Our industry is engaged in an important dialogue to improve the efficiency and resilience of real assets through transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
As digital demand surges, so does the resource footprint of the infrastructure powering it. While data centers’ carbon emissions have long been in the spotlight, their escalating water use—particularly for cooling—has only recently started drawing serious attention. For ESG-focused investors, data center water use presents a growing risk—and a clear opportunity to reduce waste, lower exposure, and improve asset resilience.
An emerging ESG concern for data center stakeholders
Data centers are often hailed as the beating heart of the digital economy—but they are also remarkably thirsty. In the U.S., the average hyperscale data center can consume around 550,000 gallons of water per day—roughly 200 million gallons annually—to support its cooling systems. And more data centers are coming—as cloud computing and AI cause a surge in demand for storage, Amazon, Microsoft, and Google are planning for a 78% increase in the number of data centers they own worldwide.
Data center water use falls into two key categories: direct and indirect consumption. Direct use—primarily from cooling and humidification—accounts for about 25% of a facility’s water footprint.
The remaining 75% stems from indirect consumption—namely, the water used to generate electricity, treat water, and manage wastewater. Reducing cooling demand helps lower this entire downstream burden, making cooling efficiency one of the most powerful levers for total water savings in data center operations.
Such high consumption levels can undermine sustainability goals and expose operators to regulatory risk—especially in water-stressed regions where scrutiny and stakeholder concern are rising.
From risk to resilience: Rethinking water strategy
For investors with exposure to data centers, water use has become a strategic concern—not just an operational detail. It’s now a key factor in driving value, reducing risk, and building long-term climate resilience—and that starts with understanding not just how much water is used, but exactly where, when, and why.
One of the most effective ways to act is by implementing smart water management systems—especially in cooling infrastructure and landscape irrigation. Real-time platforms can flag anomalies, reduce overuse, and empower facility teams to make faster, data-driven decisions. Though often overlooked in high-tech environments, upgrades like water-efficient fixtures and smart irrigation systems can drive measurable water savings and enhance site-wide sustainability.
The role of water replenishment programs
Another emerging lever is participation in water replenishment initiatives. These programs help offset operational water use by funding or implementing water-saving projects in local or regional watersheds. While still underrecognized, replenishment is poised to become a best practice for ESG leaders who want to demonstrate a net-positive water impact.
But water stewardship goes beyond just offsetting use. Some operators are leading the way by designing for closed-loop systems that dramatically reduce dependency on municipal supplies altogether. For example, Microsoft’s Silicon Valley campus was designed to be a net zero water facility—capturing rainwater and treating all non-potable water onsite to reuse for cooling, irrigation, and more. This type of forward-thinking design proves that high-performance digital infrastructure can coexist with responsible water management.
As water use comes under greater scrutiny, data center stakeholders have a clear opportunity—and obligation—to address one of digital infrastructure’s most pressing sustainability gaps. Smarter strategies, improved transparency, and investment in replenishment programs—such as local leak detection or irrigation efficiency projects—can transform water risk into ESG leadership.
This article was written by Meg Mason, VP of Marketing at HydroPoint Data Systems. Learn more about HydroPoint Data Systems here.