks in its fiscal 2023 third quarter (ended April 1), equivalent to about 0.7% of its outstanding shares. Apple’s board of directors also authorized a brand-new $90 billion buyback program.
  • Microsoft spent $4.9 billion on buybacks in its fiscal 2023 third quarter (ended March 31), which was equivalent to about 0.2% of its outstanding shares. The company refreshes its buyback program every three years; it last authorized $60 billion in fiscal 2022, so this current program will end in fiscal 2025.
  • Meta Platforms spent $9.2 billion on buybacks in the first quarter of 2023 (ended March 31), equivalent to about 1.7% of its outstanding shares. It has $41.3 billion remaining under its existing program.
  • Alphabet spent $14.5 billion on buybacks in the first quarter of 2023 (ended March 31), equivalent to about 1.1% of its outstanding shares. The company also authorized a brand-new program worth $70 billion.

This is from the motley fool, a finance website.

So around $49bn in 2023 so far for the first quarter.

Totaling this up in July 2023

I this puts us at around $237bn – this is about twice that “money needed to buy up all the coal plants and replace with green energy” figure in that RMI report, just from 18 months of business. This is only money spent on share buybacks, not their total revenue.

There are obvously caveats, and while it’s not exclusively the job of tech firms to clean up the grid, but it’s food for thought about corporate priorities when they talk about sustainable computing and green I.T.