Data Center Emissions and ESG Reporting: What It Means for Site Selection

A data center burns little fuel on site in normal operation. Its footprint is dominated by the electricity it buys and by the steel, concrete and servers that go into it. That makes emissions reporting a site question in a way it is not for most buildings: the same building on two grids can report very different numbers.

The GHG Protocol’s Scope 2 Guidance sets the accounting most companies use. A location-based figure applies average emission factors for the grid where consumption occurs, and a market-based figure reflects the electricity a company has contractually chosen, through supplier-specific rates or energy attribute certificates that meet the guidance’s Scope 2 Quality Criteria. Where those contractual data are available, companies are required to report both totals.¹ In the U.S., EPA describes its eGRID database as a primary source of emission rates for location-based Scope 2 reporting and recommends using the eGRID subregion where the facility is located.²

The practical point for landowners, developers and utilities is that a hyperscale tenant’s sustainability team will look up the grid factor for a candidate site as readily as its power team looks at substation capacity. A site on a low-carbon grid starts with a lower location-based number, and no contract can change that figure. For the procurement side, see renewable energy procurement and siting.

The three scopes map onto a data center campus in a fairly predictable way. The table summarizes where each comes from and which ones the site itself influences.

Scope 1 is usually small for grid-served sites, but it grows quickly when a campus runs reciprocating engines or turbines as primary or bridge power. That trade-off between speed to power and direct emissions is covered in on-site generation and bridge power, and the permitting side in air permits for data center generators.

Scope 3 is where the largest operators now report most of their footprint. Microsoft’s 2025 report put total emissions about 23.4% above its 2020 baseline, with the company attributing the rise to growth in AI and cloud, while its energy use rose 168% over the same period. Reporting on the report notes that Scope 3 made up just over 97% of Microsoft’s footprint for fiscal 2024 and that its leaders tied the Scope 3 rise mainly to data center construction, the embodied carbon in building materials, and hardware such as semiconductors and servers.¹¹¹²

The two Scope 2 methods answer different questions. The location-based figure shows the emissions of the grid the site actually draws from. The market-based figure shows the effect of purchasing choices, and where a company buys no qualifying instruments it must use residual mix factors instead.¹ A residual mix strips out power whose attributes have been claimed by others, so it can differ noticeably from the plain grid average that EPA recommends for the location-based figure.²

The gap can be large. A Policy Review analysis of big tech’s 2025 sustainability reports found Google’s location-based emissions rose from about 5.8 million to over 11.2 million metric tons of CO₂ between 2020 and 2024, while the company’s headline market-based reporting, which counts renewable contracts and certificates, looked far better.⁶ Google’s own 2025 report said its data center energy emissions fell 12% in 2024 even as data center electricity use rose 27%, crediting efficiency and clean energy contracts totaling more than 8 GW.⁷

Neither method is wrong; both are part of the standard.¹ For site selection, the lesson is that a tenant will carry the location-based figure in its disclosures no matter how much clean energy it buys, and the market-based figure depends on whether clean supply can actually be contracted in that region. Both point back to the grid and the utility service territory.

The GHG Protocol is revising the 2015 Scope 2 Guidance. The proposals approved for public consultation keep both the location-based and market-based methods but would require market-based claims to meet hourly matching and deliverability tests, so that clean power is counted only if it is generated in the same hour and could physically reach the load. To ease the transition, the draft includes load profiles for hourly matching, exemption thresholds for smaller organizations, a legacy clause for existing contracts and a phased rollout.⁵

As of mid-2026, the revision was still a proposal. A summary of consultation feedback was released on July 29, 2026, after a consultation that drew nearly 1,100 participants from 56 countries, according to an energy consultancy’s account; final text and effective dates had not been published.¹⁰ Trade coverage of that summary reported substantial opposition among respondents to both hourly matching and deliverability, which left the final shape of the revision unsettled.¹³

If adopted in something like its proposed form, the change would make the market-based number behave more like the location-based one. Annual certificates bought from a distant region would count for less, and clean supply on the same grid, at the hours the data center runs, would count for more. That favors sites in regions with deep clean supply and room for new contracted projects, and it is the logic behind 24/7 carbon-free energy and hourly matching. Treat it as a direction to plan for, not settled rules.

Voluntary reporting is now backed by mandatory rules in some jurisdictions, though the U.S. federal rule is effectively gone. On March 27, 2025, the SEC voted to end its defense of its 2024 climate disclosure rules, which had been stayed during litigation in the Eighth Circuit.¹⁴

California SB 253 and SB 261

California’s SB 253 requires U.S. entities with total annual revenue above $1 billion, measured by the lesser of the two prior fiscal years, that do business in California to report emissions; CARB adopted initial regulations in February 2026.³ In June 2026, CARB withdrew that package to make clarifying changes and proposed moving the first Scope 1 and Scope 2 reporting deadline from August 10 to November 10, 2026, while signaling enforcement discretion for good-faith efforts in the first cycle; the revised regulation still needed approval from the Office of Administrative Law.⁸ Scope 3 reporting is expected to begin in 2027; at a July 2026 workshop CARB staff previewed options for how many Scope 3 categories to require.⁹ SB 261, the companion climate risk reporting law, was enjoined by the Ninth Circuit on November 18, 2025 pending appeal, and CARB said it would not enforce the January 1, 2026 deadline.¹⁵

European Union

The EU’s Omnibus I directive, published in the Official Journal in February 2026, narrowed the Corporate Sustainability Reporting Directive to companies with more than 1,000 employees and net turnover above €450 million, with a separate test for non-EU groups based on €450 million of EU turnover and an EU subsidiary or branch above €200 million.¹⁶ Separately, Article 12 of the recast Energy Efficiency Directive requires operators of data centers with at least 500 kW of installed IT power to report energy and sustainability indicators for the prior calendar year to a European database by May 15 each year. The first reports were due by September 15, 2024.⁴

For a site seller or developer, emissions reporting shows up as a set of questions from the buyer, not as a permit. The most useful facts to have ready are those the buyer cannot change after closing.

• Grid region and factor: the eGRID subregion and its current output emission rate, which can be found from the site’s zip code with EPA’s Power Profiler.²
• Utility supply: whether the serving utility offers clean energy tariffs, and whether new wind, solar, storage or firm clean projects can be contracted on the same grid, which matters more if hourly matching is adopted.⁵
• On-site generation: whether the power plan relies on gas engines, turbines or diesel for more than backup, since that adds Scope 1 emissions and permit limits.
• Construction footprint: building size and structure drive embodied carbon, which large operators now report as part of Scope 3.¹¹
• Reporting exposure: whether the likely tenant is subject to SB 253, the CSRD or facility-level EU reporting.¹⁶⁴

1. 01Look up the eGRID subregion for the site and record the current emission rate in the diligence file.
2. 02Ask the utility what clean energy tariffs or power purchase agreement structures are available and how renewable energy certificates are retired.
3. 03Model Scope 2 both ways, location-based and market-based, for the planned load, and test the market-based case against hourly matching.
4. 04If the power plan includes on-site generation, estimate Scope 1 emissions and confirm permit limits early.
5. 05Identify which disclosure regimes the end user faces, and when, using the current CARB and EU rules rather than older summaries.

Efficiency still matters: lower PUE reduces purchased electricity and therefore Scope 2 under either method. See PUE and data center energy efficiency. If you want a parcel screened for grid, power and permitting factors that drive these numbers, you can get a site reviewed.