Ever-growing digital demand is putting data centres into overdrive; they’re a crucial part of the customer energy supply chain. and they have similar opportunities to support a clean energy transition. Colocation (colo) providers (a third-party space businesses can lease for servers and other computing hardware) are adjusting to take this into account, with some more prepared than others.

Like most market shifts, this is business-driven, as organisations begin to take clear responsibility for the power they use, and its environmental impact. However, according to Accenture, just 37% of companies globally have set net-zero targets. Yet, at the same time, legislation is now being put in place to make reporting obligatory, with the incoming Scope 3 reporting mandates, due to launch at the beginning of July.

Despite the seriousness with which businesses are beginning to take their climate targets, terms such as ‘carbon-neutral’, ‘green’ and ‘renewable-powered’ are still often used ambiguously to define sustainability performance.

Today, companies recognise that all outsourced IT functions count as part of their footprint. To end the era of greenwashing, IT management providers need to trim sustainability terminology to be aligned to eliminate any double-counting of renewables and recognise the difference between hour-by-hour carbon-free power and general, annual claims.

As businesses report their Scope 1, 2 and 3 emissions, they need to know the details of the power they use in data centres - not just the number of kilowatt hours, but the sources of those hours, and the provenance of those sources. Only then are they in a position to communicate clearly to their customers, investors and regulators how sustainable their digital footprint is.

To meet this demand, data centres are shifting towards carbon reduction and monitoring, as well as investments in building a zero-carbon supply portfolio.

We Need Consistent Counting

In the area of overall Scope 2 reporting, the industry doesn’t have full alignment. In greenhouse gas (GHG) accounting it is recognised as the highest importance to avoid double counting of emissions. Unfortunately, the GHG protocol set out two methods to advise Scope 2 power reporting, and these have created ambiguity.

The first method is based on ‘financial control’ (who buys the power), and the second is ‘operational control’ (who controls the usage). While the colo-operator procures energy for the site, the customer determines how that power is used. To be clear, some colo-operators report IT load as the colo’s Scope 2, as it purchased the power, and others report IT load as the colo’s Scope 3 because the customer controls its use. As not all operators chose the same method, this has likely led to some double reporting on the CDP platform (which most of the industry – 23,000 companies representing US$67 trillion in market capitalisation – reports to) with more Scope 2 being reported than is actually being used.

As with many areas of good practice in sustainable reporting, the largest cloud service providers are aware of the issue and taking action - which is to take the path of ‘operational control’. Iron Mountain Data Centres use this method as well, reporting IT load as the Scope 3 to not double count with clients reporting it as their Scope 2, but not all data centre operators are aligned on this. This will become an increasingly important topic as customer Scope 2 reporting obligations increase.

Renewables are Not Enough

This year will also see a step change in the way we talk about the power mix. With the rise of generative AI and the huge power demands it is creating, the industry is recognising the complexity of future power generation. A key realisation here is that wind and solar will not be enough on their own to meet the demand for a fully decarbonised grid. Rather, it will require a multi-technology approach, utilising a spectrum of renewables.  

It’s a complex picture, but sustainable global data centre providers will need many energy generation sources, and for the mix at each site to be defined and reported clearly to feed into customer Scope 2 reporting.

The overriding metric in this reporting will be actual CO2 emission levels, and the framework within which the operator will fit these customer reports will progress towards Net Zero GHG Emissions on a more granular basis.

Restructuring power procurement in this way is creating a new customer opportunity.  Many of the bigger corporations already have extremely sophisticated sustainability reporting in place and are keen to report on total decarbonisation. Some are going a step further, looking for a carbon-free matchmaking service, where, for instance, a long-term PPA with a solar project can be accredited directly to the power consumed by their servers in data facilities. The benefits of providing this sort of advanced sustainability solution are mutual.

For the customer, the colo-provider becomes a clean energy partner that boosts their sustainability performance to new levels.  And the provider can expand its role as a trusted provider into new areas and over a longer timeframe.

What the Customer Wants

Day by day, sustainability is being treated more like compliance and is being specified in RFPs (Request for Proposal), assessed, and reported in the same way. Data centre providers need to look beyond PUE (Power Usage Effectiveness), WUE (Water Usage Effectiveness) and CUE (Carbon Usage Effectiveness) and acknowledge that they offer not only low-latency connectivity, physical and logical security, uptime resilience and compliance but also trackable transparent sustainability with a route to total decarbonisation. This is what the customer wants, so it can only be a good thing.

Garry Valenzisi, Vice President & General Manager, Iron Mountain APAC

Image: Pete Linforth from Pixabay