What methodological breakthrough is helping institutional investors solve the AI-ESG paradox?
This week, host Angelo Calvello interviews Dr. Liming Zhu, Research Director at CSIRO's Data61 and a leading voice in responsible AI development. Dr. Zhu reveals why traditional ESG metrics fall short when measuring AI's complex impacts, from the staggering energy consumption of model training (equivalent to 350,000 households annually for early ChatGPT) to nuanced second-order effects across stakeholder groups. The conversation explores how AI's diverse applications resist standardized assessment, requiring sophisticated frameworks that capture both immediate environmental costs and long-term societal implications. Dr. Zhu presents the practical assessment methodology he developed with CSIRO colleagues, offering asset owners a pathway through the measurement complexity that defines modern AI investing.
In This Episode:
(00:00) Introduction to AI's environmental impact and energy consumption
(02:00) Carbon footprint breakdown: training versus usage phases
(05:08) Energy sources and renewable scheduling for AI operations
(09:22) Grid stress and national energy infrastructure challenges
(10:57) Resource utilization efficiency and baseline comparisons
(14:39) Water usage for cooling and community impact concerns
(19:38) Human labor implications and global south workforce
(26:49) AI's potential to solve climate problems and accelerate science
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Dr. Angelo Calvello is a serial innovator and co-founder of multiple investment firms, including Rosetta Analytics and Blue Diamond Asset Management. He leverages his extensive professional network and reputation for authentic thought leadership to curate conversations with genuinely innovative allocators.
As the "Dissident" columnist for Institutional Investor and former "Doctor Is In" columnist for Chief Investment Officer (winner of the 2016 Jesse H. Neal Award), Calvello has become a leading voice challenging conventional investment wisdom.
Beyond his professional pursuits, Calvello serves as Chairman of the Maryland State Retirement and Pension System's Climate Advisory Panel, Chairman of the Board of Outreach with Lacrosse and Schools (OWLS Lacrosse), a nonprofit organization creating opportunities for at-risk youths in Chicago, and trustee for a Chicago-area police pension fund. His career-long focus on leveraging innovation to deliver superior client outcomes makes him the ideal host for cutting-edge institutional investing conversations.
Resources:
Dr. Zhu's Bio: https://liming-zhu.org/about-me
Dr. Zhu's research related to the episode:
The framework:
Chapters
- (00:00:00) - The environmental and social implications of AI
- (00:01:44) - What is the environmental impact of AI?
- (00:02:53) - AI Greenhouse Gas Emissions
- (00:10:01) - Can AI Data Centers Distress the Energy Grid?
- (00:11:22) - An Impact of AI on the Environment
- (00:14:52) - Data centers and ESG
- (00:18:06) - Can AI Reduce Water Use?
- (00:19:59) - Will AI Have Any Impact on Human Labor?
- (00:27:10) - A New Paradigm for Science
- (00:29:51) - The Intersection of AI Risk Management and ESG
- (00:32:38) - Amino: The Future of AI
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