Renewed Pressure for Renewables to Power the Data Center

In a recent presentation at the Energy Smart data center conference in Stockholm, Gary Cook, the Greenpeace activist who has tracked data center carbon emissions for a decade, showed a slide of logos, indicating companies that have made a commitment to use 100 percent renewable energy for their IT. Cook showed the commitment started with big brand consumer-facing IT (such as Google and Apple), then spread to big data center operators (such as Equinix and Digital Realty), and now is being adopted by business-to-business companies such as HP Enterprise.

Our research supports Cook’s view that this small cluster of logos will grow to a forest in the years ahead, with a surge of renewed enthusiasm coming from top-level executives. The reason is not altruistic: corporate leaders, investors and shareholders are
exerting increasing pressure on enterprises to actively address climate change risk, better manage natural resources, such as water, and become more energy efficient.

At present, data center operators may not be heavily exposed to the effects of this top-level interest in climate change, but Uptime Institute advises data center operators to prepare for more interest and more pressure.

Financial pressure is one big reason: According to The Forum for Sustainable and Responsible Investment, a U.S.-based membership association formed to advance sustainable, responsible and impactive investing, the amount of funds invested by money managers that incorporate environmental, social and governance (ESG) criteria increased from $8.1 trillion in 2016 to $11.6 trillion in 2018 (see chart below).

C-level executives have little choice but to prioritize company objectives and allocate funds in response to these increased investor calls for climate change and sustainability efforts — it could affect the share price. For whatever reason, altruistic or financial, the investments are being made: In a recent report, Schneider Electric reports that companies spend more than $450 billion on energy efficiency and sustainability initiatives, and 63 percent of Fortune 100 companies have set one or more clean energy targets.

There is some evidence, although not conclusive, that companies that commit themselves to time-binding, greenhouse gas emission reduction targets outperform other companies on the financial markets. This may be due to better management in the first place, the push to efficiency or access to more capital. In recent years, Ceres, the MIT Sloan Management Review (a Massachusetts Institute of Technology publication that covers management practices) and The Boston Consulting Group have all drawn similar conclusions about a commitment to ESG and improved revenues and share prices.

Schneider Electric took notice of this investment trend in its 2019 Corporate Energy & Sustainability Progress Report, which it discussed in a recent webinar. Schneider reported that 42 percent of enterprises have customer/investor relations in mind when they publicly commit to energy- and carbon-reduction initiatives, which only slightly trails environment concerns (44 percent).

In recent weeks, no less than four data center operators in Sweden, Singapore, France and the U.S. have told us about the growing importance of reducing energy/carbon emissions. There is a resurgence in green thinking, often coming from top management. These changes will eventually reach many others in IT and data center operations, which will require them to improve their environmental and sustainability performance as well as reduce risk.

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