• More than 3-quarters of data centre operators in HK allocate over 10% of their IT budget to improve sustainability

    28 July 2022

    (28 July 2022, Hong Kong) A new report from global real estate consultant JLL reveals that 85% of data centre managers in Asia Pacific believe that sustainability will significantly impact their operations and decision making, confirming that the growth of the sector will increasingly be influenced by environmental, social and governance (ESG) considerations.

    Figures from the Asia Pacific survey showed that 77.5% of data centre operators in Hong Kong will allocate over 10% of IT spending on sustainable products and services for the data centres. The engagement is similar to the levels in Australia (77.5%), Singapore (80%) and India (80%). About 22.5% of the operators in Hong Kong would even allocate over 30% on sustainable products and services.

    Nelson Wong, Executive Director of Research at JLL in Hong Kong, said: “We found that the training and recruitment of people for data centres, optimising costs and ensuring compliance with data security, privacy and sovereignty regulations are the top three priorities for data centre operators in the next two years. Only 5% of operators in Hong Kong prioritise sustainability, lower that the other markets in Asia Pacific. We believe one of the reasons is there is no stringent government policy on decarbonisation.”

    “The incentive for the operators to go green is reducing energy consumption. The city is not lagging the other markets in adopting technology to improve energy efficiency, with about 30% of operators currently using AI-assisted automatic cooling control to improve energy efficiency, ranking fifth in Asia Pacific. About 55% of operators plan to use this technology in the next two years, which shows that the city is on the right track, but the government could consider implementing policy to promote sustainability in the industry to build a better environment for the future generation,” he added.

    Demand for data centres has skyrocketed due to the widespread adoption of digital communication tools and e-commerce. To fuel this growth, the amount of energy used by data centres doubles every four years and the sector now accounts for up to 4% of greenhouse gas emissions globally.

    However, only 28% of operators polled in the survey have visibility of their energy usage data, which would enable them to add transformational business value, maximise efficiency and reduce waste.

    Chris Street, Head of Data Centres, Asia Pacific at JLL,said: “Asia Pacific is arguably the most dynamic data centre market globally and strategies will need to adjust to meet the changing operating environment and increased ESG expectations. The sector urgently needs to address its expanding contribution to global emissions, so operators need advice along the entire real estate life cycle – from site selection to investment to facilities management – in order to address the sizable sustainability issues they face.”

    According to JLL’s analysis, becoming more sustainable and socially responsible is the top strategic priority for data centres in the next two years, ranked ahead of traditional productivity and efficiency metrics. Driven by net-zero carbon ambitions, owners and operators will focus on technologies that reduce power consumption, minimise waste, and rely more on renewable energy sources to power this asset class. Approximately 50% highlight that they will implement Artificial Intelligence (AI) powered cooling technology in their data centre by 2023.

    Respondents also identified re-evaluating construction aspects of data centres as central to achieving climate neutrality in the future, particularly minimising carbon-intense materials such as steel and concrete.

    Investor Interest in Data Centres

    Driven by the shift to cloud-based internet services and online retailing, data centre real estate is attracting more interest from publicly traded real estate investment trusts (REITs), private equity groups and sovereign wealth funds. As a result, institutional investors will not only be looking for a stable income stream, but increasingly positioning ESG as a major consideration for any investment decision.

    However, according to JLL analysis, the lack of global data centre standards makes it difficult to report in-depth ESG metrics. The same respondents believe the responsibility is on operators to develop their own clear and well-defined key performance indicators (KPIs) to gain the investor trust crucial to create shareholder value and maximise returns.

    Kamya Miglani, Head of ESG Research, Asia Pacific at JLL, said:”The growth of data centres in Asia Pacific comes with a mounting environmental cost but provides necessary impetus for investors and operators to enact more sustainability-based operational and development practices. As more data centres are required regionally, the conversation will inevitably shift towards greening the real estate supporting this sector and alignment with more aggressive ESG strategies.”

    The report was compiled from a survey of 505 data centre managers, 70% run by enterprises, 30% run by service providers, and covering 13 countries across Asia Pacific. Learn more here.

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