Earlier this year, Equinix (NASDAQ: EQIX) committed to becoming climate-neutral for emissions across its global operations and supply chain by 2030. It became the first data center REIT, or real estate investment trust, to make that commitment.
The company is setting a bold goal. It's about two decades earlier than the target of many governments and other organizations. Further, it's ambitious considering the amount of power data centers utilize. Data centers consume 10 to 50 times the energy per floor space of a typical commercial building and collectively account for 2% of the country's total electrical usage. The move comes as sustainability is rapidly becoming an area of focus among REITs.
Accelerating its climate plans
Equinix has a strong environmental track record. The REIT continuously looks for innovative ways to conserve energy. For example, it uses motion-activated lighting controls and LEDs to reduce energy consumption and ambient heat from operating lights. It also uses adaptive control systems, fuel cells, and other technology to reduce its energy consumption.
Equinix is also a leader in utilizing renewable energy, achieving more than 90% coverage at its data centers over the last few years. The company currently ranks sixth on the EPA's list of top 100 green power users.
Equinix has issued more than $3.7 billion in green bonds to help finance its sustainability initiatives. It completed its third green bond offering this past May, raising $1 billion. Those funds have helped finance green buildings, renewable energy, energy efficiency, water efficiency, waste reduction, and clean transportation projects.
For example, the company recently completed a new $142 million highly energy-efficient data center. Renewable energy powers the facility, which features energy-efficient systems and fuel cells as the primary power source.
Equinix plans to continue making investments to reduce its energy consumption. As part of its climate-neutral commitment, the REIT aims to achieve its long-term goal of using 100% clean and renewable energy for its global platform by 2030. It will also require that two-thirds of its suppliers by emissions set science-based targets by 2025.
While Equinix has the boldest climate commitments among data center REITs, it's not the only REIT focused on sustainability. Fellow data center REIT Digital Realty (NYSE: DLR) currently gets 100% of the power for its colocation business and European portfolio from renewable energy sources. Meanwhile, the EPA also recognized it as one of the top 100 renewable energy buyers -- it currently clocks in at 24. Fellow data center-operating REITs Iron Mountain (NYSE: IRM) and QTS Realty Trust (NYSE: QTS) also rank on that list.
REITs focused on other property types like offices and industrial real estate are also shrinking their carbon footprints. For example, office REIT Empire State Realty Trust (NYSE: ESRT) purchases enough renewable energy to power its entire portfolio, making it the most efficient REIT in New York City.
Meanwhile, Hudson Pacific Properties (NYSE: HPP) achieved carbon neutrality across all operations last September through a combination of energy efficiency, on-site renewables, and carbon credits.
While many of these REITs are purchasing renewable energy from off-site generating facilities, an increasing number of them are converting their real estate into on-site solar power plants. For example, Boston Properties (NYSE: BXP) added large solar panel-covered parking canopy systems to some of its buildings to help offset some of its power needs.
Self-storage REIT Extra Space Storage (NYSE: EXR) and industrial REIT STAG Industrial (NYSE: STAG) are adding solar panels to their rooftops. That's enabling them to generate renewable power for their operations and the surrounding community. These moves will likely lead even more REITs to take bold steps toward carbon neutrality.
Taking a leading role
Equinix is taking charge by setting a bold target for climate neutrality by the end of the decade. Its leadership should spur other REITs to take similar actions. That would be great for the environment and their shareholders, because improved energy efficiency and increased renewable power production and purchases should boost their bottom lines over the long term.