Takeaways

• Mayors from 40 cities have joined the Global Urban Data Centres Pact to address the growing impact of data centres on electricity, water resources, and local communities.
• Rapid expansion of artificial intelligence infrastructure is driving unprecedented demand for energy and water, creating new challenges for city governments.
• The pact aims to promote sustainable infrastructure, responsible planning, and stronger community engagement while supporting digital growth.

City leaders from around the world have come together to address the mounting pressures created by rapid data centre growth. Representatives from 40 cities, including London, Melbourne, Phoenix, Barcelona, Chennai, and Boise, have agreed to collaborate through the newly launched Global Urban Data Centres Pact.

The initiative was introduced during London Climate Action Week and reflects growing concerns about how the expansion of digital infrastructure is affecting electricity networks, water supplies, and local communities.

The rise of artificial intelligence has accelerated demand for computing power, leading to significant investment in new data centre facilities across the globe. While these centres are essential for supporting digital services and economic development, city leaders say their growth is increasingly creating challenges that existing regulations struggle to address.

The new pact seeks to establish common principles that cities can use to manage development more effectively. Areas of focus include cleaner energy use, improved resource efficiency, and better integration of data centres into urban planning processes. Although the framework provides shared goals, each city will be able to adapt the guidelines to suit local conditions and priorities.

Read More: Digital Edge ESG Report 2026: How AI Energy Demand Is Reshaping Data Centres

Rising Pressure on Energy and Water Systems

Melbourne is one city already experiencing the effects of expanding digital infrastructure. According to Melbourne Lord Mayor Nicholas Reece, the city currently hosts around 50 major data centres. Their demand for electricity is expected to rise sharply over the coming years, potentially accounting for a significant share of the city’s total power consumption.

Water consumption is also becoming a major concern. Cooling systems used by many data centres require substantial amounts of water, creating additional pressure on supplies that are already needed by households and businesses.

City officials warn that the rapid pace of investment could encourage competition among governments to attract projects, sometimes at the expense of environmental oversight and long-term sustainability goals.

Communities Feel the Impact

In Phoenix, where hundreds of existing or proposed data centres are either operating or under development, concerns are extending beyond energy use. Mayor Kate Gallego noted that electricity demand linked to new projects could increase dramatically in the coming years.

Residents have also raised questions about noise, land use, battery storage facilities, and the proximity of large infrastructure projects to residential neighbourhoods. These concerns have transformed data centre development from a purely technological issue into a broader governance and community planning challenge.

As a result, city leaders are urging companies to engage more closely with local governments and residents before launching new projects. Failure to do so could lead to delays, higher costs, and growing public opposition.

Balancing Growth and Responsibility

London Mayor Sadiq Khan emphasized that artificial intelligence and digital infrastructure will play an important role in the future prosperity of cities. However, he stressed that growth must be managed responsibly and in a way that benefits local communities.

Data centres are estimated to contribute between 2.5% and 3.7% of global greenhouse gas emissions, highlighting their increasing environmental footprint. With electricity demand rising faster than overall energy consumption, cities are seeking greater influence over how future projects are planned and operated.

Coordinated by the climate-focused network C40 Cities, the Global Urban Data Centres Pact does not aim to stop expansion. Instead, it seeks to ensure that future data centre growth aligns with climate action goals, sustainable infrastructure planning, and community well-being.

Also Read: As AI Grows, Data Centres Face Soaring Energy Demand

As investment in artificial intelligence continues to accelerate, city governments are making it clear that the success of future projects will depend on technological capability and on their impact on energy resources, water consumption, and the people who live nearby.

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Source: ESG NEWS