Circular Building & Construction Supply Chains for Data Centers: A strategy to tackle environmental impact

The digital economy is rapidly expanding. Data centers—the physical heart of the current technological transformation—are multiplying across the globe to support cloud computing, artificial intelligence, and real-time data applications. Yet, this rapid growth poses a critical challenge: the construction and expansion of data centers are material and carbon intensive, leaving behind an outsized environmental footprint.

Reimagining how data centers are built offers the technology industry an opportunity to better align digital progress with environmental goals. Some of the most powerful levers available to companies are circular building and construction supply chains, which, when underpinned by green sourcing, help reduce data centers’ embodied carbon—or the carbon emitted during the production and transport of materials before a facility goes live—along with their overall environmental impact.

The business case for circularity in data centers

Circularthan an environmental imperative. It is a strategic business opportunity to save costs and improve efficiency, mitigate risk in a resource-constrained world, comply with regulations, drive value creation, and align with consumers and stakeholders. 

1. Cost savings and efficiency: Reuse of structural materials and modular elements reduces raw material costs. A report by Arup and the Ellen MacArthur Foundation found that applying circular principles to building construction could reduce costs by 15–20 percent over a building’s lifecycle.
2. Risk mitigation: Circularity reduces exposure to raw material price volatility and geopolitical risks. With growing global tensions and trade restrictions, sourcing virgin materials may become more difficult and expensive.
3. Regulatory alignment: The EU’s Carbon Border Adjustment Mechanism (CBAM) and the U.S. Inflation Reduction Act include strong provisions for low-carbon building materials. Data center developers with global operations are aligning with these tightening standards.
4. Brand and investor value: Circularity drives brand and investor value by reducing data center costs associated with virgin materials sourcing and improving resilience to potential supply chain disruptions and resource constraints.
5. Consumer demand and stakeholder concern: Consumer demand for and interest in sustainability continues, and there is an increase in stakeholder concerns over local data center impacts. Circularity can help address both by bolstering the sustainability credentials of data centers.

The linear problem: High carbon, high waste, and high risk

Today, much of global data center construction follows a linear take-make-waste model:

• Take: Extract input materials—concrete, steel, aluminum, glass, copper, etc.—often using energy- and carbon-intensive processes.
• Make: Manufacture and assemble components and install them in highly engineered data center facilities designed for reliability and performance.
• Waste: Decommission or retrofit components at end-of-life and dispose of them, with limited material recovery or reuse.

The consequences of this linear model are staggering:

• Embodied carbon: According to the World Green Building Council, embodied carbon will be responsible for half of all emissions from new construction between now and 2050. For data centers—especially hyperscale builds—embodied carbon can comprise 60 percent or more of total lifecycle emissions.¹
• Material waste: The global construction industry produces over 100 billion tonnes of materials annually, of which about a third becomes waste. In the data center sector, overengineering and future-proofing often lead to surplus use of materials that could otherwise be avoided or reused.
• Resource scarcity: The rapid extraction of materials like copper, lithium, aluminum, and rare earth elements is depleting finite reserves, raising costs, and increasing exposure to supply chain disruptions and geopolitical risks.

The challenges of this linear model are also exacerbated by a current imbalance between infrastructure capex plans and the supply of materials and skilled labor to meet the demands of these plans. Moving towards circular practices is thus a key strategy to make data center supply chains more resilient and derisk projects.

Circular construction: A systems-based solution

A circular approach aims to keep materials in use at their highest value for as long as possible. For data centers, this means at a minimum accounting for the 3 Rs of reduce, reuse, recycle. Or, as defined by the Ellen MacArthur Foundation, “a system where materials never become waste.” With data center construction specifically, this means considering:  

• Design for Disassembly and Reuse (DfDR): Building elements like structural steel, raised floors, cable trays, and even Mechanical, Electrical, and Plumbing (MEP) components should be designed for modularity, disassembly, and reuse. A DfDR philosophy enables easy data center decommissioning and reduces demolition waste.
• Reverse logistics systems: Closed-loop supply chains for high-value materials like copper, aluminum, and IT infrastructure components ensure end-of-life recovery instead of discarding or downcycling.
• Modular and prefabricated construction: Prefabricated components built off-site improve material efficiency, reduce waste by up to 90 percent, and allow standardization across sites. Data Center operators can also reuse modular assets across regions.
• Material passports and digital twins: These digital tools track the material composition, lifecycle, and reusability of every data center components. Microsoft’s Project Zerix, for example, integrates BIM and digital twins to optimize design and enable smarter component reuse planning.
• Secondary materials and recycled inputs: Using recycled steel, low-carbon concrete, or reclaimed aluminum significantly lowers embodied carbon, while cement alternatives like fly ash, slag, biochar, and calcined clay can reduce emissions by up to 70 percent.

Green sourcing: Cutting embodied carbon at the root

While circular design addresses the "afterlife" of building materials, green sourcing tackles upstream environmental impacts during material selection and procurement. Green sourcing is critical for reducing embodied carbon before construction begins. Key green sourcing strategies include:

1. Low-carbon material alternatives

• Green concrete: Replace Portland cement with cement alternatives like fly ash, slag, biochar, and calcined clay. These materials can cut embodied carbon by up to 70 percent.
• Low-emission steel: Source steel from electric arc furnaces (EAFs) powered by renewables or invest in hydrogen-based steel (H2-DRI), which can cut emissions by over 90 percent versus traditional production.

2. Environmental Product Declarations (EPDs) and certifications

Mandating that suppliers provide EPDs, Cradle-to-Cradle (C2C), or Declare certifications ensures transparency in product carbon footprints, chemical content, and material recyclability. EPDs, C2C, and Declare certifications allow construction teams to make informed choices that prioritize low-carbon options.

3. Local and regional sourcing

Choosing suppliers near construction sites reduces transportation emissions and supports circular regional economies. Smaller travel distances also reduce the risk of cross-border supply chain disruptions.

4. Supplier engagement and lifecycle assessment

Green sourcing is not just about materials, but partnerships as well. Data center developers and operators can work with manufacturers and fabricators to conduct lifecycle assessments (LCAs), invest in emissions-reducing innovations, and ensure carbon intensity measures are embedded in procurement criteria.

The role of hyperscalers

While all companies involved in data centers can help drive transformation across construction and supply chains, hyperscale data center operators—Google, Microsoft, Amazon, Meta, etc.—are uniquely positioned to lead the shift. Their scale gives them market-shaping influence and the financial leverage to set new norms. Leverage they can apply by:

1. Mandating circular procurement standards: Require circular design, reused or low-carbon materials, and end-of-life plans as a baseline in all new construction contracts.
2. Standardizing modular, reusable infrastructure: Adopt modular components designed for relocation, disassembly, and multi-project utility.
3. Investing in innovation and ecosystems: Partner with green material startups, invest in recycling infrastructure, and co-develop reverse logistics solutions with municipalities and suppliers.
4. Integrating circularity into reporting: Move beyond energy efficiency and include metrics on embodied carbon, reuse rates, and material recovery in sustainability disclosures.
5. Retrofitting before rebuild: Upgrade and repurpose existing data center shells where feasible—saving time, money, and embodied emissions.

Conclusion: Closing the loop for a digital future

The rapid growth of the digital economy presents a unique opportunity for the data center industry to lead the way in sustainable infrastructure. By adopting circular construction principles and green sourcing strategies, the industry has already begun to reduce embodied carbon, minimize waste, and align performance with planetary health.

But this is only the beginning. To truly close the loop, the data center industry can go further by embedding circularity and sustainability into every stage of design, construction, and operations. These approaches are not constraints, but innovation pathways that build long-term resilience, unlock efficiency, and ensure regulatory alignment.

Hyperscalers and data center leaders who push beyond incremental progress will define the next era of responsible digital infrastructure. By scaling ambition and accelerating action, the industry can ensure that digital growth drives not only economic opportunity but also lasting environmental and societal benefit.

The future of data centers must be not just smart and scalable, but also circular and sustainable. It’s time to close the loop.

Accelerating outcomes through expert partnership

ERM provides strategic and technical advisory across the entire capital asset lifecycle—from concept to operations—while playing a pivotal role in helping clients navigate the complexities of circular building and construction supply chains for data centers. By identifying, assessing, and mitigating potential risks, ERM ensures that clients can achieve their sustainability goals while maintaining operational efficiency in their data centers. ERM provides a structured approach to manage uncertainties, enabling clients to make informed decisions that align with their strategic objectives. Through continuous monitoring and improvement, ERM helps clients adapt to evolving regulations, market demands, and technological advancements, ensuring resilience and long-term success in their circular economy initiatives within data centers.

ERM's expertise in sustainable procurement services extends beyond energy to encompass all purchases, helping clients procure from sustainable sources and validate upstream supply chain practices. This holistic approach ensures that clients can reduce their environmental footprint while also addressing cost savings, risk mitigation, regulatory alignment, and stakeholder value. By partnering with ERM, clients can leverage innovative solutions such as modular and prefabricated construction, reverse logistics systems, and green sourcing strategies to build resilient and sustainable data centers that meet the demands of the digital economy. 

¹ Telenius, J. (2022). Embodied Carbon in Data Centers. COWI & ENEA Consulting.