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The hidden environmental costs of tech giants’ AI investments

Should investors demand these companies disclose their energy consumption to calculate Scope 3 greenhouse gas emissions?

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    • For the technology leaders whose energy consumption has very significantly increased due to AI operations, and yet whose reported carbon footprint may not seem as greatly increased, investors might question the integrity of the company’s overall carbon neutrality.
    • For the technology leaders whose energy consumption has very significantly increased due to AI operations, and yet whose reported carbon footprint may not seem as greatly increased, investors might question the integrity of the company’s overall carbon neutrality. PHOTO: AFP
    Lee Joo Hee

    Lee Joo Hee

    Published Sat, Nov 23, 2024 · 05:00 AM

    GLOBAL technology leaders including Alphabet, Amazon, Apple, Meta and Microsoft are increasingly integrating artificial intelligence (AI) technologies into their product offerings.

    The substantial energy consumption associated with AI training and operation has raised concerns about the environmental impact, particularly regarding greenhouse gas (GHG) emissions. Should investors demand these companies disclose their energy consumption to calculate Scope 3 GHG emissions?

    From a sustainable investor’s perspective, the carbon emissions of a company can have implications on its discount factor (that is, cost of capital).

    Big TechArtificial IntelligenceCFA Singapore Insights

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