'The Industry Is Not Prepared': Report Finds Many Data Center Firms Unaware Of Looming Emissions Rules

Many data center operators in the U.S., Europe and Asia will soon be required to report greenhouse gas emissions and other sustainability metrics.

But few in the industry are prepared to track and collect this data, a new report from industry group Uptime Institute found, with much of the sector either unaware or in denial about the mandates that are right around the corner.

Over the next two years, a host of so-called green disclosure requirements are likely to go into effect that would require many data center operators to track and report detailed environmental impact data and measured progress toward sustainability goals.

Yet months after these mandates were announced, Uptime Institute's new study suggests that companies across the sector have made little, if any, progress toward meeting these new requirements. 

Just over one-third of data center operators are tracking key sustainability metrics, — from carbon emissions to water use — that regulators will soon require, the study found. Strikingly, the study also indicates that many in the data center space — 50% of respondents in the U.S. — don’t believe they will ever be required to track these metrics. The report’s authors said this amounts to much of the industry effectively having its head in the sand. 

“I think probably a lot of people are not following this as closely as they ought to,” said Andy Lawrence, Uptime Institute’s executive director of research. “The industry is not prepared, because there’s a lot of legislation that’s already in the pipe.” 

Around the globe, governments have rolled out a wave of corporate sustainability reporting requirements that present significant challenges for data center operators.

In the U.S., proposed regulations from the Securities and Exchange Commission will likely require companies to include a range of environmental impact metrics in their filings with the federal regulator starting in 2024. For data centers, this primarily entails emissions stemming from the thousands of megawatts of energy the industry currently uses across the United States, as well as so-called embedded carbon emitted in the manufacturing of data center equipment.

While many individual data center firms may be unaware of the looming rules, one industry group has pushed back on the SEC proposal. The Information Technology Industry Council, in written comments to the SEC, called the proposed rules “overly burdensome and unworkable," and proposed a series of changes. 

In the EU, the Corporate Sustainability Reporting Directive would require similar disclosures from a broader range of companies both public and private. Most data center operators with $40M in revenue, $20M in assets or 250 or more employees in Europe would have to report sustainability data beginning in 2023, even if they are based outside the EU. 

Several other countries — including the UK, Malaysia, New Zealand and Singapore — are set to implement similar reporting regimes over the next four years, as will a number of regional and local governments. And experts expect the requirements to get stricter.

The European Parliament is on the verge of passing the European Energy Efficiency Directive, which would require operators to disclose detailed information on a facility-by-facility basis — everything from water demand to operational details like the amount of data being transmitted to and from the data center and storage capacity.

Jay Dietrich, Uptime’s research director of sustainability, said it won’t be long until similar requirements are implemented in parts of the U.S.

“Our expectation is that it's going to slowly expand out in the United States,” Dietrich said. “We think you'll see it start to manifest in municipalities and states, and you're going to likely see similar things happening in other countries or provinces around the globe.”

Although these reporting mandates have been in the works for years, data from the Uptime Institute’s annual survey suggests that data center operators, particularly in the United States, are making little progress when it comes to being able to track the metrics soon to be required by regulators. And many don’t believe they’ll ever have to.

According to Uptime, just 37% of respondents currently track carbon emissions in any way. On some metrics, data center providers seem to be going backward, with a lower percentage of respondents tracking water usage (39%) or server utilization (35%) than in past years.

Only 17% said they collected so-called Scape 1 and 2 carbon emissions, meaning those emitted directly or through purchased energy, despite this being a requirement in nearly all reporting regimes. A mere 12% of respondents collected emissions data from their supply chain.

Most alarming to the study’s authors is the fact that a significant percentage of the industry believes it will never have to deal with sustainability reporting mandates, even with these requirements looming in the near-term future.

These numbers were most pronounced in North America, where half of respondents said they didn't expect to ever have to face reporting mandates. Uptime’s Lawrence said many operators are clearly unaware of the legislative developments in their region and the rapid pace at which these regulations are becoming more widespread. 

“It really demonstrates the unpreparedness of many operators in the industry,” Lawrence said. “Fifty percent are not expecting mandatory sustainability reporting, so in effect they’re already behind the curve because it’s going to happen. It’s not a question of maybe it will happen … it’s almost certain it will happen.”

The study’s authors say data center providers need to make urgent investments in the systems and processes that will allow them to collect the data regulators will soon require. While this partially entails implementing technologies to collect data, broader organizational changes will also be required to ensure companies not only report accurate data but are able to demonstrate progress toward the sustainability goals the regulations demand. And the clock is ticking. 

 “You're going to need to be able to report your greenhouse gas emissions inventory, your reduction goal on that inventory, and a status update — what steps are you taking, like improving your utilization of your IT infrastructure or reducing your water use,” said Dietrich, who emphasizes that the first round of reporting in the U.S. and Europe will require data from 2023. “The moment is now to be collecting this data.”