ESG investing is more than a hot topic today, especially in the data center industry. According to a recent report by the Uptime Institute, the energy efficiency of computing equipment and infrastructure accounts for less than 10% of total data center power usage. In comparison, electrical cooling accounts for more than 50%, and cooling is also responsible for much of the emissions contributing to data centers’ environmental impact.
Moreover, according to another study by the Uptime Institute in 2012, 80% of the World’s data centers are in North America and Western Europe—notably wealthy regions that can afford to invest in greener infrastructure without sacrificing operational efficiency.
The challenge with operating in these regions is that data centers often need help understanding where their energy is coming from. They might use clean sources at one facility but dirty ones at another.
The Impact of ESG Investing
The increased scrutiny of companies by ESG investors has caused companies to become more transparent with their decisions and their impact on their employees and communities. This can be seen in how tech giants like Apple disclose their use of conflict minerals in manufacturing.
Increased transparency helps hold companies accountable for their actions. In this way, ESG investments are helping to create a new era of responsibility in American business.
ESG funds push corporations toward sustainability by providing them with an incentive: if they meet investor expectations, they will receive more investment dollars from ESG firms. Given that most funds utilize a combination of quantitative analysis and qualitative screening, green data centers will soon be a significant trend in the investment community because it directly impacts bottom lines.
As ESG investing grows, companies will invest more in green technologies.
The past decade has seen a seismic shift in how technology is leveraged for business. Businesses now seek to provide more information faster and more globally than ever.
This has led to an explosion of data centers, where all this information is stored, processed, and transmitted to end users. Until recently, these data centers were operating with little regard for their carbon footprint or environmental impact. But as investors and companies alike have become more aware of the social effects of their actions, this is changing.
The result is that green data centers are becoming the next big trend in ESG investing and will likely attract an even greater share of investment dollars in the coming years.
The boom in ESG investing has driven the creation of new software that allows companies to measure and monitor environmental impact at every step of the data center design and construction process.
With all this going for it, ESG investing should be a no-brainer. But one more benefit many people need to be aware of: investing in ESG stocks can help protect your portfolio against climate change issues.
Many companies doing the most to combat climate change are not just sustainable but downright profitable. Take Tesla Motors as an example. Tesla CEO Elon Musk has been a leader in green tech for years. He used his fortune from PayPal and other ventures to invest in new power sources for cars and homes.
The company’s first car was built to be electric from day one, without any compromises for its fuel source. The company’s continued research into green tech has kept it on the cutting edge of sustainable technology, powering its cars with zero emissions while making them stylish and fun to drive.
As the demand for data centers grows and more sophisticated applications exist, many companies are turning to new ways to build and maintain their data centers to increase their performance while reducing the negative impacts of energy consumption and waste production.
For example, server virtualization is a trend that has allowed individual servers to be used for multiple purposes, which has increased their utilization rates from 30 percent to 70 percent.
Green data centers for sustainable development
Forbes estimates that the internet of things could add about an additional 3 billion devices to our current population of 8 billion. With that much new technology, power consumption will have to increase by 80 percent, putting a lot more strain on our already strained power grids.
As the World becomes more conscious of environmental issues and sustainable development, there is a growing realization that IT and energy usage are closely linked. Many tech companies are already investing in green energy and technology solutions.
Green data centers are reducing their carbon footprint and setting an example for other organizations to follow in their footsteps. By creating sustainable practices, data center managers are positioning themselves as industry leaders and reducing risk by avoiding potential liabilities.
For an organization to be green, it must run entirely on renewable energy and self-sourced 100 percent of its power with wind turbines or solar cells. Green data centers also have reduced utility costs and increased efficiency levels, which reduces costs and emissions from conventional data centers.
In addition to providing an economic incentive for companies to make these changes, society’s greater awareness of the environment also encourages corporations to take a long-term view of their investments. With growing concern about climate change and sustainable development, companies proving they are reducing their carbon footprint will get recognition and reasonable investment returns.
How Green Data Centers can generate value for ESG Investors
As the focus on sustainability and environmental protection become more prominent in today’s society, investors are increasingly looking to incorporate environmental impact considerations into their investment decisions.
Green data centers are a new trend in ESG investing, and they’ve been gaining momentum in recent years. These data centers focus on sustainability, typically renewable energy sources, and can positively impact an investor’s portfolio. Green data centers are a part of sustainability initiatives that companies are implementing to help them attract younger generations of employees who value the planet and its resources.
The primary consequence is increased cost-efficiency, which makes the green data center a smart decision for companies of any size and across all industries. On top of this, by committing to operate a green data center, a company may benefit from its positive effect on brand perception and reputation.
Yet data center operators face a unique challenge: ensuring that the number of emissions associated with each company’s servers and networks is directly tied to their value for investors who want to see businesses taking steps towards sustainability.
If you’re an ESG (Environmental, Social, and Governance) investor, you have many options for finding ways to invest in companies that are doing good in the World.
Green Data Center offers a very high ROI.
ESG, or “environmental, social and governance” investing, has been a big trend in recent years. Not only is it profitable to invest in companies that take care of the environment, society, and their investors, but the fund managers who choose to include these companies in their portfolios are also on the right side of history.
With all this going for it, ESG investing should be a no-brainer. But one more benefit many people need to be aware of: investing in ESG stocks can help protect your portfolio against climate change.
A study by NEPCon indicates that “91% of Millennials would take a pay cut to work for an organization with a good reputation for corporate social responsibility.” So by investing in green data centers, you’re also helping your portfolio succeed in the long run.
This year’s S&P 500 Environmental, Social, and Governance (ESG) Index found that companies with strong environmental practices outperformed the overall market by three-to-one.
ESG investors are more concerned than ever about the risks businesses are putting themselves at by neglecting the impacts of their supply chains and other business practices on the natural World, and they’re willing to invest in companies with a low carbon footprint that give back to their communities.
Green data center is one of the hottest issues among investors now. There are early signals that some of the leading equity exchanges in North America and Europe will be deploying sustainable solutions to power trading data centers. With clear definitions, some good examples, and plenty of information about green data centers, investors and corporations can take action to respond to this new trend.
As large corporations take more interest in ESG, investment trends are only set to grow. The rising popularity of green data centers is just the tip of the iceberg – we’re likely to see many more ecologically-aware designs like this in the future.
Green data centers will continue to see a steady increase in the adoption rate. Data centers and Cloud providers worldwide realize that they need to follow the market trend to stay relevant. Smaller niche players will build green data centers, which will later be acquired by larger data center players, who will experience great success by building green data centers or even just offering their existing customer base options to make green.
In this sense, Green Data Center is a scalable investment option that can generate short-term returns and long-term value for the user.