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AI’s Hidden Footprint: The Sustainability Responsibilities of Australian Businesses

5 days ago
3 min read

Artificial intelligence is becoming part of everyday business. Companies are using it to analyse information, improve services and make decisions faster.


But as AI use grows, so does a question that corporate sustainability and procurement teams need to ask: what impacts are we buying along with these services?


AI depends on physical infrastructure. Data centres require electricity, cooling, water, land and equipment. Their operations can also affect nearby communities and ecosystems.

For corporate customers, these impacts extend into their own value chains. Emissions attributable to purchased cloud and AI services generally fall within Scope 3, Category 1: Purchased goods and services. Companies covered by Australia’s mandatory climate reporting regime need to assess these emissions as part of their reporting obligations, with Scope 3 reporting generally commencing in their second reporting year, subject to applicable materiality requirements.


This makes credible emissions data from cloud and AI providers increasingly important. Businesses need data that reflects the services they purchase, supported by transparent calculation methods and assumptions, to assess their Scope 3 emissions and support accurate reporting.


Their supplier assessments and procurement decisions should also consider water use, biodiversity pressures and impacts on communities and workforces.


That connection is easy to miss when a service arrives through a screen rather than through a loading dock.


Digital services have physical impacts—and those impacts belong in corporate sustainability decisions.


Australia’s emerging data centre standards

The Australian Government’s consultation, Getting it right: Building AI infrastructure that works for Australia, closed on 9 October 2026. It sought input on proposed national standards for the construction and operation of large data centres, including energy and water use, emissions and pollution, environmental impacts, costs to consumers and communities, and transparent reporting.


It also sought views on the regulatory framework and how the legislation should be administered and enforced once enacted. Social considerations included direct impacts on local communities, workforces and First Nations peoples, alongside employment standards, skills development and opportunities for broader community benefit. The consultation will inform the Government’s development of the proposed national standards


The Environmental Defenders Office has highlighted the concerns of communities near proposed developments. Its perspective is a reminder that a provider’s emissions figure, valuable as it is, cannot capture every environmental or social impact of a facility.

A fuller assessment considers where infrastructure is located, the resources it draws upon, the people affected and how those impacts are managed throughout its life.


Questions corporate customers should be asking

Businesses can begin by asking their cloud and AI providers:

  • Emissions: What emissions data can you provide for the services we purchase, and how is it calculated and allocated to us?

  • Location: Where is the infrastructure supporting those services located?

  • Energy and water: How much does it use, and what evidence supports efficiency and renewable energy claims?

  • Nature and communities: How are local water availability, biodiversity and community impacts assessed, managed and mitigated?

  • People: How are workforce standards, employment opportunities and engagement with Australian-owned businesses and First Nations peoples addressed?

  • Transparency: What information will you provide as our use of your services grows?


Providers may not have every answer immediately. Asking these questions helps identify information gaps, establish expectations and bring technology procurement into closer alignment with corporate sustainability commitments and obligations. Businesses can then use that information to improve reporting, assess suppliers and make more informed purchasing decisions.


The question for boards and executive teams is no longer simply, “How can we use AI?”

It is also: “Can we account for the impacts of the AI services we buy?”




 

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