There is a technological company named ABC Incorporated which is the second largest worldwide, situated in the Third World. You are the Chief Executive Officer and the majority shareholder of this company. The fast technological improvements have raised worries among environmental activists, regulatory authorities, and the general public over the sustainability of this scenario. You confront substantial issues about the business’s environmental footprint. In 2023, your organization had a significant increase of 48% in greenhouse gas emissions compared to the levels recorded in 2019. The significant rise in energy consumption is mainly due to the surging energy requirements of your data centers, fuelled by the exponential expansion of Artificial Intelligence (AI). AI-powered services need much more computational resources and electrical energy compared to conventional online activities, notwithstanding their notable gains. The technology’s proliferation has led to a growing concern over the environmental repercussions, resulting in an increase in warnings. AI models, especially those used in extensive machine learning and data processing, exhibit much greater energy consumption than conventional computer tasks, with an exponential increase.
Although there is already a commitment and goal to achieve net zero emissions by 2030, the challenge of lowering emissions seems overwhelming as the integration of AI continues to increase. To achieve this goal, substantial investments in renewable energy use would be necessary. The difficulty is exacerbated by the competitive environment of the technology sector, where rapid innovation is essential for preserving market standing and shareholders’ worth. To achieve a balance between innovation, profitability and sustainability, a strategic move is necessary that is in line with both, business objectives and ethical obligations.
(a) What is your immediate response to the challenges posed in the above case? (b) Discuss the ethical issues involved in the above case. (c) Your company has been identified to be penalized by technological giants. What logical and ethical arguments will you put forth to convince about its necessity? (d) Being a conscience being, what measures would you adopt to maintain balance between AI innovation and environmental footprint?
Approach · directive: “what / discuss”
What it asks · As CEO and majority shareholder, respond to AI-driven emissions growth, identify the ethical issues, justify the penalty, and balance AI innovation with the environment.
The question has 4 parts — answer each
- (a) State your immediate response to the challenges posed in the case
- (b) Discuss the ethical issues involved
- (c) Give the logical and ethical arguments for the necessity of penalising the company
- (d) Suggest measures to balance AI innovation with the environmental footprint
Open with · The case sets innovation and shareholder value against climate responsibility — a test of corporate conscience and intergenerational ethics.
Cover
- Stakeholders: shareholders, employees, customers, regulators, activists, communities near data centres and future generations.
- (a) Immediate: acknowledge the 48% rise openly, order an independent emissions audit, pause non-essential compute expansion and set interim targets.
- (b) Issues: profit vs planet, transparency and greenwashing, intergenerational justice, fiduciary duty vs social responsibility, burden on a developing region.
- (c) Accept the penalty: polluter pays, fairness to firms that invested in clean energy, deterrence, and a chance to rebuild trust.
- (d) Measures: renewable power contracts, efficient chips and models, better cooling, carbon-aware computing, and honest ESG disclosure.
- Options: lobby and delay (short gain, lasting damage); slow innovation (safe, loses market); invest in green innovation — the sustainable choice.
- (c) Enlightened self-interest: paying now is cheaper than stranded assets, carbon border charges and litigation later.
Close with · Sustainable innovation is the only durable edge — a conscientious CEO makes net zero a design principle, not a slogan.
Add value (verified)
- IEA: data centres consumed an estimated 460 TWh of electricity in 2022; their consumption could exceed 1,000 TWh in 2026, roughly Japan's electricity use. Electricity 2024: Analysis and forecast to 2026 — International Energy Agency (IEA) ↗“After globally consuming an estimated 460 terawatt-hours (TWh) in 2022, data centres’ total electricity consumption could reach more than 1 000 TWh in 2026. This demand is roughly equivalent to the electricity consumption of Japan.”
- UNESCO: training one large deep-learning model produces about 300,000 kg of CO2; its AI ethics Recommendation calls on states to account for AI's direct and indirect environmental impact across the life cycle. Recommendation on the Ethics of AI — flyer, UNESCO HQ (hosted by the Dutch National Commission for UNESCO) ↗“It is estimated that training one large deep- learning model produces about 300 000 kg of carbon dioxide which is equal to 125 round-trip flights between New York and Beijing. The policy area on environment calls on Member States to account for the direct and indirect environmental impact of AI systems throughout their life cycle and the data infrastructure; and to mitigate their negative impact.”
- Section 166(2) of the Companies Act, 2013: a director must act in good faith in the best interests of the company, its employees, the shareholders, the community and for the protection of environment. Board's Fiduciary Duties — IIM Calcutta (a₹tha, December 2021), quoting Section 166(2) of the Companies Act, 2013 ↗““A director of a company shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of environment.””
- Gandhi's trusteeship: wealth beyond an honourable livelihood belongs to the community and must be used for its welfare. Trusteeship by M.K. Gandhi (compiled by Ravindra Kelkar, Navajivan) — mkgandhi.org ↗“I must know that all that wealth does not belong to me; what belongs to me is the right to an honourable livelihood, no better than that enjoyed by millions of others. The rest of my wealth belongs to the community and must be used for the welfare of the community.”
- SEBI has mandated the top 1,000 listed companies to disclose their ESG performance through the Business Responsibility and Sustainability Report (BRSR). Impact of Global ESG standards — PIB (Ministry of Coal), 2024 ↗“The Securities and Exchange Board of India (SEBI) has mandated the top 1,000 listed companies to disclose their ESG performance through the BRSR. This framework aligns with global standards like the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB).”
Question: UPSC's CS (Main) 2024, GS Paper IV — paper ↗. Approach: Minimalist IAS, checked 1 Oct 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer · 385 words (UPSC limit 250) · Minimalist IAS
As CEO and majority shareholder I own both the 48% rise in emissions since 2019 and the 2030 net-zero pledge. The trend is industry-wide: the IEA says data centres' electricity use, an estimated 460 TWh in 2022, could exceed 1,000 TWh by 2026.
Stakeholders
- Those affected: shareholders and staff; AI users; regulators and activists; communities near data centres; future generations.
(a) My immediate response
- Own the number: acknowledge the rise publicly and commission an independent audit of every data centre's emissions.
- Interim targets: set yearly milestones to 2030, freeze non-essential compute expansion, and tie executive pay, mine included, to emission cuts.
(b) Ethical issues involved
- Profit versus planet: growth that shifts its carbon cost on to society and future generations.
- Honesty: the temptation to greenwash the pledge through offsets and selective disclosure.
- Distributive justice: the developing-world host bears the emissions while benefits flow to global users and shareholders.
- Whose interest: India's Companies Act, 2013 (Section 166(2)) asks directors to act for employees, the community and the environment, not shareholders alone.
(c) Why the penalty is necessary
- Polluter pays: whoever profits from emissions must bear their cost, or society subsidises the growth.
- Fairness and credibility: rivals that invested early in clean power must not be undercut; a penalty makes the pledge binding.
- Enlightened self-interest: paying now costs less than stranded assets, carbon border charges and litigation later.
- Trusteeship: Gandhi held that wealth beyond an honourable livelihood belongs to the community; a majority owner is its trustee.
(d) Balancing AI innovation with the environmental footprint
| Option | Gain | Cost |
|---|---|---|
| Lobby and delay | Margins protected | Trust lost, legal risk |
| Slow AI work | Lower emissions | Market share lost |
| Green-by-design growth | Durable edge | Upfront investment |
- Clean power: renewable purchase agreements, on-site solar with storage, and data centres sited on clean grids.
- Efficient compute: efficient chips, smaller models, liquid cooling, and heavy jobs run when renewable supply peaks.
- Life-cycle accounting: UNESCO's AI ethics Recommendation asks states to account for AI's environmental impact across its life cycle; training one large model can emit an estimated 300,000 kg of CO2.
- Transparency: audited disclosure on the lines of SEBI's BRSR, mandatory for India's top 1,000 listed companies, plus an internal carbon price.
Sustainable innovation is the only lasting edge; a conscientious CEO makes net zero a design constraint, not a line in the annual report.
Written by Minimalist IAS from facts checked at source (how we verify) — a little fuller than exam length, so every part of the question is covered; in the hall, keep the structure and trim the detail. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.