Angela Virtu
Professor of Information Technology and Analytics, Kogod School of Business
AI innovation has exploded to new heights with 72 percent of organizations integrating AI solutions into their core business practices. Simultaneously, organizations are embracing the importance of sustainability, with 90 percent of S&P 500 companies committed to publishing annual ESG (environmental, social, and governance) reports.
Individually, both of these objectives have their own merits and challenges. But organizations that want to integrate best practices of both AI and sustainability are faced with an additional challenge: finding the right balance for initiatives with competing interests.
Why is AI Becoming Essential to Modern Business?
AI has played a role in business operations for the past 20 years. In the mid- 2000s, AI was at the forefront of user experience. Consumers were exposed to recommendation algorithms that suggested everything: what shows to watch (Netflix), which products to buy (Amazon) and even what media to consume (Facebook). It has since expanded to optimize every avenue of business—from marketing and sales to fraud detection.
Since the release of Open AI’s ChatGPT in November of 2022, we’ve seen a surge of new AI applications due to the advancements in generative artificial intelligence (GAI) technology combined with its wide accessibility.
As a result, organizations are investing more heavily in their AI innovation than ever before.
In 2024, 40 percent of McKinsey’s sales and more than $1 billion of IBM’s sales are actively attributed to GAI services.
How Can AI Support Sustainability Goals?
Beyond business operations, companies are now leveraging AI to help them reach their ESG goals. Next year, 500+ cities will use AI-powered digital twin technology to help manage their infrastructures.
AI is also playing a major role in reducing the carbon footprint of the real estate industry, which accounts for 60 percent of major cities’ emissions. AI can empower eco-friendly building retrofits by analyzing construction and maintenance documents at an otherwise unattainable scale. AI is also optimizing the performance of the energy grid, among other environmental benefits.
What Are the Environmental Costs of AI?
AI solutions come with an environmental cost that businesses must consider. The underlying technology supporting these AI solutions consumes large amounts of energy. For example, training the most recent ChatGPT model (GPT4) used the same amount of energy as 5,000 American households consume annually.
A single request on OpenAI’s ChatGPT uses 9.5 times more energy than the average Google Search. Although generating text is not as energy intensive, creating one AI-generated image consumes the same amount of energy as charging your smartphone. As AI becomes increasingly incorporated into our workflows, it’s expected that by 2026, data centers will have the same energy footprint as Japan – the fifth largest energy consumer by country.
What Should Businesses Consider Before Adopting AI?
To stay competitive, businesses need to adopt AI and can do so in ways that don’t compromise their ESG goals.
A first step is to quantify the carbon emissions of their AI applications. Hugging Face, a leading platform for AI development, has introduced methods to measure the environmental impact of AI models. Additionally, consumers can now adopt models that have been trained on renewable energy or those that have lower environmental costs.
Organizations must recognize that AI and sustainability, on the surface, have a tension that needs to be addressed.
When combined thoughtfully, AI is essential for reaching the scale needed to supercharge organizations’ sustainability impact and empower business leaders to build a better world.
About the Author
Angela Virtu is a professor in IT and Analytics at American University’s Kogod School of Business, where she teaches courses on technology, data analytics, machine learning, and artificial intelligence. As the AI Instructional Faculty Fellow, she leads Kogod’s AI strategy and spearheads faculty and staff training initiatives. Prior to academia, Angela developed AI and machine learning solutions that bridged theoretical innovation with practical, ethical applications, driving organizational integration and measurable business impact.
AI can support sustainability by helping organizations analyze large datasets, optimize energy use, improve infrastructure planning, reduce inefficiencies, and make more informed ESG decisions.
AI can require significant energy to train models, process requests, and operate data centers, which can increase electricity use and carbon emissions.
Businesses are adopting AI to improve efficiency, enhance customer experiences, optimize operations, detect fraud, support decision-making, and develop new products and services.
Yes. AI can help companies track sustainability performance, identify emissions-reduction opportunities, improve resource management, and support ESG reporting.
Businesses should consider the purpose of the AI tool, its energy requirements, carbon emissions, model efficiency, and how the technology aligns with sustainability and ESG goals.
Business leaders need to understand both because AI can accelerate sustainability efforts, but it also creates environmental impacts that organizations must measure and manage responsibly.