Data Centers and the Indirect Route to Sustainability Through Thoughtful Sourcing

The Blind Spot in the Fight Against Climate Change

The United Nations (UN) concluded COP30 conference in Brazil in November 2025, once again putting climate crisis on the agenda of every nation. Pledging to accelerate the implementation of the historic Paris Agreement, COP30 has now limited the global rise in temperature to 1.5°C above pre-industrial levels. The conference made it clear that the gap between what’s needed to fight the climate crisis and what has been achieved has remained wide.

While nations continue to stand in solidarity towards climate goals, the need to keep up with AI is compelling them to bring home one of the most intensive consumers of power and carbon emitters on the planet. With data centers on the rise, balancing development and sustainability will be a forever-ongoing challenge.

That challenge starts with a simple fact: There are more data centers today than at any point in history, and the count keeps climbing.

Data Centers on the Rise

The rapid rise in GenAI applications and AI penetration into daily lives has considerably increased the need for data centers. According to the Environmental and Energy Study Institute (EESI), by March 2025, the US alone had more than 5,400 data centers. The number was only 1000 back in 2018, doubling every 3 to 4 years.¹ This is enough to understand how the wave of digitalization and AI-powered interactions has ramped up the data center footprint.

Yet scale tells only part of the story. Understanding where these emissions come from is key to assessing their climate impact.

The International Energy Agency (IEA) reports that data centers and data transmission networks each account for about 1-1.5% of global electricity use and together are responsible for around 1% of global energy‑related greenhouse‑gas emissions.²

According to Goldman Sachs estimates, by 2030, AI will increase the power demand of data centers by 160%.³ Research from Morgan Stanley stated that by the end of 2030, data centers will be collectively responsible for 2.5 billion metric tons of CO2-equivalent emissions.⁴ This offsets collective efforts from firms and nations towards net-zero, water neutrality, green power, and ethical distribution.

Thus, most enterprises focus on making the data centers more power efficient, which is essential, but it only addresses direct emissions. And this is where things get tricky. Quite often, the major contributor toward data center emissions is in fact, indirect emissions.

Understanding Direct and Indirect Emissions

Data center emissions vary in both impact and source. Dividing them into direct and indirect emissions helps show where most of the footprint comes from.

• Direct Emissions

  Data centers consume power for their core IT infrastructures as well as support systems. Any emission released due to this is direct emissions, also called Scope 1 emissions. Power efficiency is therefore essential to make day-to-day operations sustainable. A gold standard for measuring power efficiency is power usage effectiveness (PUE). The closer the PUE is to 1, the more energy efficient a data center is.

• Indirect Emissions

  A data center’s largest emissions sources are indirect, also known as Scope 2 and Scope 3 emissions. These include power generation, the manufacturing and supply of chips and servers, and the disposal of end-of-life components through e-waste management. Thus, they need to look at their whole supply chain to evaluate their carbon footprint, source and dispose of their hardware in sustainable and ethical ways.

Addressing Indirect Emissions with Thoughtful Sourcing

Thoughtful sourcing tackles both decisions at once. It starts with cleaning up the power supply and extends across the entire hardware lifecycle, from procurement to disposal.

Switch to Renewables (Addressing Scope 2 Emissions)

• Power Source Assessment: Even if a data center uses power efficiently, its overall environmental impact can remain significant if that power is generated from carbon-intensive sources. Hence, if power is generated in fossil-fuel-driven plants, the data center indirectly bears the burden of its emissions..
• Renewable Sourcing and Backup Power: Data centers must focus on sourcing renewable energy to curb power-generation-related emissions. A neglected component here is the backup power generators used on-site by data centers, which run on fossil fuels. Switching to eco-friendly fuels is, therefore, equally important to bring down direct emissions.

Sustainable Value Chain (Addressing Scope 3 Emissions)

• Construction and Procurement: Everything that a data center requires, such as materials used for the construction of the data center building, IT equipment for operations, back-up fuels, and third-party services - every component has a carbon figure attached to it. Thoughtful sourcing involves choosing suppliers and processes with minimal impact on the environment, across the supply chain.
• Disposal or E-waste Management: Data center IT equipment comes with a shelf life, making data centers a large producer of e-waste. Scope 3 emissions also include the environmental impact of processing this waste through recycling, incineration, or landfilling. This also includes transportation to the respective plants or sites.

TechM Sustainability Services for Green Data Centers

Addressing indirect emissions requires three elements working together: visibility into energy use, the technology to act on those insights, and ongoing monitoring to sustain improvements. While many organizations have one or two of these elements in place, few have all three working together.

At Tech Mahindra, we help our customers overcome these challenges to realize their green data center aspirations, by providing comprehensive solutions along with global partnerships to implement these solutions on a global scale. The spectrum of solutions can range from strategic to operational. Our strong cloud and infrastructure services combined with sustainability provides unmatched experience to implement on ground green data center solutions for customers.

Our offerings for Green Building and Green Data Center include:

• Consulting Services: Energy audits to bridge energy efficiency gaps and customized recommendations to curb power usage and Scope 2 greenhouse gas emissions.
• Solution Implementation: We offer an end-to-end services for implementing sustainability from strategy to execution with the support of our ESG team. We assist data center clients in achieving energy efficiency by implementing energy monitoring systems to measure power usage effectiveness (PUE) and continuously track and identify current consumption and baselines. We leverage analytics-driven techniques to drive effective air conditioning operations based on time of day (TOD) analysis, server demands, hot and cold isle remedies and additional sensors for efficiency monitoring, ensuring uniform temperature across data centers. We bring comprehensive solutions package for complete data center energy efficiency improvement with IoT smart platform and analytics.