How to Talk About Sustainability in the Data Center Industry

Editor’s Note: This blog was originally published in November 2023. It has been updated to include the latest information.

At Equinix, we believe the data center industry can play an essential role in balancing the demands of the growing digital economy with the need to ensure a sustainable future for our planet and all its inhabitants. That’s why we call our sustainability strategy Future First.

Every year, we publish our Integrated Sustainability Report (ISR) to share our sustainability progress with customers, partners and other stakeholders. However, sustainability is a wide-reaching topic that has a language all its own. This means that our report often uses terminology that might not be familiar to all readers. In this blog post, we’ll define some of the words and phrases that come up frequently in sustainability reporting, including our own. This includes terms that are unique to the data center industry, as well as those used by businesses across industry sectors.

Glossary of sustainability terms for the data center industry

CDP: A not-for-profit that manages the leading global disclosure platform for organizations to measure and transparently report the environmental impact of their operations. In 2023, more than 23,000 organizations—including data center operators—disclosed environmental performance data to CDP.[1] Recognition on the CDP Climate Change A List indicates that a company is among the global leaders in sustainability reporting transparency. Less than 2% of companies that disclosed to CDP in 2023 were named to the Climate Change A List.[2]

Circular economy: In contrast to a traditional linear economy, a circular economy aims to recycle, reuse or repurpose assets and materials. By doing this, an organization can extend the lifecycle and value of materials, products and systems to reduce waste.

There are many circularity practices that are specific to data centers, such as recovering heat created by IT equipment and exporting it to heat homes and businesses. In addition, a responsible electronics disposal program can help a data center operator avoid the e-waste that would otherwise occur when servers reach end of life.

Climate neutral: While carbon neutral focuses on just carbon dioxide, climate neutral includes the mitigation of all an organization’s greenhouse gas (GHG) emissions.

Equinix is a founding signatory of the Climate Neutral Data Centre Pact (CNDCP), a European industry initiative whose participants are working to make their data centers climate neutral by 2030, as part of the goal of making Europe the first climate neutral continent by 2050.[3]

EAC: Energy attribute certificates (EACs) are essential instruments in the clean energy market for tracking and accounting purposes. EACs represent the environmental attributes of renewable energy generation, such as wind, solar or hydropower, and are used to substantiate the environmental benefits of generating green electricity.

In most markets, for every unit of electricity generated by a renewable energy resource, an EAC is also created (1 MWh = 1 EAC). Here is a good video from the nonprofit Center for Resource Solutions to help explain this concept from a U.S. perspective, but it works similarly in other regions:

These certificates are crucial for organizations aiming to meet their renewable energy goals, as they provide a market-standard, transparent and traceable way to verify the origins of the renewable electricity that supports the certificates. Through rigorous tracking systems and reporting standards, EACs ensure that the renewable energy generated matches the electricity consumed, enabling businesses and consumers to make well-informed, environmentally responsible energy choices.

EACs can be either “bundled” or “unbundled” certificates. Bundled EACs are linked directly to the energy they certify and are typically generated and consumed together with the electricity. For instance, depending on the contracting terms of a power purchase agreement (PPA), it may deliver electricity bundled with EACs to an end user, but not always.

On the other hand, unbundled EACs are separated from the actual energy generation. They represent the environmental attributes of the renewable energy, but they can be bought and sold independently of the physical electricity that’s delivered to the grid. This allows organizations to support renewable energy projects even when they consume power from conventional sources.

The key distinction is that bundled EACs ensure a direct link between the certificate and the energy consumption, while unbundled EACs offer greater flexibility in how and where the certificates are used, providing more options for organizations to meet their sustainability goals.

It’s widely recognized that EACs can vary in quality and environmental benefits. For this reason, it’s important for data center operators to understand and seek to align with global certification standards and frameworks, where possible. Some of the global bodies that certify or create guidelines around EACs include:

• Center for Resource Solutions (CRS): CRS administers the Green-e certification program in the United States and Canada. This program offers renewable energy certificates (RECs), a type of EAC, ensuring environmental and consumer protection criteria are met.
• International Renewable Energy Certificate Standard (I-REC): I-REC is a global standard for tracking and documenting the generation of renewable electricity. It is designed to provide a consistent and credible approach to certifying the origin of renewable energy.
• Renewable Energy Guarantees of Origin (REGO): The REGO scheme in the UK certifies the renewable origin of electricity generated in the United Kingdom. It helps track and verify renewable energy generation and supply.
• Association of Issuing Bodies (AIB): AIB is an international organization of energy certificate market participants. It facilitates the exchange and trade of EACs in Europe.
• RE100: While not a certifying body, RE100 is a global initiative led by The Climate Group in partnership with CDP. RE100 guidance provides companies a voluntary framework around what kind of EACs to purchase for attributes such as vintage, technology and location.

Data center operators should also follow reporting standards to ensure transparency around how they use EACs and how those EACs fit into their sustainability claims.

See also: PPA

Embodied carbon: The GHG emissions generated across the entire life cycle of a given product or good. For a data center, this includes the emissions associated with the extraction of raw materials to build and equip the facility, the construction process itself, maintaining and repairing the data center during its life cycle—including replacing components—and decommissioning it at the end of its life cycle.

By performing a whole-building life cycle analysis (WBLCA), data center operators can better understand and begin to measure the embodied carbon found within their facilities.

ESG: Environmental, social and governance. The three key pillars that make up a holistic sustainability strategy to address the material challenges that impact an organization’s ability to take on issues including climate change, human rights and regulations.

Fuel cells: A technology that converts a fuel into electricity and heat through an electrochemical reaction without combustion. They can be used as a primary or secondary power source for data centers. Today’s fuel cells can consume a variety of fuels, including up to 100% green hydrogen feedstock, natural gas, biogas and liquified petroleum gas (LPG or propane).

Fuel cells at the Equinix SV10 data center in Silicon Valley

Greenhouse gas (GHG) emissions: The emissions (measured in carbon dioxide equivalents or CO2e) generated by an organization, household or individual over a set period of time. Commonly referred to as carbon emissions.

Green building design:The principles used by data center operators to make their facilities cleaner, more efficient and sustainable. Examples of such principles for data centers include heat recovery and export as well as hot/cold aisle containment, which involves using physical barriers to reduce the mixing of cold air from supply aisles with hot air from exhaust aisles. This increases efficiency by reducing the amount of energy used for cooling and can result in a corresponding PUE improvement.

See also: LEED

Green finance: A practice used to finance existing and future sustainability projects that contribute to environmental stewardship. Green bonds are a type of debt instrument in which the issuer raises capital that is slated to be applied toward eligible green projects, as defined within an organization’s Green Finance Framework, that can demonstrate environmental benefits including climate change mitigation, resource conservation, or pollution prevention and control.

LEED: Leadership in Energy and Environmental Design. A world-renowned green building rating system established by the U.S. Green Building Council that provides a framework for healthy, highly efficient and sustainable buildings. LEED certifications play an especially important role in the data center industry.

Data center operators commonly pursue LEED certifications to assure that their new facilities are designed and aligned with best practices in sustainability across seven focus areas:

• Sustainable sites
• Water efficiency
• Energy and atmosphere
• Materials and resources
• Indoor environmental quality
• Innovation in design process
• Regional priority

Achieving any LEED certification shows exemplary leadership in sustainable building practices. Facilities that achieve Platinum or Gold level certifications demonstrate exceptional efforts in sustainable building practice that exceed expectations.

mtCO2e: Metric tons (mt) of carbon dioxide equivalent (CO2e). A standard metric used to quantify and report GHG emissions. A data center operator will measure the size of its overall GHG footprint using mtCO2e.

Net-zero emissions: According to the Intergovernmental Panel on Climate Change (IPCC), net-zero emissions will be achieved on a global level when human-caused GHG emissions are balanced by removing the same quantity of emissions from the atmosphere over a specified period of time.[4] For most companies aligning to the Science Based Targets initiative (SBTi), having a net-zero target means reducing GHG emissions by at least 90% and neutralizing any residual GHG emissions on an ongoing basis.

See also: SBT

PPA: Power purchase agreements (PPAs) are long-term contracts between electricity buyers and renewable energy generators, typically wind or solar farms. These agreements outline the terms for purchasing renewable electricity generated by an asset at a predetermined price over a specified period, often years. There are two common types of PPAs that corporate buyers use: direct PPAs (AKA physical PPAs) and virtual PPAs. You can think of a direct PPA as a long-term energy hedge, where legal title to the power and possibly the renewable attribute (EAC) is delivered to the buyer.

PPAs are commonly viewed as a high-quality and high-impact vehicle to procure renewable electricity and help reduce the carbon footprint of an organization. PPAs are generally better suited for large energy users, and they can be particularly beneficial in the data center industry, given the high energy requirements of data centers.

A virtual power purchase agreement (vPPA), also known as “contracts for differences,” is a financial mechanism to support renewable energy projects. VPPAs provide a guaranteed return for the project owner, without a buyer (such as a data center operator) taking legal title to the power from the project. Just like in a direct PPA, the buyer commits to pay for the electricity generated by the project. However, with vPPAs, the project owner sells the electricity into a wholesale electricity market and then passes through any revenue or cost from the sale to the buyer. The buyer also receives the EACs generated by the project.

See also: EAC

PUE: Power usage effectiveness. A metric used to quantify the energy efficiency of a data center. PUE is calculated using the following formula:

A hypothetical data center with maximized capacity and perfect efficiency would have a PUE of 1, because 100% of its energy consumption would go to powering IT equipment. In contrast, the higher a data center’s PUE is, the more overhead energy it uses for things like cooling and lighting the facility. While PUE is a good gauge for efficiency, improving PUE alone is not enough to address a business’ sustainability.

See also: WUE

SBT: Science-based target. A target set by a company to reduce its emissions in order to help prevent the worst impacts of climate change. SBTs are “science-based” because they aim to do what’s necessary to meet the goals set by the Paris Agreement as defined by the latest climate science and approved by the Science Based Targets initiative (SBTi), an organization that aims to encourage and guide companies in their target setting.[5]

See also: Supplier engagement

Scope 1, Scope 2 and Scope 3: A company’s greenhouse gas emissions are classified into three scopes:

• Scope 1 emissions are direct GHG emissions from company-owned and controlled resources and operations. This includes emissions from company facilities and vehicles.
• Scope 2 emissions are created indirectly from the consumption of purchased electricity, steam, heat and cooling.
• Scope 3 emissions are indirect emissions, not included in Scope 2, that occur in the supply chain of a company. There are 15 categories of Scope 3 emissions, including purchased goods and services, business travel, waste generation, and use of sold products.

Scope 1 emissions generally compose a small fraction of a data center operator’s total GHG emissions. Operators can address Scope 1 emissions by investing in alternative fuels, efficiency improvements and innovation.

Scope 2 emissions can be addressed through renewable energy procurement and general efficiency efforts that optimize energy usage.

Scope 3 emissions are typically the most difficult to track, quantify and reduce, but they can be addressed indirectly via supplier engagement.

Supplier engagement: A practice of implementing a strategy with suppliers to deliver on responsible supply chain commitments and support decarbonization across a company’s value chain. Data center operators can scale their expertise and their sustainability impact by encouraging suppliers to set climate targets of their own and partnering with them to identify and implement decarbonization efforts within their own operations.

CDP releases an annual list of Supplier Engagement Leaders.

See also: CDP

WUE: Water usage effectiveness. A metric developed by The Green Grid to measure data center sustainability in terms of water usage and its relation to energy consumption.[6] WUE, measured in cubic meters per megawatt hour (m³/MWh), is the ratio between the use of water in data center systems (chilled water systems, cooling towers, humidification systems, etc.) and the energy consumption of the IT equipment. It is used to quantify the water intensity of a data center and is calculated using the following formula:

To improve WUE, a data center operator can take steps that reduce water consumption, such as increasing temperature and humidity, increasing the cycles of concentration on cooling towers and instituting a water recycling initiative.

See also: PUE

Learn more

Access the Equinix interactive sustainability report today to learn more about these and other important sustainability topics for the data center industry.

[1]2023 disclosure data factsheet, CDP

[2]The A List, CDP

[3]Climate Neutral Data Centre Pact

[4]Global Warming of 1.5 ºC, IPCC

[5]About Us, Science Based Targets initiative

[6]Michael Patterson, Dan Azevedo, Christian Belady, Jack Pouchet, Water Usage Effectiveness (WUE): A Green Grid Data Center Sustainability Metric, The Green Grid, March 1, 2011.