THE GROWING IMPORTANCE OF ESG IN DATA CENTERS
Becoming aware of the high energy demands of your data center is a critical step to build sustainable practices within your business operations.
What does Environmental, Social and Governance (ESG) have to do with Data Centers?
The term ESG is becoming a common phrase in company boardrooms and C suites as investors, consumers and other essential stakeholders are taking a growing interest in how companies are responding and reporting this information. Broadly speaking ESG seeks to incorporate environmental, social and governance factors into company operations so as to generate sustainable, long-term financial returns while achieving good social responsibility and strong corporate governance.
When screening potential investments, investors, both institutional and private, often consider a company’s impact in the ESG buckets, along with long-term risks, opportunities and financial performance. Potential customers and employees may also evaluate a company’s impact on the world through a range of company and external sources to decide if they want to work with or buy from them. Some non-government organizations (NGO’s) are working to uncover companies’ performance on a range of ESG factors including Greenhouse Gas (GHG) emissions, carbon footprint and human rights in the supply chain. These entities are publicly shaming poor performers, especially those who have public commitments to the contrary.
Each of the ESG factors covers a wide range of company aspects which are summarized below:
Environment: Climate change and carbon emissions, energy use and efficiency, air and water quality, waste management, natural resource conservation.
Social: Customer satisfaction, data protection and privacy, gender and diversity, employee engagement, community relations, human rights, labor standards. Are suppliers held to the same values as the company claims to hold?
Governance: Board composition, audit committee structure, bribery and corruption, executive compensation, lobbying, political contributions, whistleblower programs
An increasing number of investors are requiring that ESG factors must be incorporated into decision-making and become more than just a check mark to increase transparency on sustainable and socially responsible practices. There is a growing momentum for corporations and financial institutions to move away from short-term perspectives of risks and returns, to better reflect longer-term sustainability in investment performance.
The shift toward developing an ESG plan comes as these considerations are recognized as helping to maximise operational efficiencies, align stakeholder interests, and reduce overall risks. In this manner, company operations should seek to enhance the sustainability of long-term returns, and incorporate more formalised alignment with societal values. Financial decisions must incorporate sustainability factors to maximise returns and profits over the long-term.
Data centers evolving to address ESG
For data centres, ESG considerations have proven to be particularly vital. There is a growing appreciation of ESG and its potentially high importance when evaluating long-term investments.
Data Center facilities account for an estimated 1% of worldwide electricity use, so the impact to global energy demand is significant.
The demand for more data will increase exponentially – from consumers, businesses, and emerging technologies such as artificial intelligence, driverless cars, IOT, and 5G networks. Applying ESG practices to data centers will be important to all companies but especially applicable to large telecom providers, co-lo companies and hosted data centers.
Much has been done to help data centers operate in a more energy efficient way. In the last decade, even as data use has skyrocketed, technological advancements such as processor efficiency improvements, reductions in idle power and virtualization of applications significantly reduced the number of servers and the energy requirements.
The resulting energy intensity to process data has reduced, meaning the amount of energy required to process a terabyte of data has fallen, however this has been offset by the growing use of data.
Energy intensity is estimated to have fallen 20% over the last five years – more than other energy intensive industries.
But as applications for data such as IoT, social media and communications continue to grow, the energy required to drive data centers will continue to increase.
What about the elephant in the data center?
Servers are cooled by air passing through the device, picking up heat from the components and expelling hot air through the back of the server. For every kilowatt of electricity used to power servers, a kilowatt of cooling is needed for cooling and to prevent overheating. The challenge with high density servers is getting adequate cooling air volume to the devices to enable them for continuous operation. Keeping those high powered, application dense servers operating, requires a lot of cooling, which in some cases can account for 50% of the total data center energy costs. And this significant energy use and cost is often ignored for a variety of reasons.
While significant advancements have been made in cooling technology in the last 10 years making cooling systems more energy efficient; utilizing this new technology requires a major capital investment, replacement of cooling systems that still have considerable life and major upheaval in the operation of an existing data center. Most existing data centers are not designed to easily accommodate new high-density servers. And even with the most advanced cooling technology architectural, equipment layout and poor air flow management will cripple the opportunity for significant energy improvements.
What can be done in Data centers to achieve ESG Objectives?
Data centers are complex and unique ecosystems. Making changes to any one element will have an impact on other elements. A whole systems approach is needed to determine what improvements can be made to increase efficiency and determine the cost, environmental and financial impact to achieve improved effectiveness.
SCTi has been a leader in improving data center energy efficiency over the past 12 years. Aligning with industry best practices and adhering to the mantra of doing more with what you have, has enabled SCTi to substantially reduce data center cooling costs, reduce carbon footprint and defer capital spending on new cooling systems. All of which align with ESG objectives.
Book a consultation to achieve your ESG goals
In our next blog we will outline strategies that can be used to improve cooling efficiency and help to reach the corporate ESG goals.
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