AI vs. ESG – A Pressing Business Conundrum

Global spending on business digital transformation is predicted to reach $3.9 trillion by 2027 – a trend that’s largely fueled by the adoption of automation and AI technologies as businesses look to optimize key processes to increase productivity and keep up with competitors.

Digital technologies like AI require a significant investment in digital infrastructure to allow for the storage and almost instantaneous processing of vast amounts of data. The data centers that accommodate this infrastructure require substantial cooling systems that in some cases use a colossal amount of energy.

As a result of this and increased digitalization, data centers currently consume 1.5% of all the global electricity generated. At a time when energy prices are at record levels, this has extensive financial implications for businesses looking to adopt these technologies.

At the same time, the introduction of legislation that requires disclosures about activities that impact the environment that may reflect on a company’s financial condition, such as that of the Securities and Exchange Commission in the US or Corporate Sustainability Reporting Directive (CSRD) in the EU, are putting increasing pressure on businesses to adhere to ESG and sustainability initiatives.

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Data Center Balancing Act

Awareness of the relationship between these two seemingly unconnected trends is becoming more prominent, leaving businesses with a pressing conundrum to solve: How to balance increasing digital needs with sustainability initiatives in a way that doesn’t mitigate business solvency or success?

One solution to this challenge is to consider the geographical location of your data center.

Traditionally, data centers have been located in close proximity to core business locations. Concerns over network connectivity and latency speeds have necessitated this in the past – and of course, there are some datasets that still require edge sites, either from a processing speed perspective or for security reasons.

Yet with increased global connectivity, it is now possible to look further afield to locations that suit the technological requirements of AI and assist with carbon reduction too.

Look North

The Nordic region, for example, benefits from excellent connectivity and low latency networks, not to mention a stable economic climate and access to skilled a workforce. The real differentiator, however, is the consistently cool climate that enables the implementation of highly energy-efficient cooling technologies, such as direct-to-chip liquid cooling, that reduce the need for air conditioning and thus use considerably less power.

Related:Mapping the Best Data Center Locations in 2024

Access to reliable power sources is becoming a premium as the data center industry rapidly expands. Some countries are already unable to connect additional data center sites to their national grid because there simply isn’t enough power available. The Nordics benefit from an abundance of stable, low carbon, and renewable energy sources including hydro, solar, geothermal, and wind power.

These energy sources are considerably cheaper than natural gas-powered facilities and are available at competitive prices. In fact, many energy providers in the Nordics offer long-term power agreements that mitigate the risk of large fluctuations in pricing.

Additionally, the concept of heat reuse is widely accepted and encouraged in the Nordics as part of circular economy principles and so many energy providers are open to recycling waste heat from data center sites for use in the local communities.

These factors mean that modern data centers in the Nordic region allow customers to utilize the infrastructure as a decarbonization platform which can contribute to business carbon reduction and other ESG targets.

Tackling the ESG conundrum

Company leaders must inevitably juggle the many demands of the business world to ensure profitability. The increase in awareness of the AI vs. ESG conundrum is another example of two challenges becoming more critical on the agenda of leadership teams.

By understanding the relationship between these factors, it is possible to future-proof technology requirements and mitigate the financial and environmental impact that might otherwise occur.  

Eva Sóley Guðbjörnsdóttir is CFO and deputy CEO of atNorth.