Power Hungry: Addressing IT Systems’ Energy Consumption

In our previous discussions on IT’s role in corporate sustainability, we explored its often-overlooked presence in CSRD reporting. We examined how IT influences environmental, social, and governance (ESG) factors and why businesses must integrate technology considerations into their sustainability strategies. However, one critical aspect remains front and center—energy consumption.

IT is one of the biggest hidden energy consumers in the corporate world, yet it rarely makes it into sustainability reports with the same urgency as emissions from manufacturing or logistics. Data centers, networking infrastructure, and digital services all require vast amounts of electricity, making IT a silent but significant contributor to corporate carbon footprints. With the European Sustainability Reporting Standards (ESRS) guiding CSRD compliance, businesses must now confront a pressing question: How can IT’s growing energy demands align with corporate sustainability commitments?

This article dives into the energy consumption crisis in IT, uncovering its scale, its financial and regulatory risks, and, most importantly, the solutions companies can adopt to bring IT in line with their CSRD obligations.

The Quiet Energy Drain Undermining Corporate Sustainability

Imagine a warehouse-size data center filled with hum and whir of servers, the blinking lights of the machines glowing like a city skyline in miniature. The cooling fans purr in the background, doing their best 24/7 to keep the whole system from overheating. Now imagine thousands of those around the world consuming more energy than small countries — that’s how much energy each one of these is using.

IT systems are the lifeline of contemporary businesses, but they come with a cost. As companies rush to hit environmental sustainability targets set by frameworks such as the Corporate Sustainability Reporting Directive (CSRD), there is still a subject to address and it’s IT’s massive energy footprint. Thus, ignoring IT in sustainability reporting is like someone pretending elephant in the room doesn’t exist — only this elephant jugs megawatts of electricity.

So, how big is this problem?

Let’s talk numbers. From data centers to networking equipment, IT infrastructure contains 2-3% of global electricity consumption. That may not sound like much — at least not until you realize that it is comparable to the total emissions produced by the aviation industry. And it’s only growing.

IT’s energy demand is expected to double by 2030 with the advancements of AI adoption, cloud computing and growing dependence on digital services. This is especially concerning when businesses are being pressured to curb their carbon footprints. A lot of organizations monitor their Scope 1 and Scope 2 emissions, but turn a blind eye towards the enormous power consumption of their digital backbone.

So, why does IT continue to be left in the dark when organizations perform double materiality assessments? This is simply due to the fact of: out of sight, out of mind. Sustainability teams are busy focussing on the emissions associated with manufacturing practices, logistics and office energy use, while IT operations are often placed in the box labelled, ‘another support function’. But in practice, they are far from it.

The Utility-Eater Giants: Data Centers

And at the core of IT’s energy usage is the data center, the nerve center of digital operations. These facilities contain thousands of servers, which need 24/7 electricity and cooling. The irony? Much of this energy does not get used efficiency at all.

Here are some sobering facts:

- Cooling systems account for almost 40% of total energy consumption in a data center. Much of this power goes to waste, since many of the cooling technologies used are outdated.

- Idle servers can still consume 30-50% of their peak power use even when not processing data.

- Many companies depend on fossil fuel-powered grids, so their IT emissions are much worse.

For instance: In 2021, a large European bank had been called out after it was revealed that its data centers consumed more power than 20,000 homes. And yet, this wasn’t part of their sustainability reporting. If financial institutions, whose entire business model revolves around processing data, are unable to grasp IT’s footprint, what does that mean for other sectors?

How Companies Can Rein In IT’s Energy Consumption: Actionable Solutions

The good news? IT’s energy crisis is not one we can’t solve. 1/Companies have an opportunity to cut energy waste, improve efficiency and integrate IT in their CSRD strategies But there is an argument to be made and evidence to prove that CSRD is not an enterprise dream but has to be on IT managers’ radar. Here’s how:

1. Use Renewable-Powered Data Centers

Cloud behemoths such as Google, Microsoft and Amazon have started transitioning their data centres to operate on 100% renewable energy. If they can, other people can too. And they should demand that their cloud service providers use green energy sources, or even better, devise their own on-site renewable solutions.

2. Embrace Intelligent Cooling Solutions

This includes liquid cooling and AI optimization of airflow management, both of which can reduce cooling-related energy use by up to 30%. They should also explore placing data centers in colder areas (such as Scandinavia), where natural cooling minimizes dependence on energy-guzzling air conditioning.

3.  Optimize IT Load and Reduce Redundancy

The majority of companies don’t even know how inefficient all of this IT work is. Energy is wasted in unused servers, over-provisioned cloud resources, and poorly balanced workload. Power Consumption Virtualization and computational load balancing. Go through many ways to reduce this, using server virtualization, demand-based computing, and AI-driven workload distribution can significantly reduce power consumption.

4. Adopt Circular IT Practices

The issue for the IT industry isn’t only around energy — it’s waste, too. Legacy servers and networking equipment add to the ever-expanding e-waste crisis. Implementing hardware refurbishment programs, extending equipment lifecycles, and taking part in recycling initiatives can all help businesses lower their environmental impact.

When IT Becomes a Fundamental Element of CSRD Reporting

As businesses navigate CSRD’s double materiality framework, they must evaluate both:

• Financial materiality: When sustainability factors start affecting a company’s long-term viability.

• Impact materiality: When a company’s operations significantly affect the environment and society.

IT becomes a crucial consideration in CSRD reporting when its role intersects with these materiality factors in meaningful ways.

When IT Poses a Financial Risk

• Rising energy costs: When IT infrastructure—such as inefficient data centers and outdated hardware—drives excessive energy consumption, operational costs surge, impacting financial performance.

• Regulatory non-compliance: When IT systems fail to meet emerging sustainability regulations, companies face legal repercussions, fines, and reputational damage.

• Supply chain vulnerabilities: When IT equipment is sourced from suppliers with poor environmental or social practices, businesses risk exposure to supply chain disruptions and ESG non-compliance.

When IT Has a Significant Environmental Impact

• High carbon emissions from IT operations: When data centers and cloud computing contribute heavily to a company’s carbon footprint, failing to measure and report these emissions leads to incomplete sustainability disclosures.

• E-waste accumulation: When companies fail to manage outdated IT equipment responsibly, they contribute to the growing problem of electronic waste, which poses environmental and health risks.

• Inefficient software and hardware usage: When companies use IT systems inefficiently—such as running unnecessary workloads or failing to optimize cloud storage—their sustainability efforts become undermined.

When IT Affects Social Responsibility and Governance

• Cybersecurity and data protection risks: When companies lack robust IT governance, they expose sensitive customer and employee data, leading to financial losses and reputational harm.

• Digital accessibility and inclusivity gaps: When IT systems are not designed for accessibility, companies inadvertently exclude individuals with disabilities, conflicting with corporate social responsibility goals.

• Ethical AI and automation concerns: When businesses deploy AI-driven decision-making without oversight, they risk bias, discrimination, and compliance violations.

For companies committed to transparent and accountable sustainability strategies, IT must be part of the CSRD conversation. Ignoring IT’s role in business continuity, environmental impact, and governance creates a blind spot in sustainability reporting—one that regulators, investors, and stakeholders are increasingly unwilling to overlook.

Conclusion: IT Has Wasted Enough Energy — Time to Pull the Plug

IT is a business-critical enabler of the modern era, but it’s also a significant sustainability blindspot. If companies desire to fulfill CSRD obligations and develop a greener future, it cannot afford to ignore its energy footprint anymore.

The answer is not to reduce IT, but rather to SMARTest IT: smarter, cleaner and more efficient. The technology is there, the business case is clear, and it is time to act.

And so, as organizations shape and refine their sustainability strategies, the real question facing them is: Will they keep IT in the shadows, or will they finally recognize the power-hungry beast at the heart of their lines of business?