Microsoft: How Should Boards Approach AI and ESG?
Artificial intelligence (AI) is certainly having its moment – across industries, new tools are being used to increase efficiency and productivity.
The race to implement AI solutions has fuelled enormous investments and even created new teams in the world’s biggest companies and governments.
Whilst huge opportunities are on the table, AI comes with risks, particularly for sustainability issues.
The technology’s demand for energy can hinder companies’ ESG efforts if not governed carefully, and boards must navigate the balancing act between growth and sustainability.
Sorouch Kheradmand, Global Head of Sustainability at Schneider Electric, explored how Microsoft is navigating the complexities of AI with Mary Francia, an advisor on sustainability.
He explains: “With the speed of evolution and rush in investments that Artificial Intelligence is seeing, businesses see opportunities as much as risks.”
The ESG challenges of AI for Microsoft
Microsoft has positioned itself as an ESG trendsetter with its sustainability plans such as becoming carbon negative by 2030.
AI puts the company’s current commitments at risk as it is expected to continue growing explosively – along with its energy and water consumption.
The company, therefore, must look to anticipate AI’s risks and opportunities whilst putting in place board and operational governance to maximise management of these.
To maintain its leading position in ESG, Microsoft must be proactive on the disclosure of AI’s impact.
Sorouch and Mary say it should also consider integrating AI-specific expertise in the boardroom by appointing advisors or directors with AI and technology ethics backgrounds.
Balancing ESG and financial performance
Strategic portfolio management could be the key success factor in helping Microsoft navigate the next growth cycle with AI.
AI and its further development puts the company’s ESG targets at risk and will require an integrated approach.
Board members, executives, employees and stakeholders should all be educated in AI’s ESG impact and how to measure and report this, Sorouch and Mary say.
Adapted KPIs and frameworks can allow decision making and guidance with regards to specific portfolio decisions within the business.
Regular adaptation and updates to these are vital as AI’s exponential nature could put them at risk within a short time.
To ensure Microsoft’s portfolio continues to evolve in line with its ESG targets, these sustainability objectives must be embedded within the company’s existing processes alongside looking to enable quick, granular decision making from executives and managers.
Mary says: “I am grateful for the opportunity to collaborate with Sorouch on this important discussion about the intersection of AI and sustainability in board governance.
“This article captures our combined knowledge in Governance, ESG, Climate and AI to offer thoughtful approaches for enhancing board oversight in these critical areas.”
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