State Farm’s AI Reckoning

**SPEAKER_1** (0:00)
This episode is sponsored by HPE. Today's networks must evolve from simply providing connectivity to harnessing AI to deliver exceptional connected experiences. At the break, HPE's Rami Rahim shares how self-driving networks can make that happen.

**Imani Moise** (0:19)
Welcome to Tech News Briefing. It's Friday, July 10th. I'm Imani Moise for The Wall Street Journal. Tech giants have long highlighted efforts to reduce their environmental footprint, but many companies are using far more water than they report. We're breaking down why you can't always take a sustainability report at face value, and why tracking how much water data centers actually consume isn't as straightforward as it may seem. Then, is Jake from State Farm going to be replaced with a chatbot? We'll explain how the century-old insurance giant is reinventing itself for the AI era, and why the changes are sparking backlash.
But first, AI is driving one of the biggest infrastructure buildouts in history, estimated to cost $1 trillion for this year and last. As communities weigh whether to welcome new facilities, measuring their environmental impact is becoming increasingly complicated, particularly when it comes to water. Water consumption is projected to grow rapidly in the coming years, and there's no law that requires companies to report the full scope of their water use. So, annual sustainability reports often don't paint a complete picture.
WSJ columnist Christopher Mims joins me now to explain why the math doesn't always add up, and what you should know if you live in a water-stressed area. So, large tech companies report how much water they use in their annual sustainability reports, but you found that those figures don't tell the whole story. Why is that?

**Christopher Mims** (1:48)
Well, large tech companies only report what's called direct water consumption. What they're not reporting is that there's another type of water their data centers are using, and this can be 10 times as much water as they're directly using in the data centers. And that is the water required to generate the power for these data centers.
And it's a big deal because so many of these data centers, especially the new ones, are powered by fossil fuels, which require quite a lot of water.

**Imani Moise** (2:21)
So why is indirect water usage getting more attention now?

**Christopher Mims** (2:24)
Companies have been kind of trying to, I wouldn't say hide it, but they don't report it, with the exception of Metta.
One reason indirect water use is starting to get more attention now is that many data centers are being placed in areas that are already water stressed. And frequently the power being used by these data centers is being generated by power plants that aren't too far away or may also be in water stressed areas.

**Imani Moise** (2:52)
And some companies say they're offsetting their water consumption with other sustainability initiatives. How does that work?

**Christopher Mims** (2:59)
So a lot of companies are claiming that through so-called water restoration projects, which could be anything, maybe they restore a wetland in order to retain more water, or they're paying to stop leaks in a municipal water system, that they are offsetting the water that they use directly in a given community. And so they're claiming that by 2030, Google talks about this, Amazon talks about this, they're going to put back a gallon of water for every gallon that they directly use in their data centers. But again, this doesn't account for indirect water use at the power plants powering these data centers.

**Imani Moise** (3:43)
So how does the location of a data center affect water consumption?

**Christopher Mims** (3:48)
When a data center is in a water-stressed area and when it is drawing power from a water-stressed area, it can draw down local supplies of water because water is regional, right? I mean, water travels, but ultimately, if you are drawing water from the Colorado River and the desert southwest, there's only so much water available.

**Imani Moise** (4:14)
Are there efforts to standardize water use or consumption reporting? It seems like there's a lot of different ways that this can be measured.

**Christopher Mims** (4:20)
There are a lot of different ways to measure, but what we don't have a handle on yet is how do you look at the sort of all-in water consumption of a given data center in a given location? The challenging part is every single one of these is different. The location it's in is different. The climate it's in is different. The mix of power going into it is different. So it's a big job. It would have to be calculated individually for every single data center.
And of course, it depends on the weather. It depends on the time of day.