The sustainability challenges shaping the digital future landscape

Australia is one of the world’s preferred locations for expanding digital infrastructure. As the sector grows, today’s facilities, particularly those located in industrial areas, are undergoing significant transformation. With this growth comes a new set of challenges and considerations for developers, operators, regulators and communities. Looking ahead, hyperscale developments across Asia-Pacific will face increasing scrutiny around grid capacity, community impact, land-use efficiency and natural resource consumption. Rising electricity demand, growing pressure to decarbonise, the potential air quality impacts of backup power generation, and the significant water requirements of some cooling technologies are rapidly elevating data centres on environmental, planning and regulatory agendas across the region.

Market insight: Sustainability challenges are intensifying

The Data Centre Leaders’ Summit and Transform’s workshop on Sustainability in Data Centres held in Sydney earlier this year highlighted the momentum behind sustainability, embodied carbon reduction, and procurement standards across Australia’s rapidly expanding digital infrastructure sector. Across panels and presentations, speakers emphasised that regulation, design, and financing are all evolving to meet the challenges of a more resource-intensive digital economy.

The industry is calling for regulatory frameworks to keep pace with the sustainable design leadership already being demonstrated by many large developers and operators. While much of the progress in this space is currently voluntary, market leaders are seeking a reduction in embodied emissions found in structural and reinforcing steel, concrete and building services by:

• Eliminating unnecessary components
• Substituting traditional materials for lower-carbon alternatives
• And optimising building services

Across discussions, stakeholders noted that meaningful procurement shifts depend on transparent, consistent embodied-carbon data, which remains a significant industry gap. It was also identified that the pace at which technology increases computing capacity enables new sustainable solutions and design techniques to be implemented to fast-track project delivery.

A new baseline for sustainable development in Australia

The Australian Government’s Expectations for Data Centres and AI Infrastructure Developers established a national framework that now underpins the social license to operate for data centre developments. These expectations apply to new or expanded hyperscale data centres, co-location facilities, and AI compute centres, setting the benchmark for prioritising projects in the federal assessment process. The pillars include:

1. Prioritising Australia’s national interest: Including Australia’s national security and data sovereignty.
2. Supporting Australia’s energy transition: New infrastructure should not place upward pressure on energy prices.
3. Sustainable and efficient water usage: Data centres should use innovative, efficient and sustainable solutions to minimise water use.
4. Investment in Australian skills and workforce: Data centre operators should create fair, safe, secure, and well-paid jobs for Australian workers.
5. Research, innovation and local capability: Contributing to research and innovation by enabling access to compute for Australian start-ups, innovative small business, researchers and not-for-profits.

The expectations apply to new or expanded developments within Australia, and energy-intensive proposals not closely aligned with these expectations will not be prioritised by Commonwealth regulatory assessments. This shift mirrors the discussions at the recent events, where speakers warned that projects lacking credible plans for energy, water and emissions management will struggle to advance.

NSW Government backs data centres development with sustainable and equitable investment

Building on the national direction, the NSW Government recently endorsed 15 major data centre projects (with a collective value of $52 billion) through the Investment Delivery Authority (IDA), while explicitly positioning sustainability as a core assessment criterion.

NSW’s Data Centre Consultation Paper introduces a principles‑based framework to guide sustainable and equitable digital infrastructure investment, focusing on:

• Energy sourcing integrity
• Water efficiency
• Emissions trajectories
• Community impacts

How SLR can support

Many developers are investigating opportunities to expand within existing footprints, upgrade legacy infrastructure, and respond to rising energy, emissions, climate and nature-related pressures. SLR provides end-to-end advisory services across the data centre lifecycle, supporting clients through planning, design, delivery and ongoing operational performance, as well as retrofit and optimisation advisory, compliance management and ESG performance improvement. Our multidisciplinary team works with hyperscale developers from the earliest stages of a project, providing support across site selection, feasibility, planning and approvals, regulatory and social licence considerations, and integrated design and delivery.