AI’s Impact on ESG Strategy and ITAM

The global race to increase the use of Artificial Intelligence (AI) is in full swing. AI can help address the biggest hurdles in Environmental Social and Governance (ESG) strategies. However, developers and investors are accelerating at a pace that lacks consideration for environmental and social impacts. IT leaders must apply robust, consistent, and evolving AI operating principles.

Anglepoint’s Senior Green IT Consultant, Ella Brunsman, explores this topic and shares her thoughts on how AI impacts ESG strategy and IT Asset Management (ITAM). She explains how Anglepoint is uniquely positioned to enable AI to help clients understand the environmental impacts of IT, software, and the cloud while reaching their commitments to environmental and social metrics.

AI Drives Benefits for ESG and ITAM

Generative AI is a powerful tool, and integrating AI in reporting and ITAM aids ESG initiatives and offers powerfully enhanced data analytics that process vast data sets and uncover insights for sustainability metrics. AI’s predictive modeling capabilities allow businesses to forecast trends at phenomenal speeds, and inform sustainable decision-making. Real-time monitoring and tracking of environmental factors drives proactive responses and actions. AI enhances transparency and accountability in ESG and ITAM metrics through automated reporting processes that ensure timely and accurate disclosures. This data collected and analyzed by AI provides stakeholders with the real-time clarity and accessibility of ESG reports, fostering trust and accountability.

AI plays several roles in sustainable ITAM. It predicts equipment and failures, reducing downtime and extending the lifespan of IT assets. Additionally, AI offers resource optimization, which minimizes waste and promotes a circular economy to reduce the consumption of finite resources. The efficiency of supply chains can be enhanced to reduce overproduction and waste, and these AI-driven systems manage energy use in data centers and IT operations, improving sustainability.

AI also improves ESG compliance and ITAM efficiency. Accurate data from multiple sources and enhanced reporting enable regulatory compliance and operational efficiencies. Streamlined processes reduce manual effort and increase accuracy. Monitoring is repeatable, measurable, and sustainable, ensuring continuous compliance and timely corrective actions.

There are key strategies for optimizing ESG and ITAM performance with AI that will provide a solid foundation for ESG initiatives. First, implementing a data governance framework will ensure continuous data quality and compliance. Second, AI Models can be optimized by fine-tuning the AI algorithms to minimize computational resources while maintaining performance. Third, collaborative partnerships with domain experts will help to refine AI models and improve their relevance to ESG goals. Finally, investments in energy-efficient hardware reduce environmental impact.

AI also aids in predicting ESG and ITAM risks, enabling proactive risk mitigation. AI detects anomalies in ESG data, identifying potential compliance issues early.

Running various scenarios helps assess the impact of different risk factors on ESG performance. This provides data-driven insights into potential risks, supporting informed decision-making.

Through AI, stakeholder engagement is enhanced with interactive dashboards that allow visualization of ESG and ITAM metrics. This tailors communication to different stakeholder groups to provide relevance and impact. Ultimately, the stakeholder feedback can be incorporated into ESG strategies, ensuring alignment with expectations.

Negative Impacts of AI

While the general market consensus is that the benefits outweigh the risks, those risks are frequently disregarded in organizational adoption and development, which has detrimental effects on the future of our environment and society.

AI impacts all pockets of ESG. These include environmental impacts such as increased resource consumption and optimized emission reporting, to social and ethical issues like lack of transparency, bias, and weaponization.

We have explored ways AI can bring order, accuracy, and efficiency organization-wide, but this does not come without a price. Globally, regulations are being developed to protect human beings from harm and to protect our rights. In 2023, the U.S. joined the EU and China in releasing The AI Bill of Rights. The five principles include safe and effective systems, algorithmic discrimination protections, data privacy, notice and explanation, and human alternatives, consideration and fallback.

While this is a great first step, little has been done to address environmental concerns. AI technology uses a significant amount of energy and is also a source of Green House Gas (GHG) emissions. Since 2021, the most extensive AI training runs have been using exponentially more computing power, doubling every 3.4 months on average. By 2040, emissions from the Information and Communications Technology (ICT) industry are expected to reach 14% of global emissions.

The impact on resources is also staggering, with Google and Microsoft reporting a 20-34% increase in water use from 2021 to 2022, which experts have linked to AI development. AI made up 10-15% of Google’s total electricity consumption (18.3 terawatt hours in 2021), which means Google’s AI alone burns around 2.3 terawatt hours annually, about as much electricity each year as all the homes in a city the size of Atlanta. However, these two giants in the tech industry are not on their own. Cryptocurrency mining is estimated to consume 150 terawatt hours (more than the entire country of Argentina) and GHG emissions of 65 megatons (the same as the country of Greece).

How can Anglepoint Help?

Anglepoint’s Green IT service supports clients in meeting their ESG requirements and ensures they manage these effectively while implementing sustainable AI operations.

Organizations looking to drive green IT will need to consider the impact of AI very seriously. Cross-functional communication will be paramount to ensure that while one area of the business is reducing energy consumption and carbon footprint, another isn’t undoing all the good work. By accurately tracking KPIs on a dashboard to show the reductions and increases of consumption and emissions business-wide, the organization will be able to track whether or not they are achieving goals set out by stakeholders and leaders. As legislation changes around ESG and governments introduce legal requirements, this will become a vital area for business reporting to prevent unbudgeted expenditures related to ESG non-compliance.

Contact us to find out how we can support your ESG goals while achieving the right balance of AI initiatives.

You may also find this recent podcast on the topic interesting: How AI and Real-Time ITAM Can Revolutionize Your Organization.