New analysis from the Consumer Goods Forum (CGF) reveals both the potential challenges of AI on Scope 3 emissions across consumer goods value chains and the emerging innovations that can support companies to mitigate AI’s environmental impact. It also outlines practical steps companies can take today to better understand and manage these effects. 

The report, The AI footprint: What consumer goods companies need to know about AI’s environmental impacts, was developed to help answer three questions raised by members of the CGF Climate Transition Coalition: 

• What is the environmental impact of AI? 
• How does AI affect consumer goods companies’ Scope 3 emissions? 
• What actions can downstream users take to reduce and manage scope 3 emission generated through AI?

The findings show that right now, AI and cloud computing make up a very small share (less than 1%) of a consumer company’s indirect emissions. However, with the sector projected to grow 25-fold by 2033, AI’s demand for environmental resources like energy and water may become a more widespread challenge over the next decade. As companies use more AI across areas like marketing and supply chains, they will need better ways to measure, track and manage the emissions linked to their use of AI. 

While AI’s emissions footprint remains small compared to major Scope 3 categories such as raw materials, logistics and product use, its rapid growth is creating new and increasingly significant emission hotspots across the consumer goods value chain. The report highlights several areas likely to see more tension as AI adoption accelerates, including: 

• Energy demand associated with data centres 
• Rising amounts of  water use for cooling systems
• Increasing usage of carbon-intensive materials in AI infrastructure and hardware
• Continued reliance on diesel-powered generators 
• Higher levels of electronic waste from hardware replacement cycles

Grant Sprick, Vice President for Climate & Environment, Ahold Delhaize and co-chair of the CGF’s Climate Transition Coalition said:

“AI is rapidly reshaping the consumer goods and retail landscape, helping to strengthen supply chains and enhancing operational efficiency, as well as boosting forecasting accuracy and increasing consumer engagement. As companies continue to adopt AI at pace, it will be increasingly important to ensure that environmental considerations are central to how these technologies are scaled.”

Archana Jagannathan, chief sustainability officer, PepsiCo Europe, and co-chair of the CGF’s Climate Transition Coalition said:

“While AI is expected to grow dramatically, so too are the emerging innovations that can support companies in mitigating the  environmental impact. Within the Climate Transition Coalition at CGF, we’re continuing to strengthen our work on how to realise the substantial benefits of AI while being mindful of the footprint.”

The CGF’s insight report highlights a growing pipeline of innovations and opportunities helping to reduce AI’s environmental footprint that can potentially reduce consumer goods companies scope 3 emissions overall and also those specifically relating to AI usage. These include: next-generation chips, which deliver improvements in energy efficiency; geothermal and other carbon-free baseload energy solutions supporting data centre operations; zero-water immersion cooling systems that reduce both energy and water usage; and hydrogen fuel-cell backup systems that could replace diesel generators. 

The report shares practical steps that consumer goods companies can take to better understand and manage the environmental impacts associated with AI adoption, including: 

• Working more closely with hyperscale providers to improve transparency around emissions, energy use and climate transition plans
• Strengthening the tracking of AI usage data and to support more accurate Scope 3 accounting
• Updating climate governance, scenario modelling and decarbonisation roadmaps to reflect the growing demands of AI-enabled digital infrastructure. 
• Exploring approaches such as internal carbon pricing and centralised data management practices to help mitigate future impacts. 

Sharon Bligh, Sustainability Director at the Consumer Goods Forum, said:

“AI is moving fast, and we know a lot of our members are trying to get their heads around what it means in practice, particularly for climate goals and Scope 3 emissions. This report is here to help answer some of those questions and give you a clear starting point. It’s meant to support both our members and the wider consumer goods sector in understanding and starting to manage the environmental impacts of AI. While those impacts are relatively small right now, they’re only going to grow in importance. Our hope is that this gives businesses a practical place to begin as they explore how AI fits into their operations.”

While the report focuses specifically on the environmental impacts of AI, the CGF recognises that AI adoption also raises important social considerations across global and local value chains. These include workforce, skills, equity and broader societal transition risks that companies will need to address as AI deployment accelerates.

The CGF’s upcoming Global Summit, from 23-26 June in Austria, will focus on how senior leaders can leverage technology and AI to boost business impact and strengthen sustainability across their operations.