Morningstar Inc. canvassed more than 500 asset owners across 11 countries in North America, Europe and the Asia-Pacific region, with about $20 trillion in combined assets. 25% of respondents now see the environmental impacts of using AI as a potential hazard, up from 12% a year earlier. Six in 10 respondents reported concern that AI-fueled growth in data centers and power generation will lead to higher energy prices and inflation.
They also flagged social concerns, noting both the ethical issues surrounding AI in business and the impact on workers. And investors are taking a closer look at whether companies are leaning on offsets instead of making real cuts to their emissions.
Morningstar's director of institutional insights Lindsey Stewart said rising carbon emissions from hyperscalers and what that means for net zero targets are drawing owners' attention. "The potential of AI to displace certain jobs or disrupt the labor market is certainly also front of mind," Stewart said.
The unease is part of a wider debate over AI's downsides, spanning pollution, rising power costs, potential job losses, and even existential risk. That appeal came after a former Anthropic employee warned about the dangers posed by ever more powerful AI, and a current researcher at the company said the likelihood that AI causes humanity's extinction in the next decade is greater than 10%.
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Beyond environmental and social questions, asset owners are uneasy about how much investment is being poured into AI. As Stewart put it, "They're worried about the impact of very, very high valuations and asking whether the assumptions driving those high valuations can be maintained, and what are the implications for their investment portfolio if they don't."
Big pools of capital are watching a tight set of pressure points: emissions from large cloud providers, how companies balance offsets versus actual reductions, the human impact of deploying AI, and whether today's lofty price tags can stick. If those pillars wobble, many asset owners question whether current assumptions will hold and what that would mean for their portfolios. A majority also worry that AI's growing demand for data centers and electricity could feed into higher energy costs and inflation.
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