AI's Environmental Footprint: Sustainability Challenges and Employment Implications

Name: AI's Environmental Footprint: Sustainability Challenges and Employment Implications (English version)
SKU: W47448

Pitabas Mohanty, Arpita Srivastava

Product #:W47448

Supplier:Ivey

Discipline:Economics & Public Policy, Sustainability

Setting:United States, 2025

Details:Case (PDF) • 21 pages • 2026-05-12

Subjects:

Leadership and managing people Management Economics Environmental sustainability

Geography:

United States North America

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$9.71

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By 2025, AI had affected many industries across the world including health care, finance, agriculture, and urban planning by enhancing productivity, accuracy, and efficiency. Breakthroughs in neural networks, transformers, and large-scale AI models—such as GPT and PaLM—enabled sophisticated language, image, and multimodal processing. However, these advances came with heavy environmental costs and economic considerations. Energy-intensive training and deployment, significant water use, and reliance on rare earth materials contributed to carbon emissions and ecological stress. The economic impact was felt in task automation and workforce reduction in major companies. Concerns were raised about AI increasing the social inequality gap, reducing job quality, and leading to generational mobility. Divergent regulatory responses—exemplified by the European Union’s AI Act and the United States’s innovation-driven strategy—shaped global outcomes. Potential future scenarios included unrestrained growth, sustainability-aligned AI, and consumer-driven adaptation. Ultimately, a trade-off was likely to occur between technological progress and environmental sustainability, as well as labour market transformation.

Learning Objectives

This industry note is designed for a broad audience interested in the societal implications of AI. It is particularly relevant for students and professionals in business, technology, public policy, and environmental studies. The case can be used in undergraduate or graduate courses on business ethics, corporate social responsibility, technology management, or environmental sustainability. It is also suitable for executive education programs and professional development workshops focused on responsible AI development and deployment. This note explores the multifaceted impact of AI on society, encompassing its environmental footprint, economic implications, and effects on employment. Students will examine the energy-intensive nature of AI training and deployment (e.g., electricity consumption, carbon emissions, water use, reliance on rare earth materials) and evaluate how they contribute to ecological stress. The note highlights economic effects such as task automation and workforce reductions at companies such as IBM Corporation, Dukaan, Autodesk Inc., and Microsoft Corporation. It also covers concerns about social inequality, job quality, and intergenerational mobility. Students will assess divergent regulatory approaches, including the European Union’s AI Act and the United States’s innovation-focused strategy. They will explore plausible future scenarios from different approaches including unrestrained expansion, sustainability-aligned AI models, or consumer-driven adaptation.

After working through the note and assignment questions, students will be able to

analyze the environmental costs of AI, considering energy consumption, carbon emissions, and resource depletion;
evaluate the potential impacts of AI on employment, including job displacement, job creation, and the changing nature of work;
assess the different scenarios for the future of AI and the strategic choices available to various stakeholders; and
formulate recommendations for policy-makers, business leaders, and other stakeholders on how to navigate the challenges and opportunities of AI in a responsible and sustainable manner.