Kuala lumpur: The global spotlight on sustainable finance is expected to remain strong this year amid the rapid growth of data centres, said Moody's Ratings.
According to BERNAMA News Agency, Moody's Ratings senior vice president - sustainable finance and head of assessments for Asia-Pacific (APAC) Jeffrey Lee noted that more labeled bond frameworks are anticipated to incorporate data centre projects, signaling a broader adoption of sustainable finance in the tech infrastructure sector. Lee highlighted the potential for innovative structures and labeled instruments to support the burgeoning demand for data centres, driven by accelerating digitalisation.
Lee elaborated that electricity consumption by data centres is projected to reach around 600 terawatts, signifying a significant increase of about 20% from 2024. This surge is prompting issuers to adapt their labeled bond frameworks to include investments focused on energy efficiency within data centres. He pointed out that major global operators are already progressing in this direction, with companies like GDS Holdings Ltd in China enhancing disclosures via net-zero assessments and Equinix in the United States prioritising energy-efficient data centres through green financing frameworks. Additionally, DigitalEdge (Singapore) Holdings Pte Ltd and European issuers are exploring energy efficiency-linked financing structures for digital infrastructure.
While corporates are currently the primary issuers in this segment, Moody's anticipates a broader range of entities entering the market. Last week, Moody's Ratings forecasted that the global issuance of sustainable bonds is expected to reach around US$900 billion in 2026. Lee commented that although the issuance of sustainable bonds this year is expected to be lower than the highs recorded between 2021 and 2024, green bonds will continue to play a significant role in sustainable bond issuances.
Sustainable bonds, encompassing green, social, sustainability, and transition bonds, are issued to finance projects with environmental and social objectives, reflecting a continued commitment to sustainability despite the challenges posed by shifting sentiments and a tougher macro and geopolitical environment.