As businesses and governments alike strive towards improved sustainability in 2023, Artificial Intelligence (AI) is increasingly being touted as a tool that can manage environmental impacts and climate change while also improving business efficiency. But is AI as green as it seems, or is it just another instance of greenwashing?

Organisations using AI to support sustainability

AI has huge potential to make businesses more sustainable. Already being deployed by companies like Google to efficiently cool their data centres, in hospitality to track and reduce food waste, and by governments including Indonesia and Peru using AI and satellite data to show near-real-time vessel movements in the ocean to combat illegal and unsustainable fishing.

From a legislative stance, businesses will soon have to comply with the Corporate Sustainability Reporting Directive, which obligates financial market participants to disclose their non-financial and diversity information. Businesses are, therefore, actively looking for green solutions that can improve their marketability and ultimately their bottom line. AI is being touted as something that can manage environmental impacts and climate change while also improving business efficiency – a win-win.

Is AI sustainable?

However, when implementing AI solutions, there is often little detail given at the micro-level on how AI will save the planet any more effectively or efficiently than traditional computer-human operations. Greenwashing occurs when environmental claims are unproven, over-inflated, or just incorrect. The Advertising Standards Authority (ASA) has been cracking down on greenwashing in advertising, recently issuing reprimands to HSBC, Alpro, and Innocent, among others.

When implementing AI and measuring the energy savings it can produce, this needs to be offset against the electricity consumption of AI systems themselves, as this is potentially substantial. It has been calculated that AI's global carbon footprint might foreseeably be equal to that of the aviation industry. Until all AI is powered by renewable electricity, including using sustainable data sources, AI's energy consumption must be considered when making claims about the energy-saving capabilities of AI.

UK legislation for businesses making AI sustainability claims

The UK Digital Markets, Competition, and Consumer Bill (Bill) is expected to grant new powers for regulators against companies that make misleading environmental claims. Companies could face fines of up to 10% of their global turnover for breaches of consumer law. This Bill, combined with the new EU AI Act and divergent 'sector by sector' approach to regulation in the UK, is going to increase the regulatory considerations for businesses when looking to utilise and deploy AI technologies in their business.

While predictions and claims have been made about the green benefits of AI, there is little published information about how AI use in these fields will be deployed, how AI software will differ from non-AI software, and whether that difference will be beneficial in reducing the rate of climate change or meeting biodiversity and ESG goals. Developers and users risk being challenged on such green claims in 2023.

AI is already being used as a tool to combat greenwashing. AI is being deployed to analyse a company's publicly available information on the web to detect early signs of greenwashing or identify related risks. The hope is that this increased scrutiny will force higher ESG standards. There is an irony to being caught out by an AI system for making false statements about the energy efficiency and ESG benefits of the AI system your business has deployed.

Using AI to enhance ESG standards

Three things you must consider about your organisations AI sustainability:

  1. Your sustainability claims must consider the output of the AI systems themselves and the energy the AI consumes, not just their applications. You should seek legal advice in the deployment of these technologies and the statements made concerning their sustainability.
  2. When it comes to using AI to enhance ESG standards, consideration needs to be given as to how the delivery of these tools can be monitored and assessed and someone should be appointed to be responsible for this to verify accuracy and make improvements.
  3. Customers should review and be prepared to challenge AI and ESG claims made by suppliers to ensure they are accurate. Where overambitious statements have been made, legal advice should be obtained.

Download our guide the latest AI regulation for businesses in the UK and EU in 2023.

This article is part of Womble Bond Dickinson’s Growing Global series. For more insights, click here to visit our Growing Global hub.

This article is for general information only and reflects the position at the date of publication. It does not constitute legal advice.