A new report from global real estate consultant JLL reveals that 85 percent of data center 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.
The survey, which shows a regional view of the future direction of data centers with respect to ESG strategies, was conducted across 505 data center managers across Asia Pacific (70 percent run by enterprises and 30 percent by service providers), 30 of which are located in the Philippines.
Demand for data centers — the buildings that house computer systems and servers that store and process the world’s data — 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 centers doubles every four years and the sector now accounts for up to four percent of greenhouse gas emissions globally.
“Addressing concerns surrounding greenhouse emissions is a priority, especially when it comes to our energy and sustainability practices in the Philippines,” says Nix Garchitorena, Energy and Sustainability Manager of JLL Philippines.
However, only 28 percent of operators polled in the survey have visibility of their energy usage data, which would enable them to add transformational business value, maximize efficiency and reduce waste.
“Asia Pacific is arguably the most dynamic data center 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,” says Chris Street, Head of Data Centers, Asia Pacific, JLL.
Charlie McNaught, JLL Philippines’ Director for Capital Markets, says that the interest in the Data Center sector in the Philippines is not surprising.
“The country is home to 76 million internet users who spend an average of more than 10 hours on the internet daily. This provides a solid base to fuel data consumption which is expected to further grow as we anticipate greater data demand in the future on the back of wider technology adoption. With the sector in the Philippines still in its early stages of development, it allows managers to plan in their development strategy to ensure their facilities are constructed and operated in line with current and future ESG expectations,” he says.
According to JLL’s analysis, becoming more sustainable and socially responsible is the top strategic priority for data centers 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, minimize waste, and rely more on renewable energy sources to power this asset class.
Approximately 50 percent 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 centers as central to achieving climate neutrality in the future, particularly minimizing carbon-intense materials such as steel and concrete.
Investor Interest in Data Centers
Driven by the shift to cloud-based internet services and online retailing, competition for assets has intensified, thus data center 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.
“The investment in Data Centers in the Philippines is expected to grow considerably in the coming years. It is critical that more emphasis is placed on environmental considerations to ensure these newly developed assets are future proofed,” says McNaught.
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 maximize returns.
“The growth of data centers 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 centers are required regionally, the conversation will inevitably shift toward greening the real estate supporting this sector and alignment with more aggressive ESG strategies,” says Kamya Miglani, Head of ESG Research, Asia Pacific, JLL.
JLL has been operating in the Philippines since 1997 as a 100 percent wholly owned entity and currently manages about 9.4 million square meters of real estate with a workforce of over 1,200 employees.
With twenty-five years of local expertise working hand-in-hand with its global legacy, JLL provides the Philippine real estate market an unparalleled synergy of services with a strong commitment to achieve real estate ambitions through future-ready approaches.
