Advancing ESG Practices in Data Centres: Challenges and Opportunities in India

ESG compliance is no longer an afterthought in India’s data centre sector. As digital demand grows, facilities have become some of the most visible users of power and resources, placing them under close scrutiny from regulators, investors, and customers. Regulators want measurable sustainability, investors judge through ESG investing benchmarks, and enterprises expect proof of carbon footprint reduction alongside secure operations.

A future-ready data centre must therefore deliver performance while meeting environmental, social, and governance standards. That shift is redefining how facilities are built, financed, and trusted in India.

Why ESG Matters for Data Centres in India 
For data centres, ESG matters because each pillar is central to a facilities credibility.

• Environmental – These facilities are among the heaviest users of electricity and water. Without visible progress on efficiency and renewable sourcing, operators risk falling behind both regulators and competitors.

• Social – Data centres impact the communities they sit in, from job creation to resource use. Responsible operators ensure safe workplaces, fair treatment, and engagement with local neighbourhoods.

• Governance – Transparent reporting, independent audits, and strong oversight are what give enterprises and investors’ confidence. Weak disclosure or hidden breaches can undo gains in other areas.

A future-ready facility must combine uptime with credible ESG compliance, building trust through sustainability, responsibility, and openness.

Key ESG Challenges Facing Indian Data Centres
Data centres face several challenges as they work to align growth with ESG compliance.

• High energy use – Power is the single largest cost and source of emissions. Real carbon footprint reduction demands a shift to renewables, not just efficiency upgrades.

• Cooling intensity – Traditional cooling systems consume vast electricity and water. With AI and cloud raising rack densities, pressure on resources is mounting.

• Infrastructure and regulation – Metro regions struggle with limited land availability, while operators must also align with both local laws and global data centre green initiatives - a costly, resource-heavy task.

• Talent and awareness – Sustainability requires skilled teams and a culture of accountability. Infrastructure alone cannot deliver ESG compliance.

These challenges show why ESG compliance in data centres cannot be treated as an afterthought. It has to be engineered into daily operations from the ground up.

Opportunities in ESG Compliance for Data Centres
The same areas where ESG compliance creates pressure - energy use, efficiency, transparency, also present opportunities. They support long-term growth in a market where sustainability in data centres is now expected.

• Adopting renewable energy – Securing long-term contracts for solar and wind reduces dependence on fossil-heavy grids and stabilises costs. More importantly, it drives measurable carbon footprint reduction. Operators that prioritise clean power now will be better prepared as demand rises and ESG sustainability reporting becomes more stringent. STT GDC India currently sources approximately 60% of its energy from renewable sources and remains on track to achieve carbon neutrality by 2030, reflecting a clear shift towards cleaner power.

• Designing for efficiency – Smarter cooling systems, modular campuses, and automation turn data centre green initiatives into daily practice, not just reporting points. Efficiency gains improve PUE, lower operating costs, and extend infrastructure life - proof that data centre sustainability delivers real value. STT GDC India has achieved a 3.4% improvement in Power Usage Effectiveness (PUE) since its FY 21 baseline, even as capacity has continued to scale. rational efficiency while lowering emissions.

• Unlocking green finance – Global investors are using ESG investing benchmarks to guide funding. Operators who can show progress on emissions, energy use, and governance open the door to cheaper capital, while those without audited environmental, social and governance records may face higher costs of growth.

• Earning customer trust – Enterprises expect providers to demonstrate resilience and sustainability. Providers with auditable ESG compliance are more likely to win long-term contracts. Strong ESG performance enables customers to meet their own ESG commitments while scaling AI-ready digital infrastructure responsibly.

These opportunities show why ESG sustainability is not only about meeting standards - it is a driver of competitiveness and future-ready operations.

STT GDC India’s ESG Commitment in Action
At STT GDC India, we treat ESG sustainability as core to how we build and run our campuses. Our approach integrates governance, environmental responsibility, and social impact into day-to-day operations:

• Carbon footprint reduction – We are on track for carbon-neutral operations by 2030. Since FY 21, STT GDC India has reduced its carbon intensity by 51.8%, demonstrating that scale and sustainability can progress together. Nearly 80% of our global electricity already comes from renewable sources, with a target of 85% by 2028.

• Energy and cooling efficiency – We deploy advanced cooling technologies - in-row, rear-door heat exchangers, liquid immersion, and direct-to-chip, to support high-density workloads while cutting waste. AI-powered airflow controls further reduce energy consumption.

• Water stewardship – STT GDC India has achieved a 56% improvement in Water Usage Effectiveness (WUE) compared to its FY 21 baseline, supported by recycled water use, non-potable water sourcing, and wastewater treatment and reuse across campuses.

• Governance – Data privacy and security are embedded into our ESG reporting. Independent audits and certifications validate our processes, and incident response and risk management are part of daily practice. Our ESG disclosures align with GRI Universal Standards 2021, SASB, and India’s BRSR framework, supported by independent assurance, reinforcing transparency and accountability.

• Social responsibility – We invest in safe workplaces, skill development, and community engagement across our campuses. In FY 24-25, we recorded 16 million safe working hours, reflecting a strong safety culture. Our people-first approach has also been recognised through repeated Great Place to Work certifications.

For us, ESG compliance is not an external demand but a reflection of how we believe modern data centre services must operate - accountable, sustainable, and future-ready.

The Road Ahead for ESG in Indian Data Centres 
India’s data centre sector has reached a turning point. Growth is no longer just about adding megawatts, it’s about proving that capacity can expand without overshooting environmental and social limits.

A few shifts are already visible and will define the road ahead:

• Regulations – Voluntary reporting will give way to mandatory audits on carbon footprint reduction, water, and governance, with penalties for non-compliance.

• Sustainability and design – Enterprises are beginning to weigh data centre sustainability, renewable sourcing and cooling efficiency alongside uptime when choosing providers. Expect more data centre green initiatives like modular campuses, AI-led cooling, and renewable-backed grids to become default features.

• Capital – Capital will increasingly flow to operators that meet international ESG investing benchmarks, not just local norms.

The operators who embed environmental, social and governance principles into everyday operations will set the pace, while those treating ESG as a side project will struggle to keep up.

The real question for India’s data centres is no longer if they will grow, but how that growth will be managed. ESG compliance is becoming the line that separates providers who can scale responsibly from those who will struggle under scrutiny.

At STT GDC India, we see this as more than compliance. It’s about building trust that lasts - with customers, investors, and regulators alike. Our focus is on making sustainability and governance part of everyday operations, so that choosing us means choosing a partner built for both performance and responsibility.