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Beyond CSR: How Data Centers Can Keep Up with Rising ESG Regulations
With ESG regulations tightening, data centers must go beyond CSR to meet mandatory sustainability goals, writes Steve Lewis.
Industry Perspectives
September 26, 2024
7 Min Read
Image: Alamy
Businesses increasingly operate in an ESG-driven world, facing intense pressure to cut energy and carbon consumption as part of their overarching sustainability goals.
In the past, ESG (Environmental, Social, and Governance) initiatives were typically viewed as an element of Corporate Social Responsibility (CSR), where companies voluntarily chose to implement measures to enhance their social influence.
However, recent regulations are increasingly evolving ESG from a voluntary effort to a mandatory requirement. Across the globe, governments and regulatory entities are introducing new criteria mandating that businesses disclose and work to reduce their environmental impact.
This transformation indicates that ESG is no longer just an option – it’s a legal obligation.
Rising ESG Regulations
Research from data management firm ESG Book shows that ESG regulation has increased by 155% over the past decade. This sharp increase is indicative of the growing focus on sustainability-driven policies, with states like California leading the way.
In 2023, California implemented two laws mandating that businesses disclose their carbon emissions and financial risks related to climate change.
One of these laws – the Climate Corporate Data Accountability Act – requires businesses in California to report their Scope 1, 2, and 3 emissions starting from data collected in 2025. The law also mandates that companies must have an independent party review and confirm their reports.
The Climate Related Financial Risk Act requires companies to reveal the challenges they face due to climate change. Given California’s significant role in the global economy, its laws are expected to influence business practices beyond its borders.
At the same time, new European regulations are already impacting how businesses worldwide approach sustainability. The European Union (EU)’s Corporate Sustainability Reporting Directive (CSRD) came into effect on January 1, 2024. It mandates that all large companies and listed SMEs operating within the EU report on their climate impact and start publishing reports in 2025 for the year 2024.
This legislation applies to EU companies and non-EU companies with substantial operations within the EU, including a physical presence.
In accordance with the directive, companies must disclose risks related to environmental and social factors, providing information on metrics like greenhouse gas emissions and energy efficiency. This transparency helps investors and stakeholders gather the information they need for evaluating a company’s environmental impact.
The Impact on Data Centers
These policies are especially important to data centers, as they could consume 9% of the United States’ electricity generation by 2030 – double the amount they use today, according to a study by the Electric Power Research Institute. This highlights the necessity for data centers to improve their reporting capabilities and adhere to global standards.
The escalating ESG regulations pose both challenges and opportunities for data centers. Serving as the backbone of businesses worldwide, data center operations require substantial amounts of energy to support servers, cooling systems, and infrastructure – and that’s only going to increase as organizations invest in new infrastructure to support their AI activities.
Efficient cooling is essential not only for meeting ESG requirements but also for reducing operational costs.
Challenges in Hybrid Cooling Systems
Data centers typically use a combination of air and liquid cooling systems to handle the levels of heat generated during their operations. However, managing cooling setups, where air cooling is combined with in-row or liquid cooling, presents challenges.
The shared infrastructure among pods in a room complicates tracking energy usage and cooling effectiveness.
The situation is further complicated by the need to retain some level of air cooling due to dependencies on shared systems like chillers that supply in-row coolers.
Consequently, data center operators must carefully select a liquid cooling strategy that works alongside existing infrastructure while optimizing efficiency. This entails using simulations and real-time data to evaluate if the chosen cooling method aligns with future ESG standards.
For example, leveraging real-time data analysis enables operators to continuously monitor energy consumption and cooling efficacy, offering a clear view of the data center’s environmental impact.
Simulation tools can then simulate scenarios, such as increasing liquid cooling usage, to predict energy savings and ESG compliance outcomes. Ensuring that the data center complies with regulations and operates efficiently requires the integration of simulation with real-time monitoring.
Standardized Metrics in ESG Compliance
The implementation of metrics such as Cooling Efficiency Ratio (CER), Carbon Usage Effectiveness (CUE), Water Usage Effectiveness (WUE), and Power Usage Effectiveness (PUE) through the ISO/IEC 30134 standards series presents data centers with a framework for benchmarking their performance against industry standards.
These metrics are crucial for demonstrating adherence to ESG regulations and identifying areas for improvement.
Cooling Efficiency Ratio (CER): This measure assesses how effective cooling systems are by comparing the energy used by the cooling equipment to the energy consumed by IT equipment. A lower CER suggests that less energy is dedicated to cooling, helping to decrease the facility’s energy usage. Optimizing CER allows data centers to showcase their dedication to reducing energy wastage, an aspect of ESG reporting.
Carbon Usage Effectiveness (CUE): CUE measures the amount of carbon emissions generated compared to the energy used by IT equipment in a data center. This measurement shows how efficiently a data center operates and its impact on the environment in terms of greenhouse gas emissions. With environmental regulations emphasizing the need to reduce carbon footprints, maintaining a CUE is essential for data centers striving to comply with these standards.
Power Usage Effectiveness (PUE): Established in 2007, the PUE metric has long been considered a standard for monitoring power efficiency in data centers. Initially, PUE measurements indicated a consistent improvement as data centers became more efficient at powering their IT equipment. However, over the last five years, the rate of improvement has slowed, suggesting that PUE is just one of many ways of tracking a data center's performance. Despite this, PUE remains an important component of a series of metrics that provide a more comprehensive view of a data center's sustainable performance. As part of the ISO/IEC 30134 series, PUE is a globally standardized Key Performance Indicator (KPI) that encourages improvements in data center operations.
Water Usage Effectiveness (WUE): WUE evaluates the amount of water the data center uses compared to its IT energy usage. This is crucial in areas with water resources or stricter water usage rules. Monitoring and improving WUE helps data centers maintain water practices that meet global environmental requirements.
These metrics serve multiple purposes:
Benchmarking Performance: Data centers can compare their performance to other data center operations, allowing them to identify where they may be lagging behind or where they are ahead of the curve.
Regulatory Compliance: As part of the broader ESG reporting framework, these metrics provide the data-driven evidence required by regulators, helping to avoid penalties and maintain a good reputation.
Continuous Improvement: The adoption of these metrics allows data centers to continuously monitor and improve their operations. By regularly tracking PUE, CER, CUE, and WUE, operators can identify areas for improvement and make informed decisions on upgrades to enhance energy efficiency and sustainability.
Transparency and Reporting: Standardized metrics simplify the process for stakeholders to comprehend and compare the sustainability initiatives of data centers. This transparency is critical for building trust and credibility in ESG claims.
Advanced Tools for Enhanced Efficiency
As ESG reporting requirements tighten, data centers must proactively adjust their cooling strategies and infrastructure to meet these demands.
Moving from CSR initiatives to ESG compliance means data center operators can no longer rely on outdated or manual energy performance tracking methods. They now require tools that provide precision and accuracy to adhere to the evolving regulations.
Simulation Tools: These tools offer a representation of cooling systems, allowing data centers to simulate scenarios and evaluate the impact of different cooling strategies. This aids in assessing the effectiveness of technologies as well as understanding their integration with existing systems.
Real-Time Monitoring: Real-time monitoring tools track operational data and performance metrics continuously. By combining real-time data with simulation insights, data centers can get a picture of conditions and make informed decisions regarding future cooling approaches.
Navigating ESG and Cooling Efficiency
The evolving regulatory landscape for ESG reporting and the integration of hybrid cooling systems pose significant challenges for data centers. By embracing simulation tools and monitoring technologies, data centers can improve their effectiveness, optimize cooling methods, and meet reporting standards.
Taking a proactive approach to management and providing accurate reports will not just ensure adherence, but also contribute to a more sustainable and effective data center sector. As regulatory requirements continue to expand, the ability to adjust and innovate will be crucial in navigating the intricacies of ESG reporting and cooling efficiency.
Steve Lewis is vice president of US sales and is heading up EkkoSense in North America as it continues its global expansion. Based in Lincoln, Nebraska, Steve brings more than 20 years of experience in data center and IT channel sales to EkkoSense.
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