Reining Sustainability in the AI Era: The Hidden Cost Blindspot CIOs Can’t Afford to Miss
For CIOs, sustainability is no longer a soft commitment. It’s a hard business risk. AI factories hosting next generation GPUs at scale consume energy and resources at unprecedented scale, and the pressure is mounting from every direction. Energy costs can be volatile, ESG commitments demand credible proof of progress, and regulators are tightening requirements for carbon, water, and waste reporting. The pain point is clear: how do you roll out AI and HPC at scale while keeping costs under control? And, how do you reassure stakeholders that growth is truly sustainable?
Deloitte’s 2025 Global Sustainability & Climate Policy Outlook found that 74% of Australian executives say rising energy costs are already constraining digital transformation plans. Meanwhile, ADAPT’s 2025 CIO Edge Survey reported that 69% of CIOs in Australia and New Zealand are under board-level pressure to show measurable progress toward carbon neutrality in IT and data centre strategy. CIOs are being asked to deliver digital acceleration and ESG accountability in parallel.
Energy efficiency as a board KPI
As IT scales, energy efficiency has shifted from a technical metric to a board-level issue. Performance per watt is now the benchmark for whether an AI factory is delivering responsibly.
The global colocation average PUE sits around 1.7, but leading facilities now consistently achieve closer to 1.4. In Australia, the NABERS 2025 Energy Ratings Update confirms that from mid-2025, government workloads will require a 5-star rating or a minimum PUE of 1.4.
Facilities that fall short of this benchmark won’t qualify for contracts which means, for CIOs, data centre partner selection is no longer just about uptime, ecosystem depth, or density. They are all critical conversations, but today, provable energy efficiency is a non-negotiable standard. Verifiable efficiency that can withstand board and regulatory scrutiny has become a baseline requirement and a critical lever in containing AI project costs.
Cooling for high-density AI
As racks scale from 20kW to 600kW and beyond, cooling becomes one of sustainability’s hardest challenges. Air cooling alone is no longer sufficient. Without liquid or hybrid cooling, operators face higher power bills, escalating emissions, and increased regulatory pressure.
JLL’s 2025 Global Data Centre Outlook notes that cooling already accounts for 40% of operational energy demand in AI-ready facilities, with water use per megawatt forecast to double by 2027 if hybrid systems aren’t adopted. For CIOs, this is more than an engineering issue. It directly affects operational certainty, the ability to meet ESG goals, and the long-term viability of their AI programs.
Water and waste accountability
Data centre sustainability now extends well beyond energy. Water consumption is under increasing scrutiny, particularly for data centres relying on potable supply. According to the Australian Energy Council’s 2025 Data Centre Sustainability Briefing, water efficiency standards will become mandatory for large AI-ready facilities by 2027, linked directly to ESG reporting. CIOs will need partners who can demonstrate not just efficiency, but innovation in water reuse and recycling.
Waste is another rising concern. PwC’s 2025 Australia ESG Reporting Survey found that 81% of boards now expect CIOs to demonstrate verifiable, ethical disposal of IT hardware and other waste generated at data centres. Independent certifications such as TRUE waste management, which validates landfill diversion, are becoming the standard. Leading facilities are already achieving diversion rates above 90%, proving that AI adoption doesn’t need to come at the cost of environmental responsibility.
Carbon offsetting and climate accountability
Even with advanced efficiency and cooling systems, AI factories will remain heavy energy consumers. The final sustainability test is whether providers can deliver certified carbon offsetting that strengthens ESG reporting.
The Commonwealth Government’s Climate Active certification is now the benchmark. KPMG’s 2025 Net Zero Readiness Report revealed that 64% of Australian CIOs expect to rely on certified offset programs as part of their IT-related ESG commitments. Providers that offer opt-in, kilowatt-level offsetting backed by Climate Active give CIOs a straightforward, auditable way to meet mandatory climate disclosure requirements while retaining flexibility.
Why sustainability secures the future
Sustainability is the final foundation of digital trust. Speed enables delivery. Scale provides staying power. Security protects trust. Sovereignty ensures control. But none of these endure if infrastructure cannot operate efficiently, comply with tightening standards, or scale responsibly.
For CIOs, this is both a challenge and an opportunity. By selecting colocation partners that can prove sustainability with certifications, engineering outcomes, and climate accountability, IT leaders can take a leadership role in the enterprise ESG agenda. That means lowering costs, anticipating compliance changes, and giving boards confidence that digital transformation can grow without adding hidden risks.
CIO Sustainability Checklist
The message is simple: sustainability is now the licence to operate in the AI era. The question is whether your current partners can deliver audited, verifiable sustainability at scale. If not, now is the time to talk to us.
This article is part of NEXTDC’s 5S series on digital trust: Speed, Scale, Security, Sovereignty, and Sustainability. Explore the full series to see how each foundation enables CIOs to deliver AI success responsibly.