AI and Sustainability: How Responsible Are Today’s AI Companies?

Explore how sustainable today’s AI companies are through Environmental, Social, and Governance (ESG) ratings, carbon data, and a closer look at environmental and social responsibility metrics.

Artificial Intelligence (AI) has taken center stage in recent years, grabbing attention from investors, business leaders, and tech enthusiasts alike. It’s transforming industries, especially IT and manufacturing, in ways we’re only beginning to understand. But amid the excitement, there are growing concerns about the environmental cost and long-term sustainability of this technology.

Despite its remarkable potential, AI is energy- intensive. According to a recent Goldman Sachs report, a single AI query can consume nearly 10 times more energy than a typical search engine query—and generate significantly higher CO2 emissions., Furthermore, according to a report from the International Energy Agency (IEA), AI-related electricity demand is projected to more than double by 2030 and data centers in the US could account for nearly half of the country’s energy use in the future.

While this growth is creating new opportunities, it also poses clear challenges for companies aiming to meet net-zero targets or align with global climate goals such as limiting warming to 1.5°C. It also adds a layer of uncertainty to other metrics such as water consumption and renewable energy, as the technology is evolving rapidly.

Supporters of AI argue that the technology is empowering the global workforce in unprecedented ways. By automating routine tasks and boosting operational efficiency, AI can enhance productivity, reduce inefficiencies, and contribute to better environmental outcomes. AI also allows workers to focus on more meaningful and creative tasks. In some cases, roles are shifting from execution to oversight, especially in AI-augmented production lines.

However, these benefits come with significant challenges. AI can displace jobs, forcing workers to adapt and reskill to stay relevant. The impact isn’t uniform—some sectors and roles are more vulnerable than others. Much like the Industrial Revolution, this transformation brings a mixed legacy—while some jobs are disappearing, new ones, often requiring different skill sets and mindsets, are emerging.

Read more: Role of Artificial Intelligence in Climate Data

To dig deeper, we compared the ESG performance of 100 publicly listed AI-focused companies against a matched sample extracted from a broad universe of about 10,000 global firms, based on the MSCI IMI Universe. AI companies were matched with their peers based on country, sector, and market cap. Our AI sample included industry giants such as Microsoft, Alphabet, and Nvidia, as well as specialized players including C3.ai and Palantir. It spanned various industries, including healthcare (Tempus AI, Recursion Pharmaceuticals), autonomous vehicles, robotics, e-commerce, and entertainment.

The results? Surprisingly consistent. As shown in Figure 1, the average ESG scores for AI companies are not significantly different from those in the broader corporate world. This suggests that, at least for now, AI-focused firms are not operating on a separate sustainability track.

Given how widely AI tools are integrated across sectors, it’s difficult to treat “AI” as a standalone industry—much like trying to isolate the Internet as a sector. As the field matures, we may see more formal classifications emerge.

Looking at Greenhouse Gas (GHG) emissions, AI firms appear to surprisingly have a lower carbon intensity compared to the broader market. Inrate’s findings are as follows:

• Carbon Intensity (per market cap) in mtCO₂e per million USD: 490.17 (AI firms) vs. 576.19 (global universe)
• Carbon Footprint (per revenue) in mtCO₂e per million USD: 124.80 (AI firms) vs. 202.51 (global universe)

These figures indicate that AI companies are, on average, emitting less CO2 relative to their size and revenues—though this could reflect the higher valuations and margins common in the tech sector.

Read more: What are ESG Funds? The Future of Sustainable Investing

Drilling into environmental, social, and governance indicators, we found that AI companies also track closely with the broader universe. There are no major deviations in average scores, which reinforces the view that these firms, despite their tech-heavy focus, are not outliers when it comes to governance and social responsibility.

AI is reshaping the business landscape,. speeding up innovation, demanding rapid adaptation, and opening new markets. However, the technology is also complicating sustainability planning, particularly around energy use and emissions.

For investors and corporate strategists, the key is to understand that AI is not a niche sector—it’s a pervasive force. As such, assessing its sustainability impact requires a holistic view that goes beyond one-to-one comparisons (e.g., AI vs. search engines) and instead looks at the broader value chain and societal benefits.

Ultimately, AI’s impact on sustainable development will depend on how it i’s deployed, managed, and governed. Cost-benefit analysis, thoughtful implementation, and a clear view of long-term goals are crucial to determining whether this powerful tool helps or hinders our global sustainability journey.

• Search Engines vs AI: energy consumption compared [https://kanoppi.co/search-engines-vs-ai-energy-consumption-compared/?utm_source=chatgpt.com]
• AI is poised to drive 160% increase in data center power demand [https://www.goldmansachs.com/insights/articles/AI-poised-to-drive-160-increase-in-power-demand]
• AI is set to drive surging electricity demand from data centres while offering the potential to transform how the energy sector works [https://www.iea.org/news/ai-is-set-to-drive-surging-electricity-demand-from-data-centres-while-offering-the-potential-to-transform-how-the-energy-sector-works]