When GenAI meets sustainability

COME 2025, it will be 10 years since 196 nations adopted the Paris Agreement to deal with climate change and limit global warming to no more than 1.5 degrees Celsius by 2030 and reach net zero by 2050. With the 2030 deadline drawing closer and the COP29 climate conference just days away, progress in fighting against climate change will invariably be scrutinised.

For too long, sustainability has been viewed as mere regulatory compliance and an operational burden. Yet climate change affects everyone – from the heatwave in 2023 to recent typhoons that battered much of East Asia – having an impact on individuals and businesses and destroying infrastructure. We need to recognise that there has to be a better approach to how companies view the relationship between business and sustainability.

By integrating sustainability into their core business strategy, companies can create economic value in a way that also leads to positive impact on people, society and the environment – a concept known as value-led sustainability.

At its root, value-led sustainability is where sustainability is integrated into the core values and operations of an organisation. Hence, sustainability is not an add-on or a compliance requirement, but a fundamental aspect of the organisation’s strategy, decision-making and culture. This approach prioritises long-term environmental, social and economic health over short-term gains.

AI as a catalyst for value-led sustainability

Today, artificial intelligence (AI) and generative AI (GenAI) are being used or considered by companies to help enhance business performance – from operations, administration and customer experience to risk management and strategy. Can the same technology be used to drive sustainability for businesses?

Indeed, there’s strong indication that GenAI can exponentially amplify value-led sustainability. Transcending the capabilities of traditional AI, GenAI goes beyond analysing data and has the unique ability to learn from multi-modal data sources, integrating visual, textual and sensor data. There is therefore potential to harness GenAI for sustainability solutions that were previously inconceivable.

Some may argue that the use of GenAI, together with powering the data centres needed for GenAI to function, contributes to the carbon footprint, given the energy needed to power the large language models and data centres. To address this, governments are working to align AI development and deployment with sustainability practices, such as utilising renewable energy sources to power AI infrastructure.

The impact of GenAI on enhancing supply chain management, decarbonisation and sustainability reports can reap immense benefits.

In supply chain management, companies can leverage GenAI to drive sustainable sourcing. By analysing vast datasets, including location, price and performance metrics, GenAI can identify suppliers that adhere to sustainable practices and continuously evaluate supplier performance based on sustainability metrics. In GenAI-driven supplier contract management, standard contracts can be automated for efficiency, while more complex agreements can be crafted with a combination of AI-driven insights and human expertise, thereby enhancing productivity and reducing emissions.

In decarbonisation, through the creation of synthetic data, GenAI can simulate different scenarios to test energy-saving strategies without disrupting actual operations. It can help to identify inefficiencies, suggest optimisations and recommend sustainable energy sources. Companies can then use the information to optimise their energy efficiency. Additionally, AI is being applied in climate intelligence initiatives, such as optimising wind turbine alignment with wind conditions and improving the energy efficiency of data centres.

For sustainability reporting, GenAI’s ability to synthesise and analyse vast amounts of data related to environmental, social and governance (ESG) considerations from various sources, including internal records, social media and global databases, helps companies better understand their ESG performance and areas for improvement.

GenAI-powered tools can guide users in creating ESG reports, ensuring accuracy and adherence to regulatory standards and supporting ESG compliance. Companies can also deploy GenAI to generate potential future scenarios based on current ESG trends, which are useful for planning long-term sustainability goals.

Robust governance needed

While GenAI has wide applications in sustainability, it also introduces new governance challenges.

As organisations use GenAI to advance their ESG agendas, they should establish strong corporate governance structures to ensure the responsible and ethical use of these powerful technologies, in alignment with the social and governance dimensions of ESG principles.

A robust AI governance framework is essential to address concerns about data privacy, data quality assurance, ethics, transparency, and potential biases in AI-generated content. This framework should include oversight mechanisms to monitor AI outputs and ensure ethical use, as well as pre-empt copyright infringements and legal disputes.

A complementary combination

With just over five years to reach milestone climate-change targets, more can be done to advance the sustainability agenda. Sustainability, financial value and technology can complement – rather than oppose – one another on the journey to net zero.

To truly harness the potential of GenAI for value-led sustainability, a multidisciplinary approach is essential.

Combining deep expertise in GenAI with a profound understanding of sustainability principles and practices with a robust corporate governance strategy not only manages inherent risks, but also fosters the development of necessary future-ready skills within the organisation, ensuring that growth is both economically beneficial and environmentally responsible.

Praveen Tekchandani is Singapore climate change and sustainability leader and partner at Ernst & Young LLP. Ritin Mathur is partner, consulting, Ernst & Young Advisory Pte Ltd.