The Philippines has the potential to become a major destination for AI and data center investments, but its readiness will depend on whether the country’s energy, water, and sustainability systems can keep pace with the sector’s rapid growth.

For ESGpedia Vice President Jozsef Acabo, the country has several advantages that could make it attractive to data center investors, including land availability, openness to foreign investment, and growing awareness of the need to improve energy supply, including renewable energy.

But those strengths will only translate into long-term competitiveness if infrastructure and ESG systems mature alongside demand.

“The Philippines is positioned to be one of the top attractive places for data centers because of those three things,” Acabo told Power Philippines.

Why data centers are looking at the Philippines

Data centers are becoming increasingly important as demand for artificial intelligence workloads continues to grow.

These facilities house the servers and digital infrastructure needed to process, store, and move large volumes of data. As AI adoption accelerates, more capacity will be needed to support the computing power behind those systems.

Acabo said Southeast Asia is still in the early stages of data center development compared with regions such as North America, Europe, and the Middle East, giving the Philippines room to position itself within the sector’s growth.

The country’s investment case is supported by available land, an openness to foreign capital, and rising attention on energy development. However, data centers are not ordinary infrastructure assets.

They require large and reliable supplies of electricity and water, making infrastructure readiness central to whether the Philippines can attract and sustain more investments.

Energy and water as the first test

Acabo identified grid infrastructure and water infrastructure as the two biggest areas the Philippines must improve to become a major data center hub.

“I think number one is grid infrastructure,” he said. “Water is another area we need to improve.”

Data centers need continuous power to operate servers and supporting systems. They also require cooling infrastructure to manage the heat generated by computing equipment, which makes water availability and reliability an important part of the investment equation.

For the Philippines, this means the data center conversation cannot be separated from the country’s broader energy and infrastructure challenges.

If more operators enter the market, electricity and water systems will need to support higher demand while also meeting investor expectations for resilience, efficiency, and sustainability.

ESG data as an investment requirement

The growth of data centers also changes the sustainability conversation for companies and investors.

According to Acabo, transparency and accuracy in emissions disclosure will become increasingly important for data center operators because investors will want to understand not only current emissions, but also mitigation plans and timelines.

He said investors typically look at three things: the current state of a company’s emissions, its plans to address gaps, and when those plans will be implemented.

For data center operators, this is especially important because many are connected to larger corporate groups or listed parent companies. Even if a data center operator is not itself listed, its energy and water use may contribute significantly to the emissions profile of its parent group.

“Because they will be, if not right now, the biggest emission footprint for the entire group,” Acabo said.

This makes ESG reporting more than a compliance exercise. It becomes part of investor due diligence.

The question is not only whether a company can disclose sustainability information, but whether that information is accurate, audit-ready, and useful for strategy.

Energy resilience as ESG strategy

Acabo said companies should also treat energy resilience as part of their ESG strategy rather than only as a technical infrastructure issue.

For businesses, this begins with understanding their own energy mix. Companies need visibility over how much of their power comes from fuel-based sources, how much comes from the grid, and how much comes from renewable energy.

From there, they can identify what they can control.

Acabo said companies may look at increasing renewable energy adoption where practical, streamlining energy use, and balancing different sources of supply while grid constraints remain a challenge.

“If you have balanced sources, then I will become naturally resilient,” he said. “But if you can incorporate renewable energy and mix it in that strategy, then you’re doing two things, resiliency and going green.”

In the short term, this means balancing available power sources, including renewable energy. In the long term, companies will need to regularly review their energy strategy as renewable energy becomes more accessible, more affordable, and more widely available.

Accountability across the value chain

As data center activity expands, sustainability accountability will not rest on one group alone.

Acabo said responsibility extends across the value chain, including hyperscalers, data center operators, investors, suppliers, and parent companies.

“The short answer to that is everyone in the value chain,” he said.

For data centers, however, the burden may fall more heavily on operators and hyperscalers because of the sector’s energy and water intensity. These companies will need to disclose their footprint, act on their sustainability strategies, and show how they plan to improve energy sourcing, infrastructure reliability, and green transition efforts.

Acabo said companies that treat sustainability only as compliance may meet basic reporting expectations, but that may not be enough to attract investors over the long term.

He said investors are increasingly looking at the impact of sustainability strategies, including mitigation and adaptation plans.

The missing piece in disclosures

For operators expanding in the Philippines, Acabo said common ESG metrics already include energy use, energy source, water consumption, fuel use for generators, and company-owned vehicles.

The less visible gap is the value chain.

He said supplier footprint is not yet seen as clearly in disclosures, even though it can affect both sustainability reporting and operational resilience.

“If they’re not looking at the value chain, the footprint of their value chain, they’re missing a big point,” Acabo said.

For data center operators, this means understanding not only their own direct emissions, but also the footprint of suppliers that provide equipment, materials, construction services, and other support.

It also means assessing how far suppliers can support future growth as data center requirements increase.

Scope 1 emissions refer to direct emissions from a company’s own operations, such as fuel used in generators or vehicles. Scope 2 emissions come from purchased electricity. Supply chain emissions broaden the picture further by looking at the footprint of suppliers and other activities linked to the company’s operations.

For investors, that broader view can help determine whether a business is prepared for growth in a carbon-conscious market.

ESG beyond compliance

Acabo said sustainability reporting should help companies understand where they are, what needs to improve, and how they plan to act.

That means companies should not focus only on making disclosures appear perfect. Instead, they should ensure that the information is accurate and useful for decision-making.

For large corporations and listed groups, this also extends to their suppliers.

Acabo said many small and medium enterprises lack the resources, tools, and expertise to disclose their carbon footprint. Larger companies can help address that gap by providing systems that allow suppliers to report sustainability data, which can then be used for corporate disclosures and even linked to sustainable financing opportunities.

This creates what Acabo described as a broader ESG ecosystem, where corporates, suppliers, and financial institutions can benefit from better sustainability data.

“Yes, but we’re not there yet”

The Philippines’ ambition to become an AI and data center hub comes at a time when demand for digital infrastructure is expected to keep rising.

But that ambition will be tested by whether the country can strengthen the systems that support energy-intensive growth.

For Acabo, the Philippines has a strong case, but readiness remains a work in progress. Grid and water infrastructure must improve. Companies must understand and balance their energy sources. Operators must disclose emissions accurately. Supply chain footprints must become more visible.

Asked whether the Philippines’ energy and ESG readiness can keep pace with its AI and data center ambitions, Acabo’s answer was clear.

“Yes, but we’re not there yet,” he said.

As the Philippines courts AI and data center investments, can its energy, water, and ESG systems mature quickly enough to support the sector’s growth?

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