Sustainable AI: New Performance Frontier

KPMG global research reveals how organizations are balancingcost, risk, regulation, and environmental stewardship—and why a kpmg.com Foreword This moment demands clear-eyed leadership. Executivesmust recognize that AI’s environmental footprint is not aside effect. It is a strategic risk that requires immediate,coordinated action. That means growing the business with A recent conversation around my extended family’s dinnertable centered not on current events or travels, but on a topic The speed and scope of burgeoning corporate AI use willrequire data center operators, including hyperscalers andcloud providers, to significantly expand capacity, power, andcooling. AI workloads in data centers alone will more thantriple by 2027 compared to today.2Left unmanaged, the water Artificial intelligence is transforming the world faster than anytechnology in recent memory, reshaping how we operate,innovate, and compete. Yet this acceleration brings a definingparadox: AI is driving new efficiencies, insights, and socialbenefits while simultaneously placing unprecedented At the same time, AI holds extraordinary potential toaccelerate climate action by enabling real-time emissionsreductions and optimizing grids, buildings, supply chains,and natural resource management. AI is a powerful tool thatorganizations can use to measure their progress against From our everyday work here at KPMG, we believe that AI’spromise and impact are real. Leaders who act now to addressAI’s environmental costs head-on will be the ones who Their concerns are grounded in data. Across industries, fromconsumer products to healthcare, AI use is set to skyrocket.More than 7 in 10 global CEOs say AI is a top investmentpriority. And nearly the same percentage plan to spend Maura HodgeKPMG USSustainability Leader AI’s environmental footprint is not aside effect. It is a strategic risk that It’s a truth universally acknowledged thatartificial intelligence is a resource-hungrytechnology in a resource-constrained world.3Less understood is how powerfully AI canadvance climate goals by exposing resourcewaste, optimizing production and logistics,and transforming sustainability measurement For sustainability leaders, the question isn’t whether to slow AI adoption, but howto scale it so that environmental, financial, and operational performance reinforce Companies today face a defining challenge: balancingenvironmental and community commitments with the relentlesspressure to innovate. A new KPMG LLP survey of 350technology, sustainability, strategy, and operations executivesshows that this tension is reshaping how organizationsacross sectors approach both innovation and environmentalresponsibility. From their responses, one message is clear: This paper presents our research findings and offers a pathto a unified AI strategy where sustainability is embeddedfrom design through deployment. Written for sustainabilityleaders at organizations that are using AI to improve internaloperations or their products and services, we will show howleading organizations are rethinking partnerships, modernizing ThebusinesscaseforsustainableAI “Sustainable AI” refers to the practice of designing andimplementing AI solutions that are energy-efficient, reduce carbonemissions, and support a cleaner environment. The core idea is tobalance technological advancement with sustainable practices tomitigate the environmental impact of AI. At the center of this effort Reducecosts When scaled the right way, AI tools can also identify operational waste,optimize logistics, and improve asset utilization, including AI workloadsthemselves. For example, selecting more efficient AI models can reduceusage-based cloud and compute bills. Understanding the impact of AI on Sustainable AI recognizes a growing reality: Even when companiesdon’t own the infrastructure behind their AI systems, their use of AIstill drives energy, water, resource consumption, and cost. Aligningsustainable AI with cloud financial management helps teams reducewaste, avoid overspend, and improve return on investment (ROI).With AI adoption accelerating rapidly—organizations deployed 11 ImproveROI AI’s financial potential is growing: 86 percent of CEOs expect returnswithin three years, up sharply from 21 percent the year prior.6Butthose returns depend on managing AI’s cost profile. Sustainable AIcontemplates how each dollar invested can produce greater value AI and sustainability aren’t competingpriorities—they reinforce each otherwhen designed with cost, carbon, and Drivecompetitiveadvantage Mitigaterisks Using AI sustainably helps companies protect themselvesfrom rising operational, regulatory, financial, and reputationalthreats. As sustainability reporting expectations expand, mostorganizations will see an increase in Scope 2 or 3 emissionstied to AI use, making it essential to understand impacthotspots across the value chain now. And, although power-related outages, community resistance, and resource sc