While the effects of climate change aggravate, both businesses and countries are increasingly alarmed and feel pressured on how they can lessen their carbon footprint and adopt more environmentally friendly practices. One practice gaining traction is incorporating environmental considerations in procurement. With public procurement being accountable for around 15% of carbon emissions globally, making it more green can also significantly influence the supply chain to become greener and more cost-effective. The intersection of artificial intelligence (AI) and sustainable procurement—where responsible sourcing and smarter technology collide—may offer a promising solution.
Because they mostly rely on market-based instruments that may ignore the complex requirements of ecosystems and communities, traditional approaches to environmental governance frequently fall short. Putting a price on nature, like forests and water, leads to choices prioritizing financial gain over ecological preservation, which could have more negative effects than positive ones. Here’s where AI enters and creates more opportunities by simulating intricate environmental systems and facilitating more intelligent, transparent procurement choices.
What AI can do in procurement does not only lie in efficiency but also in insight. It can automatically and extensively evaluate enormous amounts of supplier data to identify environmental hazards, highlight compliance problems, and suggest more environmentally friendly options. CPOstrategy highlighted in a 2024 industry piece how AI-driven analytics help lower emissions throughout the procurement process, from performance monitoring to supplier selection.
According to a review from ScienceDirect, AI and sustainable procurement can work hand in hand in several ways. One of which is supplier evaluation. AI can help in real-time evaluation of suppliers’ environmental, social, and governance (ESG) credentials, which can enable more sustainable and informed buying decisions. In data management, AI can also improve supply chain transparency by processing and analyzing vast amounts of data. AI also supports integrating circular economy principles into procurement strategies by streamlining resource consumption and recycling procedures.
Published in ResearchGate, a study of project-based companies in the United States provides additional proof of how integrating AI with improved environmental performance and more sustainable procurement decisions. These companies are utilizing AI to align their operations with climate goals and reduce costs, proving that digital technologies can drive meaningful change.
Although, despite these advantages in pushing for sustainability and green procurement, AI has its own ecological footprint. Large language model training and the implementation of predictive systems can require substantial energy consumption, frequently from fossil fuels. Depending on the infrastructure, generative AI systems can produce as much carbon as a cross-country flight, according to MIT News.
Add to that, Harvard Business Review explained the inequality of AI’s significant benefits across the world. Richer countries and businesses frequently benefit more, like in increasing productivity and profitability. On the other hand, regions that have fewer resources usually bear the social and environmental costs, such as excessive energy use and resource depletion.
Organizations must emphasize ethical, transparent processes over efficiency if they want to fully utilize AI in procurement. This includes making investments in clean energy infrastructure for AI operations, incorporating equity into AI design, and making sure that the digital transformation benefits all stakeholders, particularly in developing countries.
Additionally, this involves using AI in procurement as a strategic tool for long-term value development rather than as a quick fix. Beyond cost reduction, AI should be used to foresee environmental concerns, track emissions, and promote supplier diversity.