Twin transformation has begun
Digitalization and sustainability are two fields that can no longer be separated. Some people are already talking about a fourth and fifth industrial revolution, whose impetus is practically overrunning our economy and society. Yet digitalization and sustainability are closely linked. Let’s just take the ecological sustainability dimension and CO2 emissions. There are reinforcing and moderating effects, for example, increasing digitalization can contribute to climate protection, e.g., by improving efficiency, but at the same time it also has an effect through its own consumption of resources. Digitalization is equally intertwined with social and economic sustainability aspects. And recently, another aspect of digitalization has been given attention. Digitalization creates its own artifacts, e.g., data volume and algorithms. What about their sustainability? Should digital knowledge not be permanent and generally accessible?
As a result, some experts are following the principle of consistently placing digitalization at the heart of a higher purpose. In other words, digitalization should not be pursued for itself and, in particular, it must target sustainable ecological, social and economic goals. For companies, this means that digitalization and sustainability should not be managed separately from one another.
The responsibilities of data center providers
Our data growth is increasing exponentially, driven in particular by the business world. This includes the Internet of Things, the digitalization of value chains and the increase in virtual working due to the Covid crisis. But in the private sphere, the amount of data is also constantly increasing thanks to social media activities, video streaming or gaming. All industries are affected – from autonomous driving, to automated buying and selling programs on capital markets, to digital health management in medicine. Data is transmitted, stored, managed and/or processed everywhere. Data centers are the fundamental requirement for the digitalization of the economy and society.
The estimated energy consumption of data centers in EU member states is expected to increase from 2.7 percent of total electricity demand in 2018 to 3.2 percent by 2030. The key question now is how data centers can meet this responsibility, not by working against the economy, but with it. Sustainability and economic growth do not have to be incompatible. Data center providers are now facing a big challenge. The business magazine Forbes correctly defines sustainability as one of five cloud computing trends in 2022: ‘Sustainability is increasingly a driver of cloud innovation’.
One important step has already been taken. European data centers today require 12 times less energy per workload than in 2015. Compared with the global increase in computing power (factor of 10) and the volume of data transferred (factor of 20), the increase in energy requirements (factor of 1.55) is disproportionately low.
Sustainable Development Goals – the normative value system
The European Green Deal aims to achieve a climate-neutral Europe by 2050. Data centers will be made accountable for this as well. Newly-built data centers will be operated in a 100% CO2-neutral way by 2030. In Germany, the goal is more ambitious. The government’s coalition agreement stipulates that new data centers must be operated in a climate-neutral manner by 2027. Sustainable data centers are strengthening their “climate protection measures” by reducing their CO2 footprint. At least one other ecological goal is also affected. “Affordable and clean energy” is being accompanied by a call to reduce overall global energy consumption. Data centers can make a contribution here by using electricity from renewable energies and returning their waste heat to the economic cycle. The principle of sustainability has been a recognized guiding principle for society and business since the Brundtland Report in 1987. Agenda 21 put the idea of ecological, economic and social sustainable development into practice and also anchored it regionally. Originally used as an economic principle in forestry and forest management, sustainability describes a basic rule according to which no more natural resources may be taken from a forest than can grow back naturally. The focus is on balancing economic, ecological and social demands. In 2015, 17 Sustainable Development Goals (SDGs) were defined by the 193 current UN member states at the World Summit on Sustainable Development in New York. They will be valid until 2030 and form the basis of the global commitment to sustainability – including for data center providers.
From corporate responsibility to shared responsibility
From an ethical point of view, data centers are highly ambivalent in terms of their ecological sustainability. They consume energy, so they have negative ecological effects in today’s world of electricity production, but at the same time they are at the center of enormous electricity savings – e.g., through efficiency improvements. Consequently, they deliver immense value added for the economy and society, but are nevertheless being discussed critically again under the keyword “rebound effect”. Regardless of your position on these issues, it is clear that modern technologies such as artificial intelligence, virtual reality and the expansion of the cloud are intensifying these conflicts.
Data centers have a double responsibility to break this ambivalence. On the one hand, they are part of an international value chain and therefore part of their customers’ responsibility. For example, a major car manufacturer or an international healthcare group may have to explain to its stakeholders where their data is stored. Customers are increasingly asking data center providers about their sustainable, especially climate-neutral, operating model. (And also if security is guaranteed – a sustainability aspect too, but one we don’t want to go into here). Consequently, for data center providers it is a matter of meeting the demands made by their own actions on the one hand and thinking along with the sustainability agenda of their customers on the other. However, data centers can also pursue their own sustainability strategy – with in-house sustainability managers, their own sustainability report, etc.
The portfolio of actions
A triad of efficiency (using energy more efficiently), continuity (using renewable energy) and sufficiency (reducing energy) applies. The following measures can be implemented in detail.
For example, it must be clarified how renewable energies can be integrated or waste heat can be used. Data centers release heat into the environment through every kilowatt of electricity consumed, so utilizing this waste heat will likely be key in the future. Approaches such as the provision of CO2-neutral waste heat for local and district heating networks are being discussed.
Another important issue is how data centers can be made more efficient. The consolidation of data centers in one place, e.g., by using a shared infrastructure (colocation) could also lead to shorter amortization periods for higher investments, e.g., in waste heat utilization. For companies, this means physically decoupling the corporate headquarters or production site and the data center, a development that has been observed for several years. Such colocation data centers (data center as a service model, DaaS) improve the overall energy balance.
In the end, sourcing questions also need to be answered. Which materials and raw materials are used and how can they be handled in a resource-saving manner?
From the no-harm principle to the benefit principle
In addition to these more technological-economic aspects, other questions are also relevant, e.g., how data centers want to position themselves in relation to their stakeholders. One obvious strategy could be a “do no harm” damage minimization strategy implemented by reducing the footprint. Currently, most data centers are probably busy meeting this challenge, taking into account regulatory issues and sensitizing their staff in this regard. The EU green taxonomy, the new CSR reporting requirement, and the supply chain due diligence law are just three prominent examples that are generating discussion in Europe right now.
An additional option would be a “do the right thing” benefit-maximization strategy based on the handprint. Following this option would require a broader understanding of sustainability. In addition to a strictly ecological view, which is primarily oriented on SDG 13 “Measures for climate protection” and SDG 7 “Affordable and clean energy”, and thus on the “E” of the ESG discourse (E = Ecological, S = Social, G = Governance), the social pillar of sustainability would also be relevant. Accordingly, the aim would be to illustrate the positive effects that data centers, as the backbone of digitalization, achieve for society. In this context, the security and availability of data are two important functional prerequisites.
Opportunity and risk of value positioning
The fact that an industry comes out with such value positioning implies the risk of adversarial communication – what if this goes wrong? What if greenwashing allegations are made? Or what if NGOs and the media start investigating? Theory and practice provide many good or rather bad examples from other industries. On the other hand – and this is indeed a question of self-confidence and self-image of the providers, at least of some pioneering companies – such positioning can significantly increase employer attractiveness. After all, the pressure on the industry comes not only from regulation and the market, but also from a generation that can hardly, or at least only with difficulty, imagine a professional activity without a higher purpose. To exaggerate, it could be said that the same applies to digitalization industries. Using values as a competitive advantage is the only chance to make yourself attractive to future employees and to find the necessary acceptance among an increasingly critical public.
What can be done?
We are probably only at the very beginning of an exciting journey. The twin transformation is not only ubiquitous and international, but also highly interdisciplinary. It also means that no one knows everything and no one has sole responsibility. Shared value also means shared responsibility.
First of all, intelligent measuring points, better key figures and meaningful indicators are needed, which should then be fed into an indicator system based on the three pillars of sustainability. These include energy efficiency of data centers and hardware utilization (economic factors), waste heat recovery rate and recycling rate of hardware (ecological factors) or employee satisfaction and conflict-free raw materials (social factors).
As always in such cases, dialogue and communication have a crucial role to play. Planners, operators and politicians, as well as proponents and critics, must come together. Moderation skills and decision-making are required. Governments must ensure that there is sufficient green power, customers must reward sustainability efforts, and the media should increasingly report on positive examples from industry. In the end, consumers are also responsible as part of the ecosystem, because their user behavior contributes to energy consumption.