Data centres, the backbone of the digital economy, are increasingly at risk of climate change-related damage, and operators could face mounting insurance costs, rising operational disruptions, and billions in physical losses if urgent steps are not taken.
This is according to a new global report released on Sunday by the Cross Dependency Initiative (XDI), a global authority on physical climate risk analysis.
The report, the most comprehensive of its kind, analyzes nearly 9,000 data centres worldwide, both operational and planned, across eight major climate hazards, including flooding, forest fires, tropical cyclones, and coastal inundation.
While noting that physical risk in Sub-Saharan Africa is low compared to other regions, the report stated that data centres in Nairobi and Lagos will see exponential growth in the amount of damage from climate change and extreme weather towards the end of the century.
“Data centres are the silent engine of the global economy. But as extreme weather events become more frequent and severe, the physical structures underpinning our digital world are increasingly vulnerable,” said Dr Karl Mallon, founder of XDI.
Insurance costs could triple without action
The report warns that without serious mitigation and adaptation, insurance costs for data centres globally could triple or even quadruple by 2050.
- Already, more than 1 in 10 data centres in the fast-growing APAC region are at high risk of climate damage, a figure that is expected to climb to 1 in 8 by mid-century.
- Targeted investments in resilience, such as improved site design, physical reinforcements, and climate-adapted construction, could save operators billions annually in potential damages and insurance premiums.
- The report provides a world-first quantitative framework for measuring how such structural adaptations can reduce risk.
Most exposed hubs
The report ranks global data centre hubs by their exposure to climate hazards, revealing that major tech and finance centres are among the most threatened.
By 2050, hubs in New Jersey, Hamburg, Shanghai, Tokyo, Hong Kong, Moskva, Bangkok, and Hovestaden are projected to have between 20% and 64% of their data centres at high physical risk.
- In some cases, data centres located in the same region or even the same city face vastly different risk profiles due to elevation, drainage, or proximity to hazard zones.
- This variation underscores the need for jurisdiction-spanning climate risk assessments to guide smarter capital allocation and site selection for data infrastructure.
- While adaptation is essential, XDI cautions that structural resilience alone will not be sufficient. Data centres are only as secure as the infrastructure they depend on, such as roads, water supply, and communication links, which are themselves vulnerable to climate disruption.
“The most resilient data centre still relies on power lines, cooling systems, and transport routes that may not withstand worsening climate impacts. Decarbonisation and adaptation must go hand in hand,” said Mallon.
The report calls on operators, investors, and governments to urgently prioritize climate resilience in data infrastructure planning, alongside emissions reductions, in order to safeguard digital services and economic stability for the long term.
