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Data Centers Aligning with ESG Models:
A Huge Challenge for the Industry in 2022

Blog Series: Eco-Insights

Robson Pacheco •

The global disruption due to pandemic restrictions experienced in the last two years has magnified the deep interdependence among people. This is accelerating the dissemination of business Environmental, Social and Governance (ESG) models and associated projects within the Brazilian data center industry. To be ESG compliant, a data center needs to meet specific cultural and technical standards and become more transparent to the market.

A 2018 research study by the consulting company State Street Global Advisors, found that organizations that undergo this journey achieved solid gains in investor and consumer preference. The 475 large global investment companies surveyed reported that 80% of the participants prioritize investing in organizations aligned with ESG standards. A 2020 Bank of America study based on 14,500 interviews with Generation Z individuals, living in 10 different countries, demonstrated that 80% of them prefer to consume services from companies committed to ESG priorities.

A report released by Merril Lynch Global Research in September 2019 shows that equity returns for ESG organizations in Europe outperformed the market average by three percentage points a year, between 2007 and 2019. With data centers being the backbone of modern business, focusing on ESG in the data center and IT functions can be a strong contribution to a company’s ESG messaging in a digital age and may help to lift the brand’s profile.

Women Are Still a Minority on Data Center Teams

A survey conducted by the Uptime Institute in September 2021 with 800 data center managers shows that, in 82% of the companies that participated in the survey, women represent only 10% of their teams. Following an ESG model, companies could address gender diversity through STEM initiatives, by implementing programs that mentor young women and students to encourage interest in STEM, and by integrating more women into internship programs in IT and data center-centric roles. This is a long-term strategy that should begin now.

Sustainability Opportunities for the Data Center Industry

Sustainability, on the other hand, is a key topic for the industry. Research conducted in September 2021 by the IT monitoring company Paessler, based on interviews of 1,500 managers from the US, Germany, UK, Canada, France, Australia, Brazil, and Mexico, shows the advancement of ESG awareness among IT managers. Thirty-seven percent believed that moving the on-premises data center to the cloud would help align their company with ESG standards, as the enterprise data center could potentially be shut down. Thirty-five percent of managers said that, on this journey to the cloud, they would only utilize data centers adopting best practices in sustainability.

Monitoring E-Waste Remains a Challenge

The Uptime Institute study, mentioned above, reinforces the importance of this trend: among the 800 data center managers interviewed, 82% measure energy consumption rates and effectiveness. However, only 51% measure water consumption in the data center. Even fewer, 25%, monitor e-waste treatment as a metric for gauging the advancement of the data center’s sustainability.

Currently, the great challenge of the Brazilian data center that seeks to adopt ESG principles is the reduction of electrical energy consumption. In this context, fuel cells, renewable assets and long-term energy storage systems, including Battery Energy Storage Systems (BESS) and lithium ion batteries, will play a key role in the data center aligned with ESG metrics.

Data centers have options on the data center cooling front as well. Water-free thermal systems and refrigerants with low Global Warming Potential (GWP) are being specified more frequently. Some countries have established timelines to transition to low GWP refrigerants to support zero-carbon goals.

The data center manager seeking compliance with ESG standards is actively analyzing the reliability and cost-effectiveness of the electrical grid, the temperatures of each Brazilian region, the availability of water and the availability of sustainable, locally generated, and renewable energy. It is worth noting that there is growing interest in using wind power in the data center.

Business Governance and Transparency

It is of essence to go beyond sustainability policies and provide the operation with a support in the area of governance. The extreme complexity of the data center demands sophisticated governance methodologies and solutions – it is necessary to streamline process, people, and technologies to achieve a clear view of everything that is going on within the organization. There is no ESG aligned data center without evidence to support this alignment.

More and more, people and organizations are making choices based on how compliant to the ESG business model a data center is. In this context, the data center management solution must be auditable and integrated with large ERP and business platforms. The Brazilian market has access to data center monitoring solutions and services that use Artificial Intelligence to map what is happening in the environment and automatically generate detailed indicators. This is another element that businesses can leverage to alleviate the challenging transformation journey that the Brazilian data center faces in 2022.

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