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Navigating the environmental, social and governance considerations of artificial intelligence investments
The popularity and adoption of artificial intelligence (AI) have surged in recent years, with more than $650 billion of capital expenditure already deployed into AI data centres since the early 2020s, and exponential growth forecasts extending well towards 2030 and beyond.
Yet relative to this explosive growth, the ESG implications of the AI boom receive far less attention and may be less well understood by investors. As AI becomes embedded across multiple industries, its sustainability considerations become increasingly critical, spanning energy and water consumption, labour market transformation, regulatory frameworks, data privacy and geopolitical aspects.
The AI investment landscape is vast, with opportunities across public and private equity and fixed income, as well as infrastructure, and real assets. From clean power generation for data centre operation to energy and water efficient infrastructure assets, and innovative cooling technologies to natural capital projects addressing biodiversity issues; each opportunity carries distinct sustainability considerations that investors must evaluate thoughtfully.
Looking ahead
As AI technologies continue their rapid evolution and adoption, the sustainability considerations will only grow in importance and complexity. Investors must adapt and develop robust frameworks that evaluate sustainability aspects alongside traditional financial metrics. Those doing this work will be better positioned to identify both risks and opportunities, drive meaningful engagement with portfolio companies, and ultimately make better informed capital allocation decisions, anchored in environmental stewardship, social responsibility and strong governance.
The integration of sustainability considerations is not merely about risk mitigation - it represents an opportunity to identify value creation, support responsible innovation, and contribute to the development of AI in a way that serves broader societal benefits while delivering attractive returns.
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