Mumbai: As global demand for digital services, artificial intelligence, and cloud computing fuels the rapid expansion of data centres, a new report warns that these vital digital infrastructures face mounting physical risks from climate change. The 2025 Global Data Centre Physical Climate Risk and Adaptation Report, released by the Cross Dependency Initiative (XDI), provides the most detailed assessment to date of climate-related vulnerabilities across nearly 9,000 data centres worldwide—both operational and planned, reports The Hindu.
The report places India under the spotlight, identifying five states—Uttar Pradesh, Tamil Nadu, Maharashtra, Karnataka, and Telangana—as among the top 100 most climate-exposed regions globally for data infrastructure.
Uttar Pradesh is ranked second in the global risk index. Out of 21 assessed data centres in the state, nearly 62% are expected to face high physical climate risk by 2050, with damage risk projected to more than double by 2100.
In Tamil Nadu, especially around Chennai, over 10% of data centres are already in the high-risk category, while about 70% are considered moderately at risk. The state ranks 25th on the global index.
Maharashtra, home to India’s largest concentration of data centres in Mumbai and Navi Mumbai, ranks 48th globally. According to the report, nearly 6% of its facilities are already high-risk, and two-thirds are moderately exposed. By 2100, the state’s overall climate risk is expected to rise by 133%.
Globally, the report estimates that 6.25% of data centres are currently high-risk—defined as having a projected value-at-risk of over 1% of their asset value—potentially making them uninsurable or extremely costly to cover. This figure is expected to rise to over 7% by 2050.
The share of moderately at-risk data centres is also increasing, from 15.79% today to nearly 20% in the next 25 years. Other high-risk zones identified in the report include Jiangsu and Shanghai in China, Hamburg in Germany, Tokyo in Japan, Bangkok, Hong Kong, and New Jersey in the United States, where between 20% and 64% of data centres could be at high risk by mid-century.
“Data centres quietly power much of the modern economy,” said Dr. Karl Mallon, Founder of XDI. “But with extreme weather events becoming more frequent and intense, these physical facilities face growing threats.”
The financial impact of climate-related damage is also growing. In 2024, global insurance losses from natural disasters exceeded $135 billion for the fifth year in a row. In response, insurers are tightening risk models, raising premiums, and limiting coverage in vulnerable regions.
The report urges urgent action to strengthen resilience. It recommends measures like flood barriers, use of stronger building materials, and raising infrastructure above ground level. According to XDI, implementing these strategies could cut the number of high-risk data centres by more than two-thirds by 2050 and reduce the number of moderately at-risk facilities by over 70%.
The potential financial benefit is also substantial. The report estimates that applying these changes could avoid annual damages worth $8–11 billion by 2050. Over a 25-year period, the total value of avoided losses could reach $120 billion.
However, the report cautions that even robust structural upgrades may not be enough. Data centres depend on surrounding systems—such as electricity, water, telecommunications, and transport networks—that are themselves vulnerable to climate risks.
“No amount of engineering will fully safeguard data centres if climate change continues unchecked,” Dr. Mallon warned. “Emissions reduction and long-term climate planning must go hand in hand with infrastructure upgrades.”
India, positioning itself as a global hub for data infrastructure, cloud services, and AI innovation, is investing heavily in hyperscale data centres across cities like Mumbai, Navi Mumbai, Chennai, Noida, and Hyderabad. But as the XDI report makes clear, matching that growth with smart adaptation and climate policies will be crucial to protect infrastructure, attract sustained investment, and ensure long-term digital resilience.
