As we all know, building and running a data center is an expensive business. As a result, many turn to loans, credit, and bonds to finance them.
With debt an inevitability, the question is how can they make the best of a bad situation?
In our latest DCD>Zero Downtime episode, we sit down with Matthew Chambliss from Aligned Data Centers to talk about a possible solution: sustainability-linked finance.
Sustainability-linked finance enables companies to get the financial back necessary, while simultaneously reaching sustainability goals. Two examples of what this might look like include Green Bonds, and Sustainability Linked Loans, which force companies to spend their money on environmental projects. Failure to meet sustainability goals can result in financial penalties.
“When we think about green bonds, versus sustainability-linked loans, the sustainability-linked loans for us are really more privately held,” said Matthew Chambliss.
“Your typical lending institutions are issuing those, and it's more of a direct transaction.
“Whereas with the green bonds, these are going to be placed initially with lending institutions, but ultimately, those may end up in the hands of other investors, and there's a bit more reporting that goes with the green bonds, as well as some third-party verification. But for the most part, we very much mirror what we've done with those two things.”
Aligned Data Centers has taken advantage of sustainability-linked financed, with $3.1 billion worth.
“Aligned was really founded with the ethos of sustainability, at the heart of everything we do, and our technology, specifically our cooling technology, dovetails quite nicely into the sustainability-linked financing and with the low PUEs that we're able to provide, and the efficiency with which we run our data centers.
“The real goal, in the beginning, was to be sustainable not so much to qualify for sustainability-linked financing. As we grew as a business and started to take on debt, this came up as an opportunity for us to really put our commitments to sustainability to the forefront and make a public commitment, that's recurring.”
Chambliss also puts a lot of this down to the data center industry and its commitment to developing sustainably.
“Being in the data center industry, it's really nice,” said Chambliss. “With how we fit into the whole ecosystem of data centers, our customers really from top to bottom are very interested in sustainability.
“They want to see us, you know, doing that right there with them, whether it's purchasing renewable energy, or running the data center more efficiently. And there are always trade-offs, but for the most part, we're finding that running more efficient PUEs, purchasing renewable energy, and making that available to our customers for purchase, are all things that are valuable to our customers.”
Tune in to the full episode to find out more about the options for sustainability-linked finance.