ESG Inside the Data Centre

ESG Inside the Data Centre

Data centres have become one of the defining infrastructure asset classes of the 2020s, the physical backbone of artificial intelligence, cloud computing, and the broader digital economy. Yet their environmental footprint is impossible to ignore. The International Energy Agency estimates that global data centre electricity consumption stood at approximately 415 terawatt-hours (TWh) in 2024, accounting for around 1.5% of the world's total annual electricity use, more than the entire electricity demand of France. Under the IEA's central projection, that figure is set to more than double to 945 TWh by 2030, driven primarily by AI-optimised compute workloads. For investors, operators, and ESG practitioners, this creates an urgent and multidimensional sustainability challenge that now sits squarely at the heart of due diligence and capital allocation.

International Court of Justice's Climate Advisory Opinion

The International Court of Justice (ICJ) details its Advisory Opinion issued on July 23, 2025, concerning States' obligations regarding climate change. The United Nations General Assembly requested this opinion, posing two key questions: what are States' international legal obligations to protect the climate system from anthropogenic greenhouse gas emissions, and what are the legal consequences for States that cause significant harm through their acts or omissions? The ICJ's unanimous opinion, a rare occurrence, found that States have binding obligations under various international treaties and customary international law to address climate change and its impacts. Furthermore, the Court determined that a breach of these obligations constitutes an internationally wrongful act, entailing State responsibility, and clarified the framework for assessing legal consequences, including cessation of wrongful acts and reparations.

BRICS Climate Finance: A Five-Pillar Transformation

The BRICS initiative is aimed at reforming global climate finance. This initiative, detailed in a Technical Note prepared under Brazil's 2025 presidency, outlines a five-pillar framework to address challenges emerging economies face in accessing climate funding. The pillars propose reforming multilateral development banks, improving access to concessional finance, advancing country-led investment platforms, developing innovative private sector mobilisation strategies, and strengthening regulatory frameworks. The overarching goal is to mobilise at least USD 1.3 trillion annually by 2035 for developing nations, aligning with the Baku to Belém Roadmap and emphasising South-South cooperation in climate action.

Australian Sustainable Finance Taxonomy

The Australian Sustainable Finance Taxonomy is a framework established by the Australian Sustainable Finance Institute (ASFI), a collaborative body including financial institutions, government, and academia, to classify economic activities that contribute to environmental sustainability. The taxonomy aims to accelerate capital allocation towards Australia's net-zero ambitions by providing common standards for "green" and "transition" finance. It focuses on climate change mitigation within six priority sectors: Agriculture and Land; Minerals, Mining and Metals; Manufacturing and Industry; Electricity Generation and Supply; Construction and Buildings; and Transport. Additionally, it incorporates "Do No Significant Harm" (DNSH) criteria to prevent adverse environmental impacts and "Minimum Social Safeguards" (MSS) aligned with international human rights and responsible business conduct standards. The taxonomy, a key component of the Australian Government's Sustainable Finance Roadmap, is initially voluntary, with a review planned for mid-2025 to explore potential regulatory uses and expansion priorities like climate change adaptation.

United States' first Green Impact Exchange (GIX)

The Green Impact Exchange (GIX), the first U.S. stock exchange focused on sustainability, was approved by the SEC. GIX aims to link environmental responsibility with capital markets by implementing strict governance standards, mandatory compliance, and incentives for eco-conscious companies. This exchange will operate with a dual-listing model initially, utilising technology for trading and enforcing accountability through audits and a "return to green" programme. By offering benefits like access to ESG capital and enhanced reputation, GIX seeks to combat greenwashing and drive a more sustainable financial ecosystem, though it faces challenges regarding liquidity and global harmonisation.