GUEST COLUMN
SUPPORTING SUSTAINABILITY One of AI’s most exciting applications is its ability to speed up the transition to a sustainable economy. For instance, AI digital twins allow businesses to create virtual simulations of physical systems to predict, monitor and optimise performance. Digital twins can be applied in industries such as manufacturing, energy and urban planning to reduce waste, improve energy efficiency and minimise environmental impact. By using real- time data, companies can make more informed decisions, testing initiatives virtually before implementing them. Sustainability reporting is becoming more complex as governments impose stricter regulations, such as the European Union’s Corporate Sustainability Reporting Directive and the US Securities and Exchange Commission’s climate disclosure rules. AI can streamline the collection, integration and analysis of ESG data, making it easier for businesses to comply. By automating these processes, AI reduces the risk of error and ensures that businesses can meet deadlines and reporting requirements. For example, AI-powered tools can help businesses gather data from various sources, including supply chains, financial reports and external audits, ensuring it is standardised and accurate. This not only improves transparency but also provides businesses with actionable insights that can inform sustainability strategies. AI also plays a crucial role in resource optimisation. In industries such as manufacturing, the technology can help businesses forecast demand more accurately, reducing overproduction and minimising waste. In energy management, AI can optimise heating, cooling and lighting systems in real time, leading to substantial reductions in consumption. AI-driven predictive maintenance tools can also ensure that machinery operates efficiently, preventing unnecessary breakdowns and reducing waste.
AI-powered systems can optimise supply chains by identifying the most energy-efficient routes, reducing fuel consumption and emissions. In logistics, AI can predict optimal delivery schedules and reduce unnecessary shipments, contributing to a significant reduction in carbon footprints. CIRCULAR BUSINESS MODELS AI is instrumental in driving the shift towards circular business models, where products are designed for longevity, reuse and recycling. By using AI to track product lifecycles, businesses can ensure that products are returned for recycling or repurposing once they reach the end of their useful life. In the waste management sector, this kind of technology is already being used to sort recyclable materials more efficiently, improving recycling rates and reducing landfill waste. Moreover, AI can help businesses transition to a product-as-a-service model, where customers access a product’s service rather than purchasing it outright. This model reduces the need for raw materials and encourages businesses to design products that are easy to maintain, repair and recycle. As AI becomes increasingly integral to business operations, its role in sustainability will be shaped by how well
we balance innovation with responsibility. Looking ahead, the question remains: will AI help us accelerate the shift to sustainability, or will its environmental costs outweigh the potential benefits? The answer lies in how businesses and policymakers manage AI’s impact. By embracing energy-efficient technologies, reducing resource consumption and fostering workforce resilience, companies can ensure that AI becomes a positive force in achieving global sustainability goals. Ultimately, AI’s success in advancing sustainability will depend on our ability to leverage its power responsibly – ensuring that the drive for technological innovation aligns with our commitment to environmental stewardship and social equity.
Julia Binder is co-editor of Leading the Sustainable Business Transformation ; José Parra Moyano is a contributor to the book. Binder is a professor and director of the Centre for Sustainable and Inclusive Business at IMD Business School. Parra Moyano is a professor of digital strategy at the school
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Business Impact • ISSUE 2 • 2025
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