Why is Carbon Accounting Important?

The ability to make change starts with measuring the current state. As Peter Drucker famously said: you can’t manage what you can’t measure.

Data centers are the backbone of our modern society, and with the rapid rise of AI, they are poised to enable drastic change. As AI revolutionizes industries and digital infrastructure scales at record speed, the carbon footprint of data centers is under growing scrutiny from regulators, investors, and customers alike.

It is important to also recognize that the rise of data centers has an environmental impact. According to a recent Berkeley Labs report, Data Centers could account for 12% of the United States’ total energy use and consume up to 124 billion liters of water per year by 2028. And these figures don’t account for the cement, steel, and other materials it takes to construct hyperscale (100MW+) data center sites. 

However, recognizing their incredible scale and influence, all hyperscalers and many large colocation data center operators set ambitious 2030 carbon reduction targets and have made incredible progress in recent years. 

They are rapidly implementing innovative solutions and are pushing for accountability across the entire value chain. These green data center initiatives are influencing everything from site selection and construction to supplier selection and software development. 

More recently, for customers building sustainable data centers, choosing suppliers with transparent Environmental Product Declarations (EPDs) is becoming a business requirement, not a preference. By producing EPDs, companies are pushed to understand their current operational emissions and think differently about product development. 

It is imperative for suppliers to not only account for the monetary costs of their operations, but also the carbon costs.

What is Carbon Accounting?

Carbon accounting is the process of measuring, tracking, and managing CO₂ and other greenhouse gas emissions produced by an organization, product, or activity. This process is guided by the Greenhouse Gas Protocol’s definition of what Scope 1, 2, and 3 emissions are within the system. This protocol’s purpose is to provide a standardized framework for companies to account for all carbon emissions. 

• Scope 1: Direct emissions from owned or controlled sources, e.g. fuel burned in backup generators. 
• Scope 2: Indirect emissions from purchased electricity, heat, or steam. 
• Scope 3: Indirect emissions from upstream suppliers to downstream operations and product use.

Hyperscalers have implemented many strategies to reduce their Scope 1 and 2 impacts because they can easily be measured and mitigated by the company. However, the most challenging piece to the puzzle lies in reducing Scope 3 emissions. These emissions are indirectly contributed by the rest of the value chain and can account for anywhere from 38%-69% of a data center’s GHG footprint. 

Data Center operators can only go so far within the complexity of their supply chains, and this is where the opportunity lies for suppliers to become true partners along the path to sustainable operations.

Through standardization and transparency, suppliers can not only understand and improve their own operations but also establish themselves as collaborative partners.

Having an EPD can be the difference between being a preferred partner or being left behind. They are powerful tools that shift vendors’ messages from aspirational to actionable.

Life Cycle Assessments, Environmental Product Declarations, and Emissions Transparency

There are two important methodologies in measuring and reporting on embodied carbon and its corresponding GHG impacts: Life Cycle Assessments (LCAs) and Environmental Product Declarations (EPDs).

• Life Cycle Assessments: Guided by ISO 14040 and 14044 standards, an LCA is a systematic method for evaluating the environmental impacts of a product, process, or service throughout its entire lifecycle, from raw material extraction to final disposal. 
• Environmental Product Declaration: A report that transparently documents the environmental impact of a product throughout its lifecycle. A certified, independent third-party must first verify the LCA data before an organization can confidently report on their product’s or service’s impact.

The process of collecting and analyzing data is challenging and constantly changing. The time and monetary investment needed to produce accurate LCAs and verified EPDs has been a hurdle for many suppliers, but as the industry continues to grow, excuses are becoming less valid.

As industry pressure increases and reporting tools evolve, it is becoming crucial for all suppliers to create and distribute EPDs.

Partnering For Sustainable Digital Infrastructure

iMasons is a global nonprofit that fosters collaboration and innovation by uniting everyone involved in building the digital infrastructure. They have established the Climate Accord, which is a coalition between digital infrastructure leaders. And, in July of 2024, this Accord released a call for supplier action to help decarbonize the digital infrastructure.

The governing body consists of AWS, Digital Realty, Google, Meta, Microsoft, and Schneider Electric, and they urge all suppliers to adopt EPDs as standard practices to accelerate the industry’s net-zero ambitions. This was a critical moment that serves as a signpost for everyone to do their part in establishing industry-wide transparency and accountability. 

Achieving net-zero goals is a top priority for the digital infrastructure leaders, therefore carbon accounting should be a top priority for everyone that underpins their operations.

Carbon Accounting as a Core Business Practice

EPDs are more than data sets. They represent a company’s commitment to a sustainable future. Developing the data set on a product’s raw materials, manufacturing operations, use case, and disposal is a time-consuming and costly process. And the more intricate the product is, the more complicated it is to determine its impact. 

Although there are ongoing activities to streamline the process, for equipment as intricate as a diesel generator, it can take over a year of data gathering and analysis through the LCA process before a report is ready for verification. Then, verification can take months of review and rework before the final EPD is published.

However, these are not just technical exercises. EPDs drive organizational mindset shifts—every decision makes an impact. This drives innovation and new product development with life cycle emissions in mind. Because, as the industry raises its standards, suppliers must follow, or risk being left behind. 

Companies that embrace carbon accounting will not only keep their largest customers—they’ll attract new ones, influence industry standards, and play a tangible role in decarbonizing the digital economy.

By partnering with data center operators, suppliers can:

• Enhance their customer relationships
• Establish themselves as industry leaders
• Identify opportunities to innovate, and
• Become a trusted voice in sustainability

The data center industry won’t achieve its aggressive sustainability targets through individual efforts. It will get there through strategic partnerships, transparent data, and a mutual commitment to making every decision count. 

It starts by measuring what matters. 

Cummins is Laying the Foundation

At Cummins, sustainability isn’t a response to market pressure — it’s a core business imperative.

Guided by our business and environmental strategy , Destination Zero™, we are proactively reimagining how we design, build, and deliver power solutions for the data centers of tomorrow. Our mission is clear: to lead the industry in enabling decarbonized digital growth.

We are developing third party-verified EPDs for key product lines — including diesel and natural gas generator sets — not just to meet customer expectations, but to raise the bar for carbon transparency across the supply chain. This work is part of a broader effort to embed lifecycle thinking and carbon accountability into every stage of product development.

As data centers expand globally to meet the demands of AI and cloud computing, Cummins is laying the foundation for digital infrastructure that is not only resilient, but also environmentally responsible. Our engineers and product teams are driving innovation that supports both near-term emission reductions and long-term zero-emissions ambitions.

Together with hyperscalers, colocation providers, and industry coalitions, we are building a future where every watt of power contributes to a lower carbon world.

Explore our Corporate Sustainability Report page to see how Cummins is helping decarbonize digital infrastructure and how we are making measurable progress toward a more sustainable planet.