A proposal to build one of California’s largest data centers in Imperial County has sparked a debate about the demands these facilities place on local resources and what communities stand to gain. The project is currently stalled following a court ruling requiring a full environmental review.
Meanwhile, across neighboring San Diego County, local governments are grappling with the implications of large-scale data centers. Communities are raising concerns about water and energy consumption, infrastructure costs and whether these facilities will generate meaningful local economic benefits. California has recently enacted legislation addressing data centers’ environmental impacts, resource consumption and costs to communities.
Much of the debate has focused on who will pay for infrastructure improvements, how much water and electricity these facilities will consume and whether local communities will share in the wealth they generate.
But we believe the debate has overlooked a more fundamental issue: Who should own these enterprises, who should govern them and who should benefit from the wealth they create?
Traditionally, responses to the potential negative impacts of large-scale development have focused on government regulation, environmental review and negotiations over community benefits; all are essential. We already recognize the importance of public participation in decisions about essential infrastructure, but being consulted about a company’s decisions is fundamentally different from having a formal role in governing the enterprise itself. If communities have a legitimate interest in how essential infrastructure is developed and operated, why shouldn’t they also have a voice in governing enterprises that depend so heavily on their resources?
There is another way to design enterprises, one that begins by rethinking the rights and responsibilities of ownership. It is called steward ownership. It rests on two principles: self-governance and profits that serve the enterprise’s purpose rather than primarily enriching outside shareholders. Decision-making authority rests with people entrusted with advancing the company’s purpose and ensuring its long-term success. Investors and founders may receive financial returns, but their rights to extract value are limited so that the enterprise’s purpose remains paramount.
Steward ownership is not a single legal structure. Its principles can be embedded in several different ownership and governance arrangements. Although steward-owned enterprises have operated successfully in Europe for decades, the approach is gaining traction in the United States, where a growing number of businesses are adopting structures that protect their purpose and long-term independence.
So, what might this look like in our region? Consider a data center owned by a perpetual purpose trust, legally committed to environmental sustainability and long-term community prosperity. Its governance might include independent stewards with expertise in water, energy and economic development, as well as community representation.
These stewards could exercise formal decision-making authority over resource use, infrastructure investments and how the economic benefits are shared with surrounding communities. An arrangement like this would help ensure that environmental and community commitments remain central to the enterprise’s decisions over time. Such arrangements would still need to attract substantial private investment, but they would provide a different way to balance financial returns with long-term community interests.
Changing who owns an enterprise will not, by itself, solve the environmental challenges posed by data centers. Public regulation and environmental oversight remain essential. But steward ownership challenges a fundamental assumption of business ownership: that control of the enterprise should also confer the right to capture the financial value it creates.
As Imperial and San Diego counties consider the future of data centers, local governments, community leaders and developers have an opportunity to broaden the conversation. Alternative ownership and governance models deserve a place alongside discussions of environmental regulation and community benefit agreements. These models demonstrate that enterprises can be structured to give stakeholders a meaningful voice in governance, rather than limiting their participation to public hearings or advisory processes.
The question is not simply whether data centers should be built, but how the enterprises that own and operate them should be designed, and whose prosperity they should advance.
Cordeiro is the Dammeyer distinguished professor of global leadership and education at the University of San Diego’s Kroc School of Peace Studies. O’Brien, a retired corporate finance executive and author, is a Jamul resident.