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Data centres are prioritising sustainability but lack visibility of energy consumption

Data centres are prioritising sustainability but lack visibility of energy consumption

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A new report from JLL has revealed that 85% of data centre managers in the Asia Pacific believe that sustainability will significantly impact their operations and decision-making, confirming that the growth of the sector will increasingly be influenced by Environmental, Social and Governance (ESG) considerations.

Demand for data centres has skyrocketed due to the widespread adoption of digital communication tools and e-commerce. To fuel this growth, the amount of energy used by data centres doubles every four years and the sector now accounts for up to 4% of greenhouse gas emissions globally.

However, only 28% of operators polled in the survey have visibility of their energy usage data, which would enable them to add transformational business value, maximise efficiency and reduce waste.

“The Asia Pacific is arguably the most dynamic data centre market globally and strategies will need to adjust to meet the changing operating environment and increased ESG expectations,” said Chris Street, Head of Data Centres, Asia Pacific, JLL. “The sector urgently needs to address its expanding contribution to global emissions, so operators need advice along the entire real estate life cycle to address the sizable sustainability issues they face.”

According to JLL’s analysis, becoming more sustainable and socially responsible is the top strategic priority for data centres in the next two years – ranked ahead of traditional productivity and efficiency metrics. Driven by net zero carbon ambitions, owners and operators will focus on technologies that reduce power consumption, minimise waste and rely more on renewable energy sources to power this asset class. Approximately 50% highlight that they will implement Artificial Intelligence (AI) powered cooling technology in their data centre by 2023.

Respondents also identified re-evaluating construction aspects of data centres as central to achieving climate neutrality in the future, particularly minimising carbon-intense materials such as steel and concrete.

Investor interest in data centres

Driven by the shift to cloud-based Internet services and online retailing, competition for assets has intensified, thus data centre real estate is attracting more interest from publicly traded real estate investment trusts (REITs), private equity groups and sovereign wealth funds. As a result, institutional investors will not only be looking for a stable income stream but increasingly positioning ESG as a major consideration for any investment decision.

However, according to JLL analysis, the lack of global data centre standards makes it difficult to report in-depth ESG metrics. The same respondents believe the responsibility is on operators to develop their own clear and well-defined Key Performance Indicators (KPIs) to gain investor trust, which is crucial to creating shareholder value and maximising returns.

“The growth of data centres in the Asia Pacific comes with a mounting environmental cost but provides the necessary impetus for investors and operators to enact more sustainability-based operational and development practices,” added Kamya Miglani, Head of ESG Research, Asia Pacific, JLL.

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