With the tech industry under pressure over not only how it reports its emissions but also the actual volume of greenhouse gases emitted, OVHcloud’s completion of the first EU Taxonomy-aligned green loan for the European cloud sector in February is a welcome development.
Analysis published by The Guardian last September suggested that emissions from the company-owned data centres of Google, Microsoft, Meta and Apple were probably more than seven and a half times higher than officially reported between 2020 and 2022.
Morgan Stanley estimates the data centre boom will generate approximately 2.5 billion metric tons of carbon dioxide-equivalent emissions globally by 2030, which is the equivalent of about 40% of total emissions by the US.
These facilities not only require energy to power operations – they also require huge quantities of carbon-intensive materials such as steel and concrete during the construction phase.
Data centres already account for more than 1% of global electricity use according to the International Energy Agency, which says increased requirements for transparency may focus attention on energy demand for data centres.
OVHcloud’s €1.15bn multi-refinancing last month included a €450m EU Taxonomy-aligned green loan. The EU Taxonomy is a key element of the European Commission’s action plan aimed at redirecting capital flows towards a more sustainable economy and represents an important step towards achieving carbon neutrality by 2050 as it is a classification system for environmentally sustainable economic activities.
Activities are recognised as sustainable if they substantially contribute to one of the six EU Taxonomy’s environmental objectives but also do no significant harm to any of the other five objectives and meet minimum social standards.
OVHcloud has also included a rendezvous clause in the documentation for the €200m multi-purpose revolving credit facility it also took out in February, with the objective of potentially turning this facility into a sustainability-linked loan that includes ESG criteria to be defined and agreed with the lenders.
When asked how long the EU Taxonomy-aligned green loan took to complete from initial discussions to completion, Benjamin Mennesson, Head of Financing at OVHcloud explains the overall refinancing programme was concluded relatively quickly.
“As we already had audited and high-quality public data available in our universal registration document, discussions on the usage of the EU taxonomy were simple,” he says.
The company has put a number of processes in place to ensure it is developing its business in an environmentally sustainable way, covering energy efficiency and the circular economy.
“Since the early 2000s we have implemented a unique water-cooling technology that drives lower energy consumption, which means there is no air conditioning in our data centres,” he says. “We are driving continuous improvement on our power usage effectiveness and are committed to low carbon and renewable energies.”
OVHcloud uses in-house server manufacturing, refurbishment and recycling to extend hardware lifespan and has several ranges of servers to make sure it can use servers and second life hardware for more than eight years.
As for whether technology firms have a responsibility to operate sustainably given the amount of energy they consume, Mennesson notes customers are asking cloud providers to help them reduce their overall carbon footprint.
“It is a clear differentiator for OVHcloud and we think it will be a long term demand from customers,” he concludes.
