By: David Craig

When considering the recent strides the data center industry has made to become more sustainable, the iceberg theory is an apt illustration. The tip of the iceberg represents energy efficiency—often the most talked-about measure in greening data centers. But the submerged 90 percent of the iceberg is comprised of essential elements that have a significant impact.

While there is no doubt that energy efficiency is an important metric, it doesn’t tell the whole story. For long-term change to occur, the entire sustainability chain—from embodied carbon to IT components to renewable energy sources—needs to be part of the equation. A comprehensive strategy can lead to greater sustainability gains and provide companies with a competitive advantage that is critical to helping them reach net-zero commitments.

This requires a shift in mentality to one that values sustainable practices and responsible resource consumption at every step. To truly make a difference in data center sustainability, a holistic approach that considers every aspect of the data center, from design to supply chain to building through to end-of-life equipment disposal, is required. The result can have a positive impact on not only the environment but the community, businesses, innovation, and a culture of responsible consumption. Ultimately, this shift toward holistic sustainability is necessary for the long-term viability of the data center industry—and for the health of the planet as a whole.

The business case for sustainability

The prevalence of big data, IoT device usage, advancements in AI, and general digitalization in the wake of the COVID-19 pandemic has led to explosive data center industry growth in recent years. As more data is generated, stored, and processed, the footprint of data centers continues to grow at an unprecedented rate. Data centers are now responsible for more than one percent of the world's total energy consumption, a figure that is projected to double by 2030. As a result, calls are growing for more transparency about direct environmental impacts and how data centers will reduce their carbon footprints. For example, Google data centers—which consumed 164 million gallons of water in 2021—pledged in 2021 to replenish 120 percent of the water they use, on average, in their data centers and offices. It is becoming imperative for the data center industry to embrace sustainability, not only for the environment but for the long-term viability and profitability of operations.

Vendor selection criteria are also shifting to incorporate sustainability concerns. The World Economic Forum report reveals that more than two-thirds of consumers consider sustainability when purchasing products, and the trend is even more pronounced among millennials. As businesses are starting to see sustainability as an investment opportunity and realize that good sustainability practices can contribute to their financial performance, the concept of ESG Alpha continues to gain traction. The idea is that those adopting strong ESG policies and practices will perform better financially over the long term than those that don’t, partly due to the thought that companies that prioritize sustainability are often better positioned to adapt to changing market conditions, as well as attract top talent, build stronger relationships with customers and stakeholders, and manage risks more effectively.

While the relationship between ESG performance and financial gains has been the subject of much debate and research, there is growing evidence to suggest that there is a positive correlation between the two. A study by EY found that organizations that are able to drive down costs through more sustainable production and operations will not only survive but will also emerge as leaders in top-line growth and bottom-line results. Other research by Harvard Business School found that companies that voluntarily adopted sustainability practices outperformed their peers in terms of both stock price and accounting measures of financial performance.

Two major considerations to embrace holistic sustainability

Looming net-zero commitments and the positive correlation between ESG performance and financial gains are both motivating drivers for data centers to adopt sustainability practices. Two major areas that stand to have the biggest immediate impact include close examination of Scope 3 emissions and the study of precision