DigitalBridge Group, Inc. (DBRG): PESTLE Analysis [Nov-2025 Updated]

You own a piece of the digital infrastructure backbone, and that means navigating a complex web of global risks and opportunities. For DigitalBridge Group, Inc. (DBRG), the near-term picture is defined by a capital-intensive race for AI capacity and a tough interest rate environment. We're talking about a multi-billion-dollar game where political shifts and a single basis point change in the cost of capital can fundamentally alter a deal's internal rate of return (IRR). Let's cut through the noise and map out the six external forces that will drive DBRG's performance in fiscal year 2025.

The political landscape is a double-edged sword for DBRG. On one side, favorable infrastructure spending bills are a clear tailwind, potentially injecting $50 billion into US fiber and broadband expansion by late 2025, which directly benefits DBRG's portfolio companies. But honestly, the friction from US-China technology and trade tensions is a real cost. It forces supply chain diversification, adding an estimated 4% to 7% in capital expenditure (CapEx) for new equipment. Plus, local zoning and permitting delays are the silent killer of timelines; if a single data center build gets held up by six months, the lost revenue and increased construction costs can wipe out 150 basis points from the project's projected return. You have to price in the political risk.

The economic reality is simple: capital is expensive right now. Higher interest rates have pushed the average cost of debt for large-scale infrastructure projects up to an estimated 6.5% to 7.0% in 2025, a significant jump from the 4% we saw just two years ago. This directly impacts the viability of new, massive infrastructure projects. Still, the underlying demand for digital assets remains incredibly strong, supporting high valuation multiples-we're seeing enterprise value-to-EBITDA multiples consistently above 25x for premium data center assets. Here's the quick math: high demand keeps asset prices up, but high rates make financing the purchase harder. Inflationary pressures, especially for energy and construction materials, mean operating expenses (OpEx) rose by an average of 8.2% across the sector in fiscal year 2025. It's a tight squeeze on margins.

Sociological shifts have permanently cemented the need for DBRG's assets. The permanent shift to hybrid work models, for example, isn't reversing; it drives sustained, non-cyclical demand for high-speed fiber connectivity. Consumers are defintely relying more on streaming and cloud services, pushing average household data consumption up by nearly 20% year-over-year. But the most immediate risk here is the labor shortage. The scarcity of skilled data center technicians and engineers is real, and it's driving up salary costs by an estimated 10% to 12% for specialized roles. If you can't staff the facilities, you can't commission the capacity. Plus, growing public awareness of data privacy and security means any breach could trigger a significant public relations and regulatory cost, potentially hitting the stock price by 3% to 5% in a single week.

Technology is the engine, but it requires a massive fuel injection. The move toward AI-ready, high-density data centers is the single largest CapEx driver for 2025. These facilities require power densities of 50kW per rack, far exceeding the 10kW standard of just a few years ago. This means DBRG needs to commit billions to retrofits and new builds. Rapid 5G and early 6G deployment also requires continuous investment in small cells and towers, ensuring that the network keeps pace. Edge computing architecture shifts network demand closer to end-users, requiring new, smaller facilities; this decentralization increases the total number of assets DBRG must manage. What this estimate hides is the substantial risk of technological obsolescence in older fiber and copper assets, which could require write-downs of up to $400 million across the portfolio if not managed proactively.

The legal environment is increasingly complex, especially internationally. Stricter data localization laws in key foreign markets mandate in-country data storage, which is actually an opportunity for DBRG to build out new facilities, but it adds regulatory complexity and cost. For example, a new build in the EU to meet localization mandates can cost 15% more than a similar US facility due to compliance overhead. Antitrust and merger control reviews are also complicating large-scale portfolio acquisitions. A major deal that would have closed in four months now takes seven, tying up capital and management time. Evolving net neutrality regulations could impact the revenue models for fiber and telecom assets, potentially reducing the average revenue per user (ARPU) by $2 to $3 monthly if unfavorable rules are enacted. You need a top-tier legal team just to stay in the game.

Environmental, Social, and Governance (ESG) factors are no longer soft; they are hard financial risks. There is intense pressure from investors and clients for DBRG to achieve net-zero carbon emissions, which necessitates expensive, large-scale investments in sustainable power purchase agreements (PPAs). These PPAs can lock in long-term energy costs but require a large upfront commitment. The scarcity of water and energy resources for cooling next-generation data centers is a critical constraint on site selection and operation, often adding $5 million to $10 million in specialized cooling system costs per facility. Plus, e-waste disposal regulations for retiring networking hardware are becoming more stringent, increasing the cost of asset decommissioning. Finance: draft a clear, risk-adjusted PPA strategy by the end of the quarter.

DigitalBridge Group, Inc. (DBRG) - PESTLE Analysis: Political factors

Increased government scrutiny on cross-border data flow and ownership.

You need to understand that data is now a strategic asset, so governments are treating its movement like a critical resource, not just a commodity. This means more friction for a global asset manager like DigitalBridge Group, Inc. (DBRG).

The regulatory environment is fragmenting fast. As of April 2025, the Digital Policy Alert documented 332 developments globally related to restricting cross-border data flows. China and the European Union (EU) are the most active jurisdictions, with 35 and 31 developments, respectively. This forces DBRG's portfolio companies-which operate data centers and fiber globally-to invest heavily in local compliance and data localization (storing data within a country's national territory) infrastructure, complicating network architecture and increasing capital expenditures.

The US government is also pushing back, scrutinizing foreign policies that limit cross-border data flows, arguing they violate US sovereignty and reduce US companies' global competitiveness. Honestly, this geopolitical tension makes any international expansion a defintely more complex, multi-year regulatory negotiation.

US-China technology and trade tensions affect supply chains and capital.

The US-China tech rivalry is no longer just about trade tariffs; it's a structural competition for control over the digital age, with AI chips as the sharpest flash point in 2025. For DigitalBridge, this translates directly into supply chain risks and capital flow uncertainty.

New US tariffs in April 2025 included an additional 50% tariff on semiconductors, EVs, and robotics, which impacts the cost of crucial data center and network equipment. Restrictions on sourcing Chinese-made equipment force DBRG's portfolio companies to diversify their supply chains, which increases procurement costs and can delay deployments. The entire global supply chain is shaking up.

As a global alternative asset manager with approximately $108 billion of infrastructure assets under management, DBRG must navigate a world where capital flows are increasingly viewed through a national security lens. This geopolitical risk is a key factor institutional investors are now pricing into digital infrastructure valuations.

Favorable infrastructure spending bills support fiber and tower expansion.

On the flip side, US federal policy is providing a massive tailwind for domestic fiber and tower assets. The Infrastructure Investment and Jobs Act (BIL) dedicated $65 billion to broadband infrastructure.

Specifically, the Broadband Equity, Access, and Deployment (BEAD) program has already obligated more than $35 billion of its $42.45 billion in available funds to states and territories. This is a clear, multi-year demand signal for DBRG's fiber and tower portfolio companies, even if the actual rollout has been slower than expected due to administrative changes in 2025.

Plus, new federal tax incentives introduced in 2025 allow businesses to immediately deduct 100 percent of the cost of eligible assets, like routers and switches, placed in service after January 19, 2025. This accelerates private-sector investment in the electronics that turn fiber into a functional network, which is a huge win for deployment speed.

Local zoning and permitting delays slow down new data center construction.

The biggest near-term execution risk for DBRG's data center strategy isn't capital; it's local politics. Data centers are facing unprecedented grassroots opposition across the US over concerns about noise, massive water consumption, and strain on the power grid.

Here's the quick math on the impact:

• $18 billion: Value of data center projects blocked in the US over the last two years (2023-early 2025).
• $46 billion: Value of data center projects delayed over the same period.

This trend is accelerating. A more recent study shows that between late March and June 2025 alone, an estimated $98 billion worth of data center projects faced delays or cancellations. Permitting timelines in key markets like Northern Virginia, which used to take six to twelve months, are now stretching into two to three years, and utility connection delays can be up to five years. This drastically increases the cost of capital and delays the realization of revenue from new hyperscale (large-scale cloud computing) campuses.

Action: Finance: Model the impact of a 24-month permitting delay on the IRR (Internal Rate of Return) for all new data center projects by the end of the quarter.

DigitalBridge Group, Inc. (DBRG) - PESTLE Analysis: Economic factors

Higher interest rates increase the cost of capital for massive infrastructure projects.

You are operating in a market where the cost of capital is fundamentally higher than it was just a few years ago. This is the new normal, not a temporary spike. While the Federal Reserve's target federal funds rate was projected to moderate to around 3.9% by late 2025, the real-world cost for project financing remains elevated. For large-scale digital infrastructure developments, which are essentially commercial projects, construction loan rates are typically ranging between 7.5% and 9.5% in the first half of 2025. This higher baseline for borrowing costs directly impacts the internal rate of return (IRR) required to greenlight new data center and fiber projects.

DigitalBridge Group, Inc. (DBRG) has managed its corporate debt well, reporting a blended average cost of corporate debt at a relatively low 3.9% as of Q3 2025. However, the real pressure comes from financing the capital expenditures (CapEx) of its portfolio companies, where the higher rates necessitate more equity or co-investment capital to maintain target returns. This means every new project needs to be more robustly underwritten, which is defintely a good thing for discipline.

Inflationary pressures drive up construction and energy costs for data centers.

The dual threat of construction and energy inflation is a major headwind for digital infrastructure development. The cost to build new data centers continues to climb, with average per-square-foot costs surging by a staggering 47% year-over-year as of August 2025, driven by rising complexity and intense energy infrastructure demands. Even as the rate of construction cost inflation has slowed regionally to about 3.8% off a high base in early 2025, the absolute cost remains prohibitive for smaller players.

The energy component is also a growing concern. Data centers are power-intensive, and their concentration in key markets is straining local grids and driving up prices. Nationally, residential electricity prices rose about 6% year-over-year as of August 2025. More critically for DBRG's portfolio, prices in major data center hubs saw steeper hikes: Virginia surged 13% and Illinois increased by a whopping 16% year-over-year. These increases directly erode operating margins for data center assets, making power procurement and efficiency a top strategic priority.

Strong demand for digital assets supports high valuation multiples for portfolio companies.

Despite the cost challenges, the relentless demand for digital assets, largely fueled by Artificial Intelligence (AI) and cloud computing, is supporting premium valuations for companies in DBRG's portfolio. The AI-driven data boom is keeping investor sentiment high for digital infrastructure stocks. For context, public infrastructure software companies, which are the direct users of these assets, are trading at a median of 6.2x Next Twelve Months (NTM) revenue as of October 2025. This is a strong signal of the market's belief in the long-term, high-growth nature of the underlying digital ecosystem.

This market enthusiasm translates into a significant advantage for DBRG's investment management platform. The firm's Fee-Earning Equity Under Management (FEEUM) reached $40.7 billion in Q3 2025, a 19% year-over-year increase, demonstrating its ability to attract capital based on the perceived value of its digital asset focus. This growth is a direct result of the high valuation multiples the market is willing to pay for exposure to the AI and cloud megatrends.

Private equity fundraising remains competitive, impacting new fund deployment.

The fundraising environment for private equity (PE) remains challenging and highly competitive, a trend that impacts DBRG's ability to deploy new capital. Total funds raised by PE firms declined by 14.0% in value in the first half of 2025 compared to the same period in 2024, totaling $326 billion across the industry. This slowdown is due to limited partners (LPs) being more cautious, prioritizing distributions from existing funds over new commitments.

However, DBRG, as an established digital infrastructure specialist, is benefiting from a flight to quality. In H1 2025, 77.4% of capital was allocated to funds exceeding $1 billion, favoring experienced managers with a clear, differentiated strategy. DigitalBridge Group's focus on digital assets places it squarely in this favored category, allowing it to raise $4.1 billion in new capital year-to-date through Q3 2025. This is a clear sign that while the overall PE market is contracting, the digital infrastructure niche is still attracting significant institutional money.

Here's the quick math on DBRG's recent performance against the broader market:

The key takeaway is that DBRG's strong Fee-Related Earnings growth shows it is successfully navigating a tough economic environment by capitalizing on the high-growth AI and cloud demand, even as high interest rates and construction inflation make new project development more expensive.

DigitalBridge Group, Inc. (DBRG) - PESTLE Analysis: Social factors

You're in the digital infrastructure business, so you know that social trends aren't just about what people post online; they are the fundamental drivers of demand for every tower, fiber mile, and data center you own. For DigitalBridge Group, Inc., the shift in how people live, work, and consume media is a massive tailwind. Still, it brings a critical risk: the scarcity of the skilled people needed to build and run this infrastructure.

Here is a breakdown of the key social factors shaping the business environment for DigitalBridge in the 2025 fiscal year.

Permanent shift to hybrid work models drives sustained demand for high-speed fiber.

The great work-from-home experiment is over; hybrid is the new normal. This isn't a temporary spike in traffic; it's a permanent re-architecture of the corporate network, pushing mission-critical demands into residential areas. As of late 2025, 64% of employees report their company operates on a hybrid model, and over the past two years, approximately five million more full-time workers in the U.S. shifted to a hybrid arrangement.

This shift means home internet is no longer just an entertainment utility; it's essential workplace technology. Professionals need reliable, high-capacity connections with strong upload speeds for constant video conferencing and cloud-based collaboration. Fiber optic internet, which offers virtually unlimited capacity, is the only technology that can truly meet this demand for consistent, reliable connectivity. This structural change provides a clear, long-term investment mandate for fiber assets within the DigitalBridge portfolio. It's a simple equation: more hybrid workers equals more fiber demand.

Consumer reliance on streaming and cloud services demands higher data capacity.

The public's appetite for digital content and cloud-based services continues its exponential rise, directly translating into the need for more data center and fiber capacity. The global Consumer Cloud Subscription market, which includes everything from video streaming to online gaming, is estimated to be worth $500 billion in 2025 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 15.2% through 2033.

In the U.S., 83% of adults use streaming services, and the average American household now owns around 22 connected devices, all competing for bandwidth. This constant, heavy usage, plus the increasing demand from Generative AI applications, is driving the need for higher-density data centers and a more robust network edge. DigitalBridge's focus on hyperscale and edge data centers is defintely positioned to capitalize on this relentless consumer-driven data tsunami.

Growing public awareness of data privacy and security influences investment choices.

Public awareness of data privacy (or the lack thereof) is no longer a niche concern; it's a mainstream social factor that dictates where and how data infrastructure is built. Consumers and corporations are increasingly demanding data sovereignty-the idea that data should be subject to the laws of the country where it was collected. This is forcing a strategic shift in infrastructure planning.

In the U.S., the lack of a single federal law means data centers must navigate a complex 'privacy patchwork,' with 19 states having passed their own privacy laws. This regulatory fragmentation, coupled with the Securities and Exchange Commission (SEC) creating a new Cyber and Emerging Technologies Unit in March 2025 to scrutinize cybersecurity disclosures, means compliance is now a major capital expenditure. Companies are investing in local data centers and regional partners to ensure compliance, which is a direct driver of investment in geographically diverse, compliant digital infrastructure-exactly what DigitalBridge specializes in.

Labor shortages for skilled data center technicians and engineers persist.

The biggest near-term risk to capitalizing on all these opportunities is the labor shortage. You can raise capital all day, but if you can't build and maintain the facilities, your returns stall. The data center industry is facing a severe talent crunch; experts estimate the industry needs to hire 300,000 more workers by 2025 globally just to keep pace with demand.

This shortage isn't just for construction trades, which saw an average of 382,000 job openings each month between August 2023 and July 2024; it extends to the highly specialized technicians and engineers who run the facilities. This scarcity drives up labor costs-an experienced HVAC technician in a major market like Chicago can command over $150,000 annually-and causes costly project delays. For DigitalBridge, this means a clear action: you must integrate labor risk into every capital deployment model and prioritize portfolio companies with strong, scalable training and retention programs.

• Integrate labor cost inflation into all new data center and fiber build models.
• Invest in automation and remote monitoring technologies to reduce reliance on on-site staff.
• Prioritize partnerships or acquisitions with strong in-house training and apprenticeship programs.

DigitalBridge Group, Inc. (DBRG) - PESTLE Analysis: Technological factors

The technological landscape for DigitalBridge Group, Inc. is defined by an unprecedented capital expenditure cycle, driven almost entirely by the insatiable demands of Artificial Intelligence (AI). You must recognize that the core risk here is not a lack of demand, but the sheer scale and speed of capital deployment required to capture it. DigitalBridge is positioning itself at the center of this, but it means the investment bar is constantly rising.

Massive capital expenditure needed for AI-ready, high-density data centers.

The AI super-cycle is forcing a fundamental redesign of data center infrastructure, moving from standard cloud capacity to high-density, liquid-cooled facilities capable of handling Graphics Processing Unit (GPU) workloads. DigitalBridge is leaning hard into this, projecting its total portfolio capital investment to reach around $20 billion in 2025, a significant jump from the $16 billion deployed in 2024.

The firm's portfolio company, Vantage Data Centers, is undertaking a massive, single-project commitment: a 1.4-gigawatt (GW) hyperscale campus in Texas, named 'Frontier,' with an expected investment exceeding $25 billion. This is not a small upgrade; it's a complete architectural shift. Here's the quick math: the total secured power across DigitalBridge's data center portfolio was already at 20.9 GW as of the third quarter of 2025, reflecting the scale needed to meet future AI and cloud demand.

Rapid 5G and early 6G deployment requires continuous investment in small cells and towers.

The AI revolution is not just about data centers; it's about the network that connects them to the user, which is what we call inferencing-using the AI model to make real-time decisions. This requires ultra-low latency, meaning the compute power must be closer to the user. So, the capital deployment extends to the tower and small cell business.

DigitalBridge has a clear line of sight on this. The CEO has stated the 2026-2029 period will be crucial for small cell densification for 5G, with the number of nodes in the U.S. expected to double to two million in that timeframe. That's a huge build-out. Investments from the new DBP III fund are already backing tower and fiber companies like JTOWER and FiberNow, ensuring the connectivity backbone is ready for this next wave of wireless technology.

Edge computing architecture shifts network demand closer to end-users.

The entire network architecture is shifting to support AI's 'cloud-trained, edge-delivered' future. This isn't theoretical; it's a necessity to cut network delay from the 30-50 milliseconds typical of a cloud data center down to single-digit milliseconds for real-time applications like autonomous systems.

This means demand is shifting away from just the mega-campuses to smaller, distributed sites-the edge. DigitalBridge's portfolio is structured for this, with platforms like DataBank and Expedient specifically targeting the enterprise edge compute market. The strategy is to place compute nodes at regional data centers and even telecom towers, which are often only one-to-five milliseconds away from users. That's how you defintely win the latency race.

• AI inferencing requires pushing compute to the edge.
• Edge sites cut network delay from 30-50 milliseconds to single-digit milliseconds.
• DigitalBridge platforms like DataBank focus on enterprise edge computing.
• By 2028, 50 percent of enterprise data is forecast to be processed outside traditional cloud regions.

Substantial risk of technological obsolescence in older fiber and copper assets.

For DigitalBridge, the risk of technological obsolescence (the danger that existing assets become outdated) is concentrated in its older fiber and, to a lesser extent, any legacy copper infrastructure it may still have exposure to. The new AI ecosystem demands fiber optic networks that can handle massive, high-strand count leases to support AI workloads-the fiber is the 'circulatory system' of AI infrastructure.

The sheer volume of new capital being raised and deployed-like the $11.7 billion DBP III fund targeting next-generation fiber-is a clear signal that older, lower-capacity fiber is becoming a less valuable asset. If a fiber asset cannot be easily upgraded to meet the high-capacity, low-latency requirements of hyperscalers and edge computing, its value will erode quickly. The clear action for management is continuous, proactive upgrade or replacement of these older assets, or a strategic divestiture before the technological gap becomes too wide.

DigitalBridge Group, Inc. (DBRG) - PESTLE Analysis: Legal factors

As a global alternative asset manager focused on digital infrastructure, DigitalBridge Group, Inc. (DBRG) operates at the intersection of high-growth technology and heavy regulation. The legal landscape in 2025 is not just a compliance hurdle; it's a direct driver of investment strategy, especially concerning data sovereignty and large-scale M&A activity. You need to map these regulatory shifts to your capital deployment plans.

The core challenge is navigating fragmented, often contradictory, global rules. This complexity increases the cost of compliance and can slow down the deployment of capital, but it also creates a competitive advantage for firms like DigitalBridge that can execute effectively across diverse jurisdictions.

Stricter data localization laws mandate in-country data storage, driving new build-outs.

Global data localization laws-mandating that certain data must be stored and processed within a country's borders-are directly fueling demand for new, local data center and fiber capacity. This is a massive tailwind for DigitalBridge's portfolio companies, but it requires precise, in-country investment.

The regulatory pressure is not slowing down. In the European Union, the General Data Protection Regulation (GDPR) continues to set a high bar, with fines for non-compliance reaching up to 4% of annual global turnover. For context, Meta was hit with a €1.2 billion fine in 2023 for data transfer breaches, a clear signal of the financial risk. This forces hyperscalers-DigitalBridge's key customers-to commit to local capacity, driving their capital expenditure, which is estimated to be over $380 billion year-over-year in 2025, largely due to AI demand.

This legal requirement translates directly into construction and revenue for DigitalBridge's data center platforms. You must view these laws as mandated demand, not just regulation.

• Mandate local data center capacity to avoid massive fines.
• Increase demand for in-country fiber routes to connect new facilities.
• Require portfolio companies to hire local compliance and technical staff.

Antitrust and merger control reviews complicate large-scale portfolio acquisitions.

The sheer scale of DigitalBridge's transactions, particularly in consolidating fragmented infrastructure assets, attracts intense regulatory and legal scrutiny. While direct antitrust blocks are rare in this sector, shareholder litigation and lengthy regulatory reviews complicate deal timelines and increase transaction costs.

A prime example in 2025 is the $1.5 billion transaction for WideOpenWest (WOW!), Inc. to be taken private by DigitalBridge and Crestview Partners, announced in August 2025. This deal immediately triggered multiple shareholder rights investigations in October and November 2025, alleging the board breached its fiduciary duty by accepting an inadequate $5.20 per share price. These legal challenges, while not a direct antitrust review, create significant friction, delay closing, and divert management resources. The Zayo acquisition of Crown Castle's Fiber Solutions business for $4.25 billion in March 2025 is another large-scale deal subject to extensive regulatory review, which is expected to close in the first half of 2026.

Here's the quick math: a six-month delay on a $4.25 billion acquisition means millions in sunk costs and lost revenue synergy. That's why we bake in longer closing periods.

Evolving net neutrality regulations could impact fiber and telecom revenue models.

The regulatory status of net neutrality-the principle that Internet Service Providers (ISPs) must treat all data equally-is in constant flux, creating market uncertainty for fiber and telecom assets. This volatility directly impacts the revenue models of DigitalBridge's fiber portfolio companies, like Zayo.

In the US, the regulatory environment for broadband providers is currently more favorable for investment. The US FCC's attempt to reinstate net neutrality rules was struck down by the Sixth Circuit Court of Appeals in January 2025. This deregulated environment allows fiber operators more flexibility in network management and pricing for high-bandwidth services, which is critical for monetizing the AI boom. Conversely, the European Union's stricter 'open internet' rules have been cited in research as having a 'significant, strong negative impact on fiber investments,' suggesting a less attractive investment environment there.

The US deregulation is a clear opportunity for DigitalBridge to accelerate investments in high-capacity fiber routes, which have seen demand surge 12x to 18x for AI deployments.

Increased regulatory reporting requirements for private market valuations.

As a publicly traded investment manager with substantial private fund assets, DigitalBridge faces increasing scrutiny from the Securities and Exchange Commission (SEC) on how it values and reports its private market holdings. The SEC's recent amendments to Form PF and proposed rules on custody, cybersecurity risk governance, and ESG disclosures are all in effect or being finalized in 2025.

These rules require more granular, frequent, and standardized data reporting on the underlying assets. This is a material operational cost and risk. DigitalBridge manages a large pool of capital subject to these rules: its Fee-Earning Equity Under Management (FEEUM) stood at $39.7 billion as of June 30, 2025, with an additional $11.7 billion raised for its latest flagship fund, DigitalBridge Partners III, as of November 2025. The sheer volume of assets necessitates a significant investment in technology and personnel to ensure compliance with the new valuation and reporting frameworks.

To manage this, you need a centralized, technology-driven compliance program. It's defintely not an area to skimp on.

DigitalBridge Group, Inc. (DBRG) - PESTLE Analysis: Environmental factors

You need to see the environmental factors not just as a compliance checklist, but as a critical risk-management and value-creation lever, especially in the capital-intensive digital infrastructure space. Our analysis shows that by the 2025 fiscal year, DigitalBridge Group, Inc. (DBRG) is navigating immense pressure on carbon, water, and energy, which is driving a strategic shift toward a more diversified and less renewables-exclusive energy sourcing model.

The core challenge is balancing the explosive demand for AI-driven capacity-which requires massive power-with the firm's aggressive Net Zero 2030 commitment for its portfolio companies.

Intense pressure from investors and clients to achieve net-zero carbon emissions.

The pressure from institutional investors and hyperscale clients is now an 'essential selling point,' not a footnote. DigitalBridge Group, Inc. has responded by setting one of the industry's most aggressive targets: achieving net zero greenhouse gas emissions by 2030 across its controlled digital equity portfolio companies. This goes beyond the company's own operations, which achieved carbon neutrality in 2022.

The firm is committed to ensuring at least 30% of its relevant portfolio companies achieve Science Based Targets initiative (SBTi)-approved net-zero targets by no later than 2040. This is a significant undertaking, considering the sheer scale of the assets. You must understand that this target is what keeps you competitive; your largest customers have their own ambitious climate goals and demand detailed ESG programs from their vendors.

Here's the quick math on the firm's climate commitments:

• DigitalBridge Group, Inc. Corporate Operations: Carbon Neutrality achieved in 2022.
• Digital Equity Portfolio Companies: Net Zero GHG Emissions target by 2030.
• SBTi-Aligned Targets: Minimum 30% of relevant portfolio companies must achieve SBTi-approved net-zero targets by 2040.

Scarcity of water and energy resources for cooling next-generation data centers.

The AI boom has turned data centers into massive energy and water consumers, creating a significant social and regulatory risk. In Q3 2025, DigitalBridge highlighted its key competitive advantage: securing a total of 20.9 GW of power capacity across its data center portfolio, with a record leasing of 2.6+ GW in that quarter alone. This unprecedented scale is the problem.

A single hyperscale data center can consume the equivalent power of a small city, and millions of gallons of water annually for cooling. For instance, a DigitalBridge portfolio company, Switch, operates a data center in Grand Rapids, Michigan, which has been cited as a factor in the city's 10th consecutive year of water supply rate increases, averaging a 3.438% annual increase for residents. That's a direct cost shift to the community, and it's defintely a risk to your license to operate.

To mitigate this energy scarcity, the firm is launching a 'DigitalBridge Digital Energy' strategy in the second half of 2025 (Q3). This strategy is designed to pursue 'all forms of energy flow' to its data centers, including:

• Liquefied Natural Gas (LNG) solutions.
• Microgrids and Battery Energy Storage Systems (BESS).
• Renewable energy sources.

Focus on sustainable power purchase agreements (PPAs) for renewable energy sourcing.

The market for Power Purchase Agreements (PPAs) is a core component of the net-zero strategy, estimated to reach $49.1 billion by 2025 globally. Data center operators are the largest corporate buyers, but the market is tightening; the average price of new U.S. wind and solar PPAs rose 4% in July 2025 following a change in federal tax incentives. This means the cost of meeting your renewable targets is rising.

While the firm does not disclose a portfolio-wide renewable energy percentage, its strategy relies on procuring 100% renewable energy through PPAs and on-site generation. A clear sign of progress is seen in the InfraBridge portfolio (acquired in early 2023), where the use of renewable energy was increased by more than 140% in 2022 compared to the prior year, while non-renewable energy use was reduced by more than 16%. Still, the new 'Digital Energy' strategy indicates a realistic pivot away from a purely renewable PPA-driven model to one that prioritizes reliable, consistent power for AI workloads first.

E-waste disposal regulations for retiring networking hardware become more stringent.

E-waste (electronic waste) from retiring networking hardware is a growing liability. Global e-waste generation is projected to surpass 65 million tonnes in 2025, and the e-waste management market is expected to grow from $75.61 billion in 2024 at a CAGR of 14.21% through 2035. What this estimate hides is the regulatory risk: while there is currently no comprehensive federal e-waste law in the U.S., state-level and European Union regulations are becoming stricter, pushing for a circular economy.

DigitalBridge addresses this through portfolio company mandates, expecting them to manage environmental performance to conserve natural resources and adhere to all local regulations. Portfolio companies, such as STACK Infrastructure, have formal initiatives that promote circularity through waste reduction and material and waste recycling. The industry is moving toward a model where the entire lifecycle of hardware, from design to decommissioning, must be tracked and optimized for reuse and recycling, which will eventually require a formal, auditable circularity metric for all portfolio assets.