The Centre for Climate Engagement (CCE) has submitted written evidence to two recent calls for response:
- The Environmental Audit Committee (EAC)’s inquiry on the risks and opportunities to the sustainability of data centres in the UK
- The Taskforce on Nature-related Financial Disclosures (TNFD)’s consultation on its draft Technology and Communications Sector Guidance
A growing number of consultations and calls for evidence are seeking input on this area, which shows that managing the technology sector’s impact on the environment is an increasingly significant policy issue. We have recently initiated a programme of work focused on the governance of AI’s environmental impacts and are committed to contributing to these conversations as they develop. CCE’s submissions draw on its expertise in translating academic expertise in environmental law and policy into practical guidance and resources for decisionmakers.
The EAC’s inquiry examined the environmental cost of the UK’s rapidly expanding data centre sector, particularly the pressure on energy and water resources. It considered how sustainability concerns can be balanced against the UK government’s economic growth ambitions, and what planning and policy measures can play a role in achieving this.
Key points in our EAC response:
AI-driven growth poses significant risks to the UK’s net zero targets
CCE’s evidence emphasised that AI-driven data centre growth could outpace clean energy rollout, prolonging reliance on gas generation and threatening existing net zero targets. Without coordinated policy intervention to align data centre growth with clean energy capacity, the carbon intensity of the grid could rise in the near term, directly jeopardising the UK’s legally binding emissions commitments.
Existing planning frameworks may be ill-equipped to account for data centres’ environmental impacts
UK planning frameworks assess data centres in isolation, with no mechanism to consider wider infrastructure interdependencies or cumulative environmental impacts. Without such a strategy, planning authorities face the risk of legal claims based on data centres’ environmental impacts.
Limitations in data collection and disclosure undermine effective emissions management
The submission highlighted that data centres are absent from carbon budget modelling, and emissions reporting relies heavily on voluntary disclosure. Targeted policy measures to close these data and disclosure gaps may enhance the accuracy and accountability of national carbon accounting frameworks, enabling more effective regulatory oversight.
Coordinated national strategy and/or institutional oversight is needed
Currently, there is no single entity responsible for overseeing the sector’s system-wide environmental impacts, with responsibilities split across multiple bodies. There may be scope to establish a clearer coordinating function or regulatory body to oversee data centre development and its cross-cutting environmental implications. Measures from other jurisdictions, particularly China, indicate a potential for centralised strategies which locate data centres in regions with abundant clean energy resources. The EU’s AI Act reveals opportunities for the UK to better integrate environmental concerns into comprehensive AI regulation.
The TNFD’s consultation aimed to gather feedback on its Draft sector guidance – Technology and communications. Building on the TNFD’s existing recommendations and its LEAP assessment approach, the guidance offers sector-specific tools including disclosure metrics, dependency and impact matrices, and illustrative examples of nature-related risks and opportunities. It covers six industry groups within the sector, ranging from semiconductors and hardware, to software, telecoms, and internet services. The consultation looks to examine whether the guidance is suitable support for organisations in identifying what is materially relevant to their business and reporting it consistently and credibly – with final guidance expected in June 2026.
Key points in our TNFD response:
Climate and nature risks are deeply interlinked and should be addressed together
CCE’s comment letter emphasised that the guidance could more explicitly show how climate change amplifies physical nature-related risks, and more clearly integrate climate scenario data and projections from bodies like the IPCC and IEA. Legal and policy frameworks for addressing nature loss are developing quickly, presenting a risk to businesses that do not understand nature-related climate impacts and dependencies and an opportunity to those that do.
Data centre location and AI’s downstream impacts on nature are critical, but underemphasised factors in nature-related risk
Where a data centre is sited – in terms of water availability, natural cooling, and energy sources – can be just as important as operational measures taken within the facility itself. Beyond physical infrastructure, technology companies’ products and services can either help or worsen environmental outcomes, such as enhancing biodiversity monitoring or accelerating extractive industries. We think there may be scope to highlight these issues when considering the broader nature-related impacts of technology companies’ value chains.
Emerging regulation and litigation pose significant, underappreciated financial risks
From data centre construction bans and biodiversity net gain requirements, to greenwashing claims and director liability, the evolving legal landscape presents acute risks that TNFD’s guidance can address more directly. When considering transition and liability risks, there could be greater appreciation for the relationship between financial risk, policy, and regulation.