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.
It asks 4 things — 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 crux as a value conflict, shareholder value and the race to innovate against duty to the public and future generations, then the IEA's data-centre electricity estimate.
Cover
- Stakeholders: shareholders and staff, AI users, regulators and activists, communities near data centres, and future generations.
- (a) Options weighed in a table (lobby and delay, slow AI work, green-by-design growth); chosen course: public admission, independent audit, compute freeze, pay-linked yearly targets.
- (b) Issues as value conflicts: profit vs planet, transparency vs greenwashing, distributive justice, shareholders vs stakeholders under Companies Act s.166(2).
- (c) Penalty: polluter pays, part of Indian law since Vellore (1996); fairness to early movers; enlightened self-interest; Gandhi's trusteeship.
- (d) Long-term: clean power, efficient compute, life-cycle accounting as UNESCO's AI ethics Recommendation asks, BRSR-style audited disclosure and an internal carbon price.
Close with · Sustainable innovation is the only lasting edge: a conscientious CEO makes net zero a design constraint, not an annual-report line.
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).”
- Vellore Citizens Welfare Forum v. Union of India (Supreme Court, 28 August 1996): the precautionary principle and the polluter pays principle are part of the law of the land; the polluter pays the cost to sufferers and of reversing the damaged ecology.Vellore Citizens Welfare Forum v. Union of India, judgment of 28 August 1996 — Supreme Court of India (JUDIS) ↗“Remediation of the damaged environment is part of the process of "Sustainable Development" and as such polluter is liable to pay the cost to the individual sufferers as well as the cost of reversing the damaged ecology. The precautionary principle and the polluter pays principle have been accepted as part of the law of the land.”
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· 376words · Minimalist IAS
Shareholder value and the race to innovate versus duty to the public and future generations: a net-zero pledge must bind even when costly. The IEA says data centres' electricity use, an estimated 460 TWh in 2022, could exceed 1,000 TWh in 2026.
Stakeholders
- Those affected: shareholders, staff, AI users, regulators, activists, communities near data centres and future generations.
(a) My immediate response
| Option | Merits | Demerits |
|---|---|---|
| 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 |
- Immediately: I would admit the 48% rise publicly, order an independent audit of every data centre, and freeze non-essential compute growth.
- Then: yearly targets to 2030, with executive pay, mine included, tied to cuts; integrity keeps costly promises.
(b) Ethical issues involved
- Profit versus planet: growth that shifts its carbon cost on to society and future generations.
- Transparency versus greenwashing: the pull to meet the pledge on paper through offsets and selective disclosure.
- Distributive justice: the developing-world host bears the emissions; global users and shareholders reap the gains.
- Shareholders versus stakeholders: Section 166(2) of the Companies Act, 2013 asks directors to act for employees, the community and the environment too.
(c) Why the penalty is necessary
- Polluter pays: Vellore Citizens Welfare Forum (1996) made this and the precautionary principle part of Indian law; the polluter bears the cost of reversing the damage.
- Fairness: early investors in clean power must not be undercut; a penalty makes the pledge credible.
- 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) Long-term balance of AI innovation and footprint
- Clean power: renewable power contracts, on-site solar with storage, data centres on clean grids.
- Efficient compute: efficient chips, smaller models, liquid cooling; heavy jobs timed to renewable peaks.
- Life-cycle accounting: UNESCO's AI ethics Recommendation asks states to account for AI's environmental impact across its life cycle.
- Transparency: independently audited disclosure on the pattern of SEBI's BRSR (mandatory for India's top 1,000 listed companies), and an internal carbon price.
Sustainable innovation is the only lasting edge: a conscientious CEO makes net zero a design constraint, not an annual-report line.
Prepared by Minimalist IAS to the answer standard of Shivam Singh (mentor, 7 years) · facts checked against official sources (how we verify) · updated 1 Oct 2026. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.
