PHL data center operators told to boost readiness

PHILIPPINE data center operators need to strengthen energy and water security to remain competitive against regional peers such as Vietnam and Malaysia in attracting artificial intelligence (AI) and cloud investments, according to ESGpedia, which said infrastructure readiness is becoming increasingly critical as Southeast Asia emerges as a major digital infrastructure hub.

Jozsef Acabo, vice-president at ESGpedia, said operators in the Philippines must prioritize “operational readiness,” particularly stable access to electricity and water resources needed to support large-scale digital infrastructure operations.

“I should say two fronts. First is disclosure,” he said in an online interview on Tuesday. “And then the second front would be operational readiness. How do you ensure data center operations or your operations have a sufficient source of energy as well as water?”

“So, those two categories, right? And you can have as much disclosure and certifications as you have, but you cannot really ignore, specifically in the Philippines, operational readiness,” he added.

Data centers are among the most energy-intensive infrastructure assets because servers, storage systems, networking equipment, and cooling systems operate continuously. Water is also critical for many cooling systems used in large-scale data center facilities to dissipate heat generated by high-density computing equipment.

Mr. Acabo described electricity as the primary operational requirement for data centers, while water remains an important secondary resource.

“When you say operational readiness, it covers risks and, of course, opportunities as well, particularly the main source of your operations, which again, bulk of it is energy,” he said. “The secondary would be water.”

The comments come as Southeast Asian countries compete to attract hyperscalers, cloud providers, and AI-related infrastructure investments amid growing demand for computing capacity across the region.

Mr. Acabo said the Philippines retains advantages because of its strategic location and English-speaking workforce but warned that infrastructure limitations could affect its competitiveness relative to neighboring markets.

“The sources of energy and water and the infrastructure might not be as agile and weatherproof, I should say, or ready for more use compared to, say, Vietnam or Malaysia, right, where data centers have been popping up really recently,” he said.

“And so, you have competitors across other neighboring countries that have more, I should say, more established infrastructure so that data center operations will thrive,” he added.

SUSTAINABILITY REPORTING
Beyond securing reliable power and water supply, Philippine data center operators are also facing increasing pressure to improve emissions transparency and sustainability reporting as global investors and hyperscalers increasingly prioritize renewable energy sourcing and climate disclosures.

“When you are in a data center operation, intensity levels of your disclosure are very important, not just for local compliance, but also for global or international investors,” Mr. Acabo said.

He said sustainability reporting is becoming increasingly important for operators seeking to attract overseas clients as Southeast Asian countries adopt carbon pricing mechanisms and stricter environmental requirements.

“One particular example is that if you are operating a data center service in the Philippines, you definitely would like to get not just local Philippine clients, which is your priority, but also attract clients outside the Philippines,” he said.

“And when you do that, that means the first obvious prospects and clients would be Southeast Asian countries,” including Singapore, Malaysia, Thailand, Indonesia, and Vietnam, he added.

Singapore currently imposes a carbon tax, while other countries in the region are considering similar pricing mechanisms, according to Mr. Acabo.

“If you are trading your services for Singapore, you must report your carbon footprint,” he said. “The government put a tax on per ton of your carbon footprint.”

“And so if you have your carbon footprint done without some assurance, or you haven’t double checked that data, then you might be losing some of those dollars that you earn towards carbon tax,” he added.

Mr. Acabo said accurate and verifiable emissions reporting is becoming increasingly important as regional clients and investors place greater scrutiny on sustainability compliance and operational efficiency.

He also cited the implementation of the Philippine Financial Reporting Standards (PFRS) S1 and S2 sustainability disclosure frameworks as an emerging compliance requirement for large corporations and their subsidiaries.

“The upcoming PFRS S2, which is implemented now, and top tier companies will start to report by submission in April 2027, is the, I guess, the new and pressing matter,” he said.

“Most, if not all, data center operators in the Philippines right now are connected to a tier one listed parent company or group,” he added. “And so, they are not just pressured, but they must adopt and report and disclose to their parent company their material topics and climate impact.”

The Securities and Exchange Commission earlier adopted PFRS S1 and S2 sustainability disclosure standards, with phased implementation for large, listed firms beginning in 2027.

Despite the challenges, Mr. Acabo said the Philippines remains well positioned to benefit from the continued expansion of digital infrastructure investments across Southeast Asia as companies diversify operations amid geopolitical uncertainty.

“We are strategically located. We are a nation of English-speaking people. So those are to our advantage,” he said.

“There are also some areas we need to improve as well.”

ESGpedia is a sustainability data and technology platform that helps companies manage environmental, social, and governance (ESG) disclosures, sustainability reporting, and carbon accounting across supply chains and investment networks. — Juliana Chloe A. Gonzales