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Data centers under a new regulatory lens

oktober 1, 2026

Contribution from our 2026 partner Freshfields

Investment screening and sustainability requirements are moving closer to the core of data center investment decisions.

Data centers are no longer viewed solely as infrastructure assets requiring land, power, cooling, capital and long-term customers. Their growing importance to AI, cloud services, financial infrastructure and essential public functions is changing the way European regulators look at the sector.

Two recent Freshfields publications highlight different sides of this development. One examines how data centers are increasingly entering the scope of foreign investment screening. The other looks at the EU’s proposed common sustainability rating scheme for data centres.

Together, they point to a broader shift: regulatory considerations around ownership, control, energy, water and resilience are becoming increasingly relevant to investment and financing decisions.

Data centers enter the security frame

As Freshfields notes in its June 2026 Foreign Investment Monitor, regulators are increasingly looking beyond the physical characteristics of a data center. The focus is shifting towards what the infrastructure enables: access to sensitive data, resilience of essential services and control over critical processing capacity.

This is particularly relevant in Europe. The EU is moving towards broader scrutiny of digital infrastructure, while individual jurisdictions are already applying their own approaches. The Netherlands, for example, has mandatory notification requirements for certain data center transactions, while Germany screens investments in data centers from an installed capacity as low as 3.5 MW. The UK is also preparing to extend its investment screening regime to third-party-operated data centers.

For investors, this means that the question is no longer simply whether an acquisition falls within an FDI regime. Ownership structure, governance rights, access to information and operational influence can all affect how a transaction is assessed. Even minority or non-controlling investments may therefore require early screening analysis.

From reporting to rating

At the same time, another regulatory development is emerging around sustainability performance.

The European Commission has adopted a common EU rating scheme under which data centers covered by the existing reporting regime are proposed to receive separate A-to-G ratings for energy and water performance. The first labels are expected by 15 August 2027 and will be based on information operators already report.

The label goes beyond energy efficiency alone. It will also provide information on energy sourcing, grid flexibility and whether a facility is ready for waste heat reuse. Importantly, the Commission is separately working towards minimum performance standards for new and retrofitted data centers.

The implications could extend beyond compliance. Freshfields points out that the ratings are expected to feed into the assessment of sustainability under the proposed Cloud and AI Development Act and have also been considered in the context of the EU Taxonomy. As a result, a weaker rating could potentially become relevant in procurement and financing discussions even before binding minimum standards are introduced.

For a market increasingly focused on bankability, that creates an important question: to what extent will regulatory performance become part of how investors and lenders assess the quality and long-term viability of a data center asset?

Regulation becomes part of the investment case

The two Freshfields publications approach the market from different angles, but the underlying development is similar.

For investors, lenders and operators, regulatory due diligence is expanding beyond traditional planning, permitting and compliance questions. Who controls the infrastructure, what access that ownership provides, how efficiently the facility uses scarce resources and how it interacts with the wider energy system are becoming increasingly relevant considerations.

That places FDI screening, digital sovereignty, energy efficiency, water consumption and resilience closer to the investment case itself.

And as the European data center market continues to scale, these factors may increasingly influence not only whether projects can be developed, but also how they are financed, valued and ultimately transacted.

These insights are based on recent publications by Freshfields. The full publications provide further legal and regulatory detail.