Preserving Biodiversity: A Strategic Imperative for Data Centres and Private Equity

Amidst growing environmental challenges and the rapid expansion of digital technology, biodiversity preservation has become a pivotal focus for the development and operation of data centres, as well as the private equity funds that invest in them. With over half of the world’s GDP heavily reliant on natural ecosystems, the loss of biodiversity poses a significant risk to business, investors and the wider economy.

Neglecting biodiversity can lead to severe consequences, including environmental degradation and dwindling natural resources, which could impact private equity firms, communities, and the planet alike. Data centres and investors that fail to account for environmental factors such as energy consumption, land and water use may encounter supply chain disruptions, regulatory obstacles, operational difficulties like water shortages, financial setbacks, and reputational harm.

Evolving Regulations on Biodiversity

In response to the urgent need to protect nature, global initiatives and regulations are rapidly evolving, and investors should ensure their portfolios stay aligned with such efforts. The 2022 United Nations Kunming-Montreal Global Biodiversity Framework (GBF), established at COP15, marked a significant step towards coordinated global action on biodiversity.

The GBF provides a roadmap for governments and private organisations to halt and reverse biodiversity loss by 2030. Key targets include: aligning all global financial flows with this mission (Target 14), requiring large and transnational companies and financial institutions to assess and disclose biodiversity-related risks and impacts (Target 15), and reforming incentives, such as subsidies, to support biodiversity conservation and restoration (Target 18).

This global effort has been reflected in regional and national jurisdictions’ regulation. For instance, to support the flow of sustainable finance, the Corporate Sustainability Reporting Directive (CSRD) mandates comprehensive biodiversity reporting, while the Sustainable Finance Disclosure Regulation (SFDR) requires biodiversity amongst other environmental, social, and governance (ESG) topics to be considered at both entity and product levels. Both are underpinned by the EU Taxonomy, which defines sustainable investment practices. The EU Green Claims Directive further ensures that environmental claims are verifiable and science-based, preventing ‘greenwashing’.

While regulations increase public and financial scrutiny on organisations, it’s increasingly recognised that biodiversity is crucial to the wider integration of ESG factors and the fiduciary duty of boards. Despite regulation being a key motivator, the associated financial risks and impacts from biodiversity loss are driving investors to include biodiversity assessment in their portfolios. Investors can begin by adopting an organisational approach to biodiversity, fostering internal understanding, securing senior-level support, and creating a biodiversity policy. The financial sector can refer to comprehensive guidelines from reputable sources such as the Taskforce for Nature-related Financial Disclosures (TNFD), Principles for Responsible Investment (PRI), and Finance for Biodiversity Foundation.

Data Centres and Biodiversity: Integrating Nature into Every Stage

Incorporating biodiversity into investment decision making not only helps adhere to biodiversity-related regulations. It can help data centre projects improve their resiliency by identifying and avoiding areas prone to environmental risks, such as water scarcity or protected ecosystems. It also fosters stakeholder acceptance by demonstrating commitment to sustainable practices. Lastly, it encourages the development of innovative, nature-based solutions for operational efficiencies, such as using natural cooling solutions like shade trees or bodies of water can reduce energy consumption.

The process begins with site selection, where it's crucial to assess the potential impact on local biodiversity. This involves avoiding ecologically significant areas, such as protected and rare habitats and species to minimise development disruption and ensure designs achieve a net positive outcome for nature, aligning with corporate biodiversity targets and disclosures, and the GBF.

In the design of the landscape, creating a biodiverse environment through nature-based solutions is key. For example, planting trees can provide natural cooling, while rain gardens can manage stormwater effectively. These enhancements not only support local wildlife but also help build resilient ecosystems that may safeguard the data centre and local communities from environmental risks.

When it comes to building design, optimising land use is paramount. This can be achieved by incorporating green roofs with solar panels, which avoids further impacts on natural habitats potentially used for energy infrastructure. Efficient use of space minimises the ecological footprint of the facility, further contributing to biodiversity conservation at a data centre location.

During the construction phase, supporting local ecosystems should remain a priority. This can be accomplished by mitigating environmental impacts with measures such as limiting vegetation clearance, controlling erosion, and avoiding pollution. Additionally, using sustainably-sourced, recycled or repurposed materials and adopting circular economy practices, can further reduce the hidden impacts on nature by decreasing reliance on raw resources.

During data centre operations, implementing practices that align with nature is crucial. This includes using renewable energy sources, installing water-efficient cooling systems, recycling water, and repurposing waste heat for nearby buildings or district heating networks. These measures collectively reduce the environmental footprint and conserve essential resources.

Finally, when a data centre reaches the end of its life, decommissioning should be handled with biodiversity in mind. Reusing or repurposing building materials through pre-deconstruction audits should be prioritised, and once the site is cleared, it should be restored to its natural state to benefit local biodiversity.

Biodiversity is integral to the sustainability and resilience of data centres. By embedding biodiversity considerations into every stage of their lifecycle, data centres can significantly reduce their environmental impact, strengthen relationships with communities, and support long-term operational viability. Embracing biodiversity is not merely a responsibility but a strategic decision that underpins the sustainable future of data centres.

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Dr. Andrea Bueno is Biodiversity Consultant at Ramboll in Germany

Robert Nussey is Nature Positive Manger at Ramboll in UK