As the number of data centres around the world increases, their use of power accelerates. The International Energy Agency expects energy consumption by data centres to double by 2030 from 2025 to reach 3% of global electricity consumption. 

With this growth comes significant environmental, social and governance challenges and responsibilities, Catalyst Head of Net Zero Buildings Abdulhamid Alrehaili said. 

“These are not the traditional ESG challenges facing real estate, where you can get a certification to demonstrate what you’re achieving,” he said. “Their impact reaches far into communities. But this is where there are opportunities to not only mitigate their impact but to benefit communities and provide the critical infrastructure we all now need for daily life.”

Bisnow spoke to Alrehaili about the ESG challenges facing developers and how an early conversation can turn them into an advantage. 


Bisnow: How is the data centre market evolving as it grows?

Alrehaili: Increasingly, we see differentiation between types of data centres. Larger facilities might be shared, like a campus comprising smaller facilities, while hyperscalers service the biggest tech companies.

This growth means people aren’t looking at data centres as they did maybe 10 years ago. They are now designated critical infrastructure. The real estate matters, but the value depends on power, connectivity and reliability, not just on the fact there is demand for data centres.

So while the opportunity is substantial for developers, demand alone doesn’t make a project viable. You need the infrastructure to deliver it.


Bisnow: What are the main ESG challenges posed by data centres?

Alrehaili: A large component is the power supplying data centres, whether it’s from a green source. Another is water supply, which depends on the cooling system you’re using. 

Community poses a significant challenge, too. The nearby community might be concerned about water use if it’s hot and there’s drought. Noise and emissions generation are a concern, particularly during construction. 

These concerns need to be addressed early in the project. Have we chosen the right site? Can we avoid issues during construction and operation? 

There are also reporting requirements to consider, such as those included in the EU taxonomy.


Bisnow: Are there any misconceptions about data centres’ ESG impact?

Alrehaili: There is a myth surrounding consumption that data centres consume more power than anything else we do. 

If you consider the importance of data centres as critical infrastructure — something we use constantly in our daily lives — then around 1.5% of global electricity consumption isn’t a lot. For context, transport, measured against wider global energy demand, accounts for around 30%.

This doesn’t remove the importance of mitigating its impact, because it is growing. We still need rules about emissions and to have greater innovation about the use of green power.


Bisnow: How does the industry measure power consumption?

Alrehaili: The power use effectiveness calculation communicates how much energy is used for every unit of IT in the centre. The PUE is used for reporting. In Europe, operators have to report against certain key performance indicators.

The challenge is that there are different levels of demand on each unit of AI, which means that while some operators need to function at 100% all the time for rapid response services and need more power, others might only operate at 60% and therefore consume less.

We need standardisation on how to communicate data centre efficiency that takes this into account. For example, in the case of a company like Nvidia, consumption per token could be used. 


Bisnow: What should developers be doing about ESG risks?

Alrehaili: There is clearly a disconnect between people’s appetite to use digital services and our willingness to accommodate infrastructure to support it. 

The industry needs to explain its role more clearly and to respond to concerns with evidence and a practical commitment to addressing them. This means having early conversations and doing proper due diligence on potential sites, including engaging with the community. 

Speak to local authorities and the community about green power. In a rural location, perhaps you can contribute a wind turbine or solar site. Power availability is essential, but you need to go beyond that to have a successful data centre. 


Bisnow: How could a data centre benefit a community?

Alrehaili: The obvious benefit is heat reuse, especially in a cold climate, such as the Tallaght District Heating Scheme in Dublin. This could be a huge benefit to a local community. 

The challenge is that even if a developer is willing, the local infrastructure needs to facilitate this. The government needs to build that final delivery infrastructure to the centre. But if considered early, such as alongside the development of new housing, this could be a significant benefit.


Bisnow: Are more innovative ways to improve centres’ efficiency emerging?

Alrehaili: There are several groups looking at this, such as the Net Zero Innovation Hub. Companies are also testing new technologies, such as cooling systems and how to recycle used water. 

However, there’s a fear of using these solutions. Data centres need to offer 99.999% availability 24/7, so they don’t want to do anything that might risk that. You also need skilled labour to implement and operate solutions in centres, and there’s a shortage.


Bisnow: What lies ahead for the sustainability of data centres?

Alrehaili: Increasingly, AI will be used to generate ideas for optimisation, such as a demand response tool that analyses temperatures. Data centres have a huge number of sensors generating data. 

We also need to focus more on the efficiency of existing data centres. There’s a lot of focus on new development, but we have many, built perhaps 10 years ago, that need to be renovated. 

With the changes in IT and the pace of change, we will see investment strategies emerge that focus on increasing capacity in existing centres. 

We work with clients to look at the technical aspect of achieving a better PUE and how to report on efficiencies to give them a better overall picture. Using this, we can see how to improve assets.

This article was produced in collaboration between Catalyst and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.