Comprehensive sustainability strategies and regulatory compliance are transforming the data centre sector, writes Jon Healy, CEO of Keysource.

The tech industry’s growing alignment with the US-led carbon credits scheme, highlighted during New York Climate Week, marks a significant pivot in the sustainability frameworks governing data centres. This shift is not merely a reaction to regulatory requirements; it’s a recognition of the urgent need to address the sector’s mounting environmental footprint as global digital demand escalates.

As data centres face increasing scrutiny, their rising energy consumption and greenhouse gas emissions demand more than superficial solutions like carbon offsetting. While such measures may provide temporary relief, they fail to tackle the root causes of environmental impact. The introduction of stringent regulatory policies signals the beginning of a broader, more integrated approach to sustainability within the sector.

Yet, achieving sufficient sustainability practices in data centre operations requires a multifaceted strategy that extends beyond carbon credits. From site selection and facility design to operational efficiency and supply chain optimisation, the entire lifecycle of data centres must be reconsidered. This shift not only reduces ecological impact but also presents opportunities for innovation, cost reduction and compliance with evolving regulations.

The regulatory landscape and its impact

The critical challenge now facing the industry is whether it can reconcile its exponential growth with substantive environmental progress – or if it will continue relying on interim solutions that merely delay the inevitable. As this debate unfolds, the regulatory landscape is adding a new layer of urgency to the discussion.

The regulatory landscape governing data centres is undergoing a significant transformation, driven by the implementation of the Energy Efficiency Directive (EED) and the Corporate Sustainability Reporting Directive (CSRD). These frameworks are setting new standards for energy management and transparency, placing data centres at the forefront of the corporate sustainability agenda.

The EED, in particular, directly targets data centre operators, imposing energy efficiency requirements that are driving operational overhauls, while the CSRD broadens the scope of corporate accountability by mandating comprehensive reporting on Scope 1-3 emissions. This, in turn, intensifies the focus on data centres, given their central role in the broader business ecosystem.

These directives are not just changing the way data centres operate – they are redefining industry norms, pushing for more tangible, data-driven sustainability efforts. Operators are now under pressure to adopt advanced energy management systems, deploy more efficient cooling technologies, and enhance server utilisation to meet these new efficiency benchmarks. Moreover, the CSRD’s demand for transparent and detailed emissions reporting is fostering a culture of accountability, forcing data centres to track and actively reduce their carbon output with greater precision.

Location is also becoming a decisive factor in navigating this evolving regulatory environment. Data centres situated in regions with access to low-carbon energy grids –such as France, with its reliance on nuclear power, or Scandinavia, rich in hydroelectric and wind energy – are gaining a competitive edge. This disparity in regional energy profiles is increasingly influencing site selection, as sustainability considerations now weigh just as heavily as traditional factors like connectivity and power availability in the decision-making process.

Sustainable design and operations

As regulatory frameworks set the foundation for more sustainable data centre practices, meaningful progress depends on the adoption of design and operational strategies.

The environmental footprint of data centres extends beyond energy consumption to include considerations like site selection, construction methods, and material sourcing. The choice between greenfield and brownfield sites plays a crucial role in sustainability. While greenfield developments risk causing habitat destruction and biodiversity loss, brownfield sites present an opportunity for urban regeneration with reduced ecological disruption.

Innovation in materials has also become a central focus, especially in battery technology. Evaluations of modern battery systems now go beyond performance to consider the full environmental impact of mineral extraction and production. This includes assessing water usage in manufacturing and the broader ecological consequences of sourcing raw materials.

Additionally, the industry is placing greater emphasis on social responsibility. The scrutiny of rare earth mineral sourcing has intensified, with careful attention to mining conditions and locations. This commitment to ethical sourcing highlights the sector’s shift towards a more balanced approach between technological advancements and environmental and social accountability. Moreover, data centres are increasingly repurposing by-products like waste heat to benefit local communities – for instance, by using excess heat to warm community swimming pools or other public spaces, further enhancing their positive social impact.

Supply chain optimisation and renewable energy

In the push for sustainability, optimising supply chains and adopting renewable energy have become essential for data centres. Forward-thinking operators are moving beyond simply choosing eco-friendly vendors; they are actively engaging and educating their suppliers through sustainability workshops and shared best practices. This collaborative approach ensures all stakeholders contribute to reducing Scope 1, 2, and 3 emissions, fostering a culture of environmental responsibility across the entire ecosystem.

The introduction of measurable reporting systems is further strengthening these efforts. By tracking carbon impact with greater precision, data centres can make more informed decisions and continuously improve their sustainability performance.

At the same time, Power Purchase Agreements (PPAs) are reshaping how data centres source renewable energy. Through agreements like Green PPAs and Green Sleeve PPAs, operators can invest directly in renewable projects, significantly offsetting their emissions while supporting the broader transition to clean energy infrastructure. This integrated strategy optimises both supply chains and energy sources, ensuring sustainability is embedded across every operational layer.

As data centres face escalating environmental and regulatory pressures, it’s clear that the industry’s path to sustainability requires more than piecemeal solutions. The convergence of regulatory demands, energy consumption challenges, and supply chain complexities signals the need for a comprehensive, integrated approach.

True sustainability will depend on operators’ ability to reimagine every aspect of their operations – from site selection and material sourcing to energy efficiency and supply chain practices. The challenge lies in whether these advancements can keep pace with the sector’s exponential growth, ensuring that sustainability becomes a fundamental driver, rather than an afterthought, of future development.