I draw the attention of the readers to our earlier article “Climate Change impact on ISO 42001” and the “RBI Reference on thee impact of Climate Change on Financial Risk”. RBI had also released the draft guidlines on “Disclosure Framework on Climate related Financial Risls, 2024”
In the FY 2025-26, it is expected that some Banks may start adopting the guidelines.
The key report areas were
1.Governance with board level oversight of climate related risks and opportunities
2.Straegy for managing the short, medium and long term climate related risks
3.Risk Management
4.Metrics and targets.
RBI seem to recommend a phased approach for the disclosures from FY 25-26 onwards going into FY 27-28.
Obviously there are technology companies which are recommending the use of tools with AI to support the organizations in assessing the Climate Risk and perhaps mitigating the risks also.
It is in this context that we need to remember an earlier study of the University of Texas which said that every Chat GPT query consumes 500ml of water to cool the servers. Another estimation was that every LLM interaction may consume power equivalent to running a LED bulb of low intensity for one hour.
Irrespective of the actual metrics, the impact of AI on power consumption cannot be neglected. We have earlier highlighted this in the “Cyrpto Mining” scenario.
It is now time to start thinking if the climate impact of Computing in general should be considered as a risk that needs to be disclosed by all entities not necessarily the REs.
Probably the AI industry should start a disclosure of the impact of their use of AI on climate and necessary metrics need to be developed.
Naavi
