WHEREAS: Consumption of freshwater is surpassing the rate at which it can be naturally replenished, creating water shortage risks for companies, communities, and ecosystems.
1 As the demand for machine learning applications grows, the need for data centers to handle larger workloads will continue to rise, putting additional pressure on local water resources. By 2025, two-thirds of the global population is expected to be grappling with “absolute” water stress, potentially affecting community access to water and sanitation.2 3
Digital Realty Trust (the Company) operates over three hundred data centers globally including in waterstrained regions. While the Company has set energy efficiency and carbon emissions reduction targets, current reporting lacks water use reduction goals for its data center operations.
While Digital Realty Trust states it is “designing and constructing sustainable data centers that use less water and energy to operate,” investors do not have access to a clear timeline or plan toward mitigating and managing water-related risks. These risks include regulatory, input costs, price volatility, stranded
assets, reputational, and loss of social license to operate risks. 4 5 Some data center developments are facing community and stakeholder opposition due to concerns relating to the potential negative impacts on the environment, land use, rising electricity costs, and lack of employment opportunities.6
Nearly half of Digital Realty Trust properties’ water withdrawals are in areas with High or Extremely High baseline water stress.
However, this aggregated information does not provide investors with the information needed to assess data center water risk. Digital Realty Trust customers Alphabet and Microsoft have already developed water planning and conservation measures for their data centers, including plans to replenish water locally and in consultation with stakeholders.
8 9 10 For investors to feel confident in the Company’s water risk management, the Company can demonstrate the efficacy of its practices by publicly reporting water
1 https://www.nature.com/articles/s41893-020-0483-z
2 https://www.unep.org/news-and-stories/story/shortages-mount-countries-hunt-novel-sources-water
3 https://utulsa.edu/news/data-centers-draining-resources-in-water-stressed-communities/
4 https://www.ceres.org/resources/reports/global-assessment-private-sector-impacts-water
5 https://www.business-humanrights.org/en/latest-news/chile-tech-giants-build-dozens-of-data-centers-in-chile-whileactivist-raise-environmental-concerns/
6 https://www.washingtonpost.com/technology/2024/10/05/data-center-protest-community-resistance/
7 https://s29.q4cdn.com/106493612/files/doc_financials/2023/ar/digital-realty-2023-10k.pdf
8 https://static.googleusercontent.com/media/www.google.com/en//about/datacenters/static/pdf/english-google-twimpact-report-ext-final.pdf
9 https://azure.microsoft.com/en-us/blog/how-microsoft-measures-datacenter-water-and-energy-use-to-improve-azurecloud-sustainability/
10 https://blogs.microsoft.com/blog/2024/06/02/microsofts-datacenter-community-pledge-to-build-and-operate-digitalinfrastructure-that-addresses-societal-challenges-and-creates-benefits-for-communities/reduction targets for its data centers aligned with global reporting standards and evolving stakeholder expectations.
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