Whatever your view of the recent Oasis reformation, or your feelings on the ethics of surge ticket pricing, one thing is unquestionable: when they join forces, those pesky Gallagher brothers are significantly more influential than when they compete with each other. In the equally turbulent but somewhat less glamourous corporate world, the same could be said of sustainability and AI. Which of these is Liam and which is Noel you can decide.
Champagne Soup-ernova
A report from Bain this week suggests that sustainability has slipped down the priorities of CEOs as they focus more on AI, growth, inflation and geopolitical uncertainty. It seems 30% of businesses declaring their progress towards their ESG targets are well behind on their Scope 1 and 2 emissions reduction goals, and almost half are behind on Scope 3. Many companies are reassessing or adjusting their climate commitments, in some cases due to the availability of better data, but in others, due to shorter-term distractions.
Not only does this deprioritisation or ‘pragmatic realism’ come with the risk of cutting an estimated $6 trillion from the value of the S&P 500, it is also totally at odds with how the majority of consumers view the importance of sustainability. The same report reveals that of 19,000 consumers surveyed across 10 countries, 61% claim their concerns about climate change have increased over the past two years and 76% believe a sustainable lifestyle is important because their own actions have an impact.
The idea that AI might be the new obsession of CEOs at the expense of sustainability is also puzzling because the big opportunity is to bring the two disciplines together for the greater good. There are potentially huge wins for sustainability from the smart application of AI in 4 key areas:
helping consumers to make informed choices by providing relevant information before purchase
helping companies develop sustainable offerings that save money, streamline innovation, and build new businesses
reducing operational risk from natural disasters & improving resilience
resource optimisation of production / supply chains
Progress is already being made in these areas – but only in the fringes with minimal impact – as by contrast, 6 in 10 organisations still struggle with even basic access to sustainability data and the ability to automatically source it from systems such as ERPs, CRMs, and enterprise asset management systems.
While AI can unquestionably be applied to sustainability challenges, there are fair questions around the sustainability of AI itself given the technology’s impact on the environment. Specifically, AI models are both hungry and thirsty – creating an increase in electricity usage which has significant carbon implications (Google’s greenhouse gas emissions grew by 48% since 2019), and requiring significant water usage for server cooling. However, the potential gains should vastly outweigh these downsides.
So rather than treat sustainability, growth and AI as unconnected, stand-alone priority areas, perhaps CEOs would be better placed to combine them into a single priority at the very top of their lists, investing time and money to explore how AI can help resolve the tensions between the need to deliver commercial growth and the need to reduce environmental impact. Some Might Say, Definitely Maybe, that this would be the beginning of The Masterplan. Whatever!
In this weeks news...
