Takeaways

• Investors are urging greater transparency from major tech companies on water and energy use linked to rapidly expanding US data centers.
• Rising demand for AI infrastructure is increasing pressure on climate targets, raising concerns about long-term environmental and financial risks.
• Water consumption is emerging as a key ESG metric, with investors seeking site-level disclosure to better assess operational sustainability.

Large institutional investors are intensifying pressure on Amazon, Microsoft, and Google to improve transparency around water consumption and energy use linked to rapidly growing data center infrastructure across the United States.

The push comes ahead of upcoming shareholder meetings, where environmental performance is expected to receive greater scrutiny. Investors are increasingly concerned that the rapid expansion of artificial intelligence (AI) and cloud computing infrastructure may strain local resources, particularly in regions already facing water stress.

Several large data center projects have already encountered local resistance, with communities raising concerns about the impact on electricity grids and water availability. For investors, the issue has evolved beyond environmental messaging and now directly relates to operational risk, capital planning, and long-term business sustainability.

Read More: 7 Green IT Solutions Cutting Technology Carbon Footprint

Climate Targets Face Growing Pressure

A key concern for investors is whether technology companies can meet their climate commitments while scaling infrastructure to support AI growth.

Trillium Asset Management has filed a shareholder resolution asking Alphabet to explain how it plans to achieve its existing climate goals. In 2020, Alphabet pledged to cut emissions by half and operate on carbon-free energy by 2030. However, the company’s emissions have increased by 51% since then, raising questions about the feasibility of its targets.

Investor groups say clearer information is needed to understand how AI-related expansion may affect climate commitments. Meanwhile, Green Century Capital Management is reportedly in discussions with Nvidia about a similar resolution focused on environmental risks associated with AI development.

Investors argue that short-term gains from AI innovation should not undermine long-term climate stability or financial performance.

Water Use Emerges as a Critical ESG Metric

Water consumption is becoming a central focus in evaluating data center sustainability. Research from Mordor Intelligence estimates that North American data centers used close to 1 trillion liters of water in 2025, roughly equal to the annual consumption of New York City.

Although companies including Meta, Google, Amazon, and Microsoft have introduced cooling technologies designed to improve efficiency, investors say reporting practices remain inconsistent.

Meta disclosed water usage data only for sites it owns, excluding leased and developing facilities. The company’s water consumption rose 51% between 2020 and 2024. Google includes both owned and leased facilities in its reporting, but does not account for third-party operations. Microsoft provides overall figures without site-level detail, while Amazon reports water use in relation to power consumption rather than total volumes.

This fragmented approach makes it difficult for investors to fully evaluate exposure to water scarcity risks and regional environmental pressures.

Investors Call for Site-Level Disclosure

Shareholders are increasingly requesting detailed, site-specific data to better understand how individual data centers affect local ecosystems and infrastructure.

More granular reporting could help investors assess regulatory risks, measure progress toward sustainability goals, and evaluate strategies such as water replenishment and energy efficiency improvements.

Amazon has acknowledged the shift toward greater transparency and stated that it is expanding disclosure of site-specific water consumption data. The company has also highlighted investments in efficiency initiatives and renewable energy capacity as part of its broader sustainability strategy.

Also Read: Why AI Is Bad for the Environment: Real Costs in 2026

Implications for Companies and Investors

The rapid growth of AI infrastructure is reshaping how environmental performance is measured within the technology sector. For corporate leaders, balancing innovation with responsible resource use is becoming a key governance priority.

Investors are increasingly treating water and energy metrics as indicators of long-term value and resilience. As regulatory oversight increases and communities become more active in opposing resource-intensive projects, companies may face both reputational and operational challenges.

The broader message is clear: As data centers become essential to the global economy, their environmental impact is moving to the center of ESG evaluation. Without clearer disclosure and credible sustainability pathways, the sector could encounter barriers to future expansion.

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Source: ESG NEWS