Key Takeaways
- A new report from UNESCO and the Thomson Reuters Foundation found that the vast majority of companies do not assess the environmental impact of their AI systems, revealing a critical gap between stated commitments and operational practice.
- Current AI regulatory frameworks, including the EU AI Act, have largely failed to mandate comprehensive lifecycle environmental impact assessments, focusing too narrowly on energy while overlooking water consumption, critical minerals, and electronic waste.
- Closing that gap will require mandatory, standardised reporting frameworks covering energy, water, and material consumption — alongside incentives for green AI innovation and circular economy principles for hardware. A joint report from UNESCO and the Thomson Reuters Foundation, published this week, delivers an uncomfortable finding: the vast majority of companies worldwide are not measuring the environmental impact of their AI systems at all. That failure isn’t just a corporate governance problem — it’s a regulatory one. As AI-driven data centre demand continues to grow at pace, policymakers face a narrowing window to build environmental accountability into governance frameworks before the footprint becomes significantly harder to address.
Phase 1: Establish Foundational Transparency and Measurement
The first critical step is mandating and standardising how the ecological footprint of AI is measured and disclosed. Without accurate, comparable data, effective regulation and accountability remain elusive. The International Telecommunication Union (ITU) has called for a shift from fragmented estimates to empirical accountability, proposing technical and policy frameworks built around standardised metrics.
- Mandate Comprehensive Data Collection and Reporting: Regulatory bodies should require AI developers and deployers to collect and report granular environmental data across the full lifecycle of their systems. This includes:
Energy Consumption: Detailed reporting on electricity usage for model training, inference, and data centre operations — including Power Usage Effectiveness (PUE) and specific metrics for AI workloads such as energy per training hour.
- Water Usage: Data on water consumed for cooling, particularly in water-stressed regions. Water Usage Effectiveness (WUE) metrics should be standardised and reported consistently.
- Material Footprint: Disclosure of critical minerals and rare earths used in AI hardware manufacturing — GPUs and specialised chips — alongside electronic waste generated at end of hardware life.
- Greenhouse Gas Emissions: Reporting of Scope 1, 2, and 3 emissions attributable to AI development and deployment, including embedded emissions from hardware manufacturing and indirect emissions from electricity generation.
The UNESCO report underscores the depth of this problem: currently, only a small minority of companies assess environmental impact at all, making the case for mandatory requirements over voluntary guidelines difficult to argue against.
- Develop Standardised Metrics and Methodologies: Governments, working with bodies such as the ITU and UNEP, must develop globally harmonised standards for measuring AI’s environmental impact — ensuring comparability and closing the door to greenwashing. These standards should cover:
Lifecycle Assessment (LCA): Mandatory LCAs for AI systems, from hardware production through model training, deployment, and end-of-life management.
- Carbon Accounting Protocols: Protocols tailored to AI workloads, potentially building on existing frameworks like the Greenhouse Gas Protocol with AI-specific amendments for computational intensity.
- Open Data Standards: Auditable, open data formats for environmental reporting that allow for independent verification.
The current lack of consistent measurement practices and fragmented accountability continues to hinder progress across the board.
- Establish Public Registries and Dashboards: Centralised, publicly accessible registries where companies submit environmental impact reports would increase accountability, enable benchmarking, and give consumers, investors, and researchers meaningful data to work with. The ITU has pointed to accessible environmental impact dashboards and labels as tools for empowering stakeholders across the AI supply chain.
Phase 2: Implement Mandatory Environmental Impact Assessments (EIAs)
Transparency is a foundation, not a solution. The next step is integrating formal environmental impact assessments into the AI development lifecycle — particularly for high-risk and large-scale systems.
- Require Pre-Deployment Environmental Impact Assessments for Large Models: For large language models and other computationally intensive AI systems, Environmental Impact Assessments should become a mandatory prerequisite for deployment. These EIAs should:
Assess Resource Demands: Project the energy, water, and material resources required for training and operating the system over its expected lifespan.
- Evaluate Location-Specific Impacts: Account for the environmental context of data centre locations — including local grid carbon intensity, water availability, and heat dissipation capacity.
- Propose Mitigation Strategies: Set out concrete plans to minimise environmental harm, including renewable energy sourcing, cooling system optimisation, and hardware lifespan extension.
The EU AI Act, while a significant step in AI governance, has drawn criticism for not mandating this kind of comprehensive environmental assessment — a gap that future revisions or supplementary legislation could address.
- Integrate Environmental Criteria into High-Risk AI Definitions: Expanding the definition of “high-risk” AI in frameworks like the EU AI Act to include systems with significant environmental impacts would subject them to stricter scrutiny and compliance requirements — creating a meaningful enforcement lever that currently doesn’t exist.
- Mandate Regular Environmental Audits: Beyond initial assessments, periodic independent environmental audits of deployed AI systems and their associated infrastructure would ensure ongoing compliance and drive continuous improvement. Audits conducted by accredited third parties would add credibility and reduce the risk of self-certification loopholes.
Phase 3: Develop Granular Green AI Standards and Certifications
Clear benchmarks drive behaviour change. Specific green AI standards and certification schemes can give developers and operators something concrete to aim for — and give regulators and procurers a basis for comparison.
- Establish Energy Efficiency Standards for AI Hardware and Software: Minimum energy efficiency standards for AI chips — GPUs, TPUs, NPUs — and software algorithms would set a performance floor. This could include:
Hardware Benchmarks: Performance-per-watt metrics for AI accelerators.
- Algorithmic Efficiency: Incentivising research into and adoption of more efficient AI architectures and training methods, including sparsity, quantisation, and leaner data handling.
The EU AI Act does encourage standards for reducing energy consumption, but its reliance on standardisation bodies — many of which include for-profit organisations as members — may slow the pace of meaningful progress.
- Certify Green Data Centres for AI Workloads: A global certification programme for data centres handling AI workloads, built on rigorous criteria, would create market differentiation and regulatory clarity. Key criteria should include:
Renewable Energy Sourcing: Prioritising facilities powered by verifiable renewable energy.
- Advanced Cooling Technologies: Incentivising liquid cooling, free cooling, and other efficient methods that reduce both water and energy use.
- Waste Heat Recovery: Promoting technologies that capture and repurpose waste heat for district heating or industrial processes.
Some major technology companies are already exploring advanced energy solutions, though several remain at early or speculative stages of development.
- Introduce Eco-Labels for AI Services and Products: A recognised eco-label or rating system for AI products and services — similar to energy efficiency ratings for appliances — would allow businesses and consumers to factor environmental performance into procurement and purchasing decisions.
- Promote Circular Economy Principles for AI Hardware: Regulatory mandates and incentives for hardware designed for longevity, repairability, and recyclability would reduce the material intensity of AI at scale. This should include:
Extended Producer Responsibility (EPR): Holding manufacturers accountable for the full lifecycle of AI hardware, including end-of-life collection and recycling.
- Component Reuse and Refurbishment: Building markets and infrastructure for reusing and refurbishing AI hardware components rather than defaulting to replacement.
The World Economic Forum has highlighted closed-loop mineral recovery and recycling as priorities for reducing the industry’s dependence on virgin material extraction.
Phase 4: Incentivise Sustainable AI Development and Infrastructure
Mandates alone won’t deliver the pace of change required. Governments also need to make sustainable AI the economically rational choice.
- Offer Research and Development Grants for Green AI: Dedicated funding for energy-efficient AI algorithms, hardware, and sustainable data centre design would accelerate progress where market incentives alone fall short. Priority areas should include:
Low-Power AI Architectures: Models that require substantially less computational power to train and run.
AI for Climate Solutions: Applications that directly support climate mitigation and adaptation — from optimising renewable energy grids to improving disaster prediction.
Implement Tax Incentives and Subsidies: Tax relief, subsidies, or preferential procurement terms for companies that invest in renewable energy for AI operations, adopt green data centre technologies, or develop demonstrably more efficient AI systems would reshape investment decisions at scale. The US Department of Energy’s FASST initiative represents one early example of aligning AI energy policy with clean energy priorities.
Integrate Green AI Criteria into Public Procurement: When government agencies procure AI systems or services, prioritising vendors with strong environmental credentials and verified adherence to green AI standards leverages considerable public purchasing power — and sends a clear signal to the market about where policy direction is heading. This is directly relevant to procurement decisions around proprietary versus open-source AI, where environmental performance is increasingly a differentiating factor.
Address Grid Infrastructure for AI Growth: Strategic investment in upgrading energy grids to handle growing AI-related demand — with renewable integration as a core requirement — is increasingly being recognised at federal level in the US as a matter of infrastructure planning, not just energy policy. Streamlining permitting for clean energy projects capable of powering data centres will be a practical test of how seriously governments treat this commitment.
Phase 5: Foster Global Collaboration and Harmonisation
AI’s environmental footprint does not respect national borders, and neither can the regulatory response. Fragmented national approaches risk creating compliance arbitrage and an uneven playing field.
- Develop International Green AI Treaties and Agreements: Common principles and binding international commitments for sustainable AI development would prevent a race to the bottom on environmental standards. Harmonised reporting requirements and shared reduction targets are a logical starting point. The UN’s adoption of its first resolution on AI and environmental sustainability signals that the political groundwork is beginning to be laid.
- Facilitate Cross-Border Data Sharing for Environmental Monitoring: International mechanisms for sharing environmental impact data would allow researchers and policymakers to track global trends, identify best practices, and hold the industry to account at a systemic level. The ITU has specifically called for open data sharing and standardised metrics as part of this effort.
- Support Capacity Building in Developing Nations: Without financial and technical assistance, developing countries risk being locked into environmentally costly AI infrastructure by default. The UN has identified support for expanding digital infrastructure in lower-income countries — while offsetting energy and water consumption — as a core equity dimension of AI’s environmental governance challenge.
- Engage Multi-Stakeholder Forums: Regular structured dialogue between governments, industry, academic researchers, and civil society is essential to keep policy responsive to rapid technological change. These forums are where the gap between innovation and environmental stewardship is most likely to be bridged in practice.
Summary
The UNESCO report is a stark reminder that industry self-regulation has not worked. The vast majority of companies are not measuring the environmental impact of their AI systems, and existing regulatory frameworks have not required them to. That gap is widening as AI’s resource demands grow. Closing it requires a coherent, phased policy response: starting with mandatory transparency and standardised measurement; moving to formal environmental impact assessments for large models; establishing green AI standards and certification schemes for hardware and software alike; and backing all of this with meaningful economic incentives and public procurement reform. None of it will be effective without international coordination — the risk of fragmentation is real, and the opportunity to harmonise is narrowing. The regulatory window to get ahead of AI’s environmental footprint is still open, but the UNESCO findings make clear it won’t stay that way indefinitely. For more coverage of AI policy and regulation, visit our AI Policy & Regulation section.
Originally published at https://autonainews.com/unesco-report-97-of-firms-fail-ai-green-checks-heres-how/
