AI’s Climate Footprint Draws Growing Concern From Asset Owners

Asset owners are increasingly concerned about the impact of artificial intelligence on the environment and society, according to a report by Morningstar Inc.

In a survey of more than 500 pension funds, family offices, endowments, sovereign wealth funds and other investors, 25% cited the environmental impact of AI use as a risk, up from 12% a year earlier. In addition, six in 10 respondents said they’re worried that AI-driven demand for data centers and power generation will result in higher energy costs and inflation.

One factor drawing owners’ attention is the increase in carbon emissions from hyperscalers and the potential impact on their net zero goals, said Lindsey Stewart, Morningstar’s director of institutional insights. Investors also are scrutinizing companies’ use of offsets to address their emissions rather than actual reductions. On the social side, respondents cited the ethical implications of AI in business and the effect on workers.

“The potential of AI to displace certain jobs or disrupt the labor market is certainly also front of mind,” Stewart said in an interview.

The concern among asset owners underscores a widening debate over AI’s drawbacks, from pollution and rising electricity bills to job losses and even posing an existential threat to humanity. Leaders from companies, including Anthropic PBC and OpenAI, have recently called for a slowdown in the development of advanced AI models to prioritize safety. The push followed a former Anthropic employee’s warning about the risks of increasingly powerful AI, while a current researcher at the company put the chance of AI causing human extinction within the next decade at greater than 10%.

Beyond environmental and social concerns, asset owners expressed reservations about the amount of investment being poured into the technology.

“They’re worried about the impact of very, very high valuations and asking whether the assumptions driving those high valuations can be maintained, and what are the implications for their investment portfolio if they don’t,” Stewart said.

Morningstar’s Asset Owner Perspectives survey included asset owners from 11 countries in North America, Europe and the Asia-Pacific region, with combined assets of about $20 trillion.

Photograph: The roof of a data center in Slough, England; photo credit: Carl Court/Getty Images