How TNFD Could Influence Technology Infrastructure Decisions

About USD 64 billion of planned datacentre projects in the United States were blocked or delayed amid local opposition, according to research by Data Center Watch covering May 2024 to March 2025. The group counted USD 18 billion of projects blocked and USD 46 billion delayed. Residents' objections included higher utility bills, water consumption, noise, effects on property values and the loss of green space. Renewable electricity purchases and emissions figures say little about whether a facility's water demand is sustainable where it is built. That depends on the supply serving the site and on the needs of other users in the same basin, because the same volume of water carries very different risk in a dry region than in one with plenty of supply.

 

Sector guidance published in September by the Taskforce on Nature-related Financial Disclosures (TNFD), following a consultation draft earlier in the year, asks companies to measure these local conditions. Depending on their activities and where their most significant effects on nature occur, companies are asked to assess water withdrawal and discharge, the land their facilities occupy and the origin of the minerals they use. The detailed metrics vary across the six industries the guidance covers, from semiconductors and hardware to software, internet media and telecommunications. TNFD is a voluntary framework and describes the examples in the guidance as illustrative, but alongside the disclosure metrics it suggests how companies could use the results when deciding where to build, what to buy and how to design facilities. Whether that happens depends on companies bringing the information into their planning.

 

Before a site is chosen

 

Research cited by TNFD indicates that a large chip fabrication plant can use up to 38 million litres of water a day, mainly to produce the ultrapure water needed in manufacturing. The guidance's section on strategy and resource allocation lists actions companies could take if their assessment finds significant water or land exposure. For new developments, it suggests avoiding water-scarce areas and places where cooling would add pressure on local water, and building on brownfield land in preference to undeveloped sites. Telecom operators could share sites through co-location in place of building new infrastructure. Datacentre operators are advised to talk to governments, water utilities and communities before choosing or expanding a site, and to consider cumulative and future water demand in the basin and the effect on other users.

 

Site decisions also involve land. The guidance cites Hines Research, which estimated in 2025 that around 160 square kilometres of additional powered land would be needed globally over the following five years to support projected datacentre growth. For companies with sites in several regions, the guidance reproduces the World Economic Forum's datacentre archetypes, which sort locations by cooling demand, water stress and renewable energy share. An operator can use them to pick out sites where high cooling demand coincides with high water stress and give those a closer look. TNFD describes the archetypes as a screening step and says they do not replace a site-level assessment.

 

Three of the additional sector metrics record choices a company has made. One is the share of new deployments that used existing infrastructure or co-location instead of greenfield land. Another is the share of sites geolocated and screened against protected or sensitive natural areas. The third, for semiconductor facilities and datacentres, is the share of new facilities and expansions subject to an environmental impact assessment that covered biodiversity, ecosystems and habitat connectivity. These metrics are recommended where relevant rather than on a comply-or-explain basis.

 

Under the land footprint guidance, operators of phased datacentre campuses should count all land under their operational control, including plots reserved for future development, so land banks show up in disclosures before construction starts. TNFD plays no part in granting permits, but a company that maps basin stress and nearby habitats before buying land can use that work in its investment case and in its talks with local authorities and communities.

 

Existing facilities

 

At an existing datacentre, an assessment could support investment in water reuse or changes to cooling equipment. Among its possible responses, the guidance lists closed-loop systems and water reuse, including cooling designs that avoid evaporative losses, and using non-potable water where feasible. It also asks companies to consider less water-intensive electricity generation such as solar and wind. In its discussion of US datacentres, the NatureFinance report cited by TNFD notes that indirect water consumption can account for up to 75 percent of the total, depending on the electricity generation mix. This includes water consumed in generating electricity for the facility and for the water and wastewater services it uses. Operators would need to weigh these options against local conditions and the facility's operating needs, and the guidance notes that the trade-offs of newer technologies should be assessed carefully.

 

Leased datacentres

 

Large software, media and telecom companies run their services on datacentres they own, lease or contract. The guidance asks them to assess and disclose material impacts wherever these occur in the value chain, including at sites they do not operate. In a hypothetical example, a company uses 10 percent of the capacity at each of ten datacentres, two of which are in water-scarce areas and each withdraw 100,000 cubic metres of water a year. In that example capacity use is treated as a reasonable basis for allocation, so the company attributes 10,000 cubic metres a year at each of the two sites to itself, and reports the site totals, its share and how it calculated it.

 

The guidance also tells organisations that develop or use AI to assess the datacentres, telecom networks, semiconductors and other hardware that supply the computing power, as well as the software. It adds that companies in many other sectors also use datacentres, so the same questions apply to them.

 

When the first reports under this guidance appear, check whether cloud, software and AI companies give water withdrawal figures for the datacentres they lease or contract as well as those they own. The hypothetical example shows one way to allocate water withdrawal when capacity use reasonably represents the customer's share, and the guidance asks companies to disclose the allocation method and key assumptions they used. A company that reports its owned sites in detail and omits leased capacity may be leaving out a large share of its water use.

 

Supplier data

 

Many of these metrics depend on information from colocation providers, cloud operators, chipmakers and mining companies, including site-level water figures for leased capacity, pollutant concentrations in wastewater and the origin of minerals. When that data is not available, the guidance lets companies estimate water use from production volumes, process information and location-specific water-use factors, provided they state the uncertainty. It expects companies to replace estimates with primary data for priority locations and suppliers over successive reporting cycles, using supplier engagement, contract terms and industry collaboration. One additional metric asks datacentre operators what proportion of their water inflows is metered rather than estimated, so readers can see how much of a reported number rests on measurement.

 

TNFD recommends reporting core global metrics, excluding placeholder indicators, and core sector metrics on a comply-or-explain basis. A company that does not report one of these metrics should say why, either because it is not relevant and material to the business or because limits on data, methods or commercial sensitivity prevent reporting. In the second case, the company should also explain how it plans to address the gap in future reporting periods, so early reports should show where each company expects its data to improve.

 

Products and e-waste

 

Mineral sourcing and electronic waste extend the assessment to extraction sites and downstream treatment facilities. Semiconductor, hardware and electronics manufacturers are asked for quantities of high-risk commodities such as cobalt, tantalum, high-purity quartz and rare earth elements, and for the share they can trace to country of origin, to sub-national region and, where available, to the mine. The Global E-waste Monitor 2024, cited in the guidance, projected annual e-waste generation of 82 billion kilogrammes by 2030, and found that 22.3 percent of e-waste was documented as properly collected and recycled in 2022. The guidance identifies low recovery of specialty elements from e-waste as a reason for continued reliance on newly extracted materials.

 

Two metrics tie this to purchasing. TNFD recommends that hardware and electronics manufacturers report the share, by weight, of the electrical and electronic products they place on the market that is covered by certified take-back, recovery or producer responsibility programmes and designed, labelled or verified for disassembly, repair and component recovery.

 

Under a core sector metric, it recommends that datacentre and telecom infrastructure operators report the weight of network equipment or infrastructure installed during the reporting period that was reused or refurbished, and the share of total installed weight this represents. That brings hardware replacement cycles into the same assessment as water and land. The guidance also points out that the sector's own products, including sensors, data analytics and software, help map and manage impacts on nature, while the sector's growth increases demand for energy, infrastructure and natural resources.

 

Water usage effectiveness (WUE), the standard datacentre water metric, compares annual site water use with the energy used by IT equipment. A datacentre in a severely water-stressed basin can have a good WUE score and still draw on water that local farms and households rely on. When a company reports one average across all its sites, an efficient site in a stressed basin is combined with sites in areas with plenty of water, and the average does not show the local exposure. The guidance asks for WUE by location. It also includes water usage impact (WUI), a newer metric that combines consumption with local water stress, as an additional sector metric recommended where relevant, and notes that the WUI method may change as more companies use it.

 

What companies would need to do

 

For the guidance to affect where infrastructure is built, water stress and habitat screening would need to happen during site selection, before land is bought. Capital planning would have to weigh basin conditions and future water availability alongside power prices and grid connection times, and investors and lenders would need to ask about leased capacity and planned expansions as well as owned sites.

 

Companies can use the guidance when comparing sites and specifying cooling equipment, and procurement teams can write requests for site-level water and energy data into their agreements with colocation and cloud providers. Coverage figures in the first reports, such as the share of sites screened or expansions assessed, will show whether the work is being done. The more useful reports will also explain where an assessment changed a site choice or a cooling specification before the money was committed.

 

Source: TNFD, Additional Sector Guidance – Technology and Communications 

Figures checked against original research: Data Center Watch (2025), Hines Research (2025), Power Play: The Emerging Powered Land Opportunity; NatureFinance (2025), Navigating AI's Thirst in a Water-Scarce World; Global E-waste Monitor 2024 (ITU and UNITAR).