This week, mayors from 41 cities across six continents signed the Global Urban Data Centres Pact at London Climate Action Week. Backed by the C40 Cities network and including London, Phoenix, Melbourne, Barcelona and Miami, the agreement is explicitly not about rejecting data centres. As the cities themselves put it, it is about making sure future growth delivers cleaner energy, lower costs and healthier communities. In other words, this is a sector growing up, not being held back.
For most business owners, data centres are invisible. They are the reason your email arrives, your cloud files open and your AI tools answer. The fact that cities are now actively planning around them is a sign of how central they have become to modern economic life. Here is what is worth understanding.
What a data centre actually is
A data centre is a large building full of computer servers. Every app, website, cloud document and AI query runs on physical machines somewhere, and those machines live in data centres. When you save a file to the cloud or ask an AI tool a question, you are borrowing a slice of computing power inside one of these buildings, often hundreds of miles away.
Two things define how a data centre behaves. First, it needs a lot of electricity to keep the servers running. Second, it generates heat, which means it needs cooling. The newest wave of demand comes from artificial intelligence, which is far more capable than older software and, naturally, asks more of the hardware running it. That capability is exactly why the building boom has accelerated, and why the investment following it now runs into the trillions.
Why cities are paying attention
The scale is genuinely impressive. There are now more than 1,700 data centres operating in C40 cities alone, with more coming online every month, and development is expected to grow by over 40 percent in fifty of those cities. This is one of the largest infrastructure build-outs of our time, and it is happening fast.
That speed is why mayors want a shared approach. In Phoenix, demand for new sites is strong enough that pending permits could double the area’s electricity needs. In Melbourne, planned facilities could draw significant volumes of water. None of this means the growth is unwelcome. As one mayor described it, data centres are the biggest thing to hit the energy grid since air conditioning arrived in the 1950s. The point is simply that infrastructure on this scale deserves to be planned well rather than left to chance.
What the pact is asking for
The agreement sets out the conditions the mayors believe make data centres work for cities, investors and residents at the same time. In plain terms, it encourages developers to build on disused or underused land, run on renewable energy and battery storage, use water efficiently, recover and reuse waste heat, contribute to local infrastructure, and create jobs and demand for local suppliers. The rules will be adapted city by city, since cooling needs in Iceland are not the same as in Manila, but the framework is meant to guide planning decisions and conversations with technology companies.
Crucially, the mayors frame this as a win-win rather than a brake. The goal is to avoid a race to the bottom, where cities compete on the weakest possible terms, and instead create conditions where the investment rush benefits everyone. Several cities are already showing how, from heat reuse in northern Europe to water-conscious cooling in drier regions. The pact gathers those ideas and scales them.
Why this matters for your business
Even if you will never build a data centre, this story touches you in three practical ways.
Your digital tools are becoming more capable and more central. The same infrastructure driving these headlines is what makes today’s cloud services and AI tools possible. As the sector matures and gets better organised, expect those tools to keep improving in capability, reliability and value.
Energy and infrastructure planning affects everyone on the grid. How your region manages this build-out will shape local power supply and costs over time. A clearer, better-planned framework is good news for businesses that depend on stable, affordable energy, which is most of them.
Sustainability is becoming a selling point, not just a constraint. As providers compete on cleaner energy and smarter resource use, the way your digital services are hosted may become something you can point to in your own reporting and supplier choices. Knowing how your providers source their power is becoming a reasonable, and increasingly answerable, question.
The wider point is encouraging. The digital economy runs on real buildings using real power, water and land, and the people responsible for cities are now treating that as something to plan for rather than react to. For businesses leaning into AI and cloud tools, that is a sign of a sector finding its footing, which is exactly what you want from the infrastructure your work depends on.