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AI’s Impact on Retail Industry's Climate Future

Artificial intelligence (AI) is now a crucial tool in tackling climate change. Here's how retail can use and is using AI to reduce greenhouse gas emissions.

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AI’s Impact on Retail Industry's Climate Future

Using AI for sustainability can help save the planet. The widespread use of artificial intelligence (AI) is now a crucial tool in tackling climate change, by reducing greenhouse gas emissions via AI climate change solutions. Indeed, AI and climate change solutions in the retail sector are predicted to increase from $5 billion to above $31 billion by 2028.

However, we’re now at a serious inflection point, reaching multiple tipping points that will secure the future of our planet. AI climate change solutions could be the answer. Time is running out to tip the scales in our favor, so join us as we explore how AI and tech solutions are being applied to tackle climate change and the opportunities it has for future applications to help pave the way toward a more sustainable future for retail.

AI in Improving Retail's Environmental Sustainability

AI is agnostic and its applications are endless, so using AI in fashion and retail is a no-brainer. From energy production management (where it reduces energy consumption and optimizes energy use) to transportation (enabling intelligent routing systems and reducing congestion), and from agriculture (via precision agriculture systems that help farmers reduce the use of fertilizers, pesticide  and water) to waste management (identifying system inefficiencies and recyclable materials in waste), AI is already performing much-needed streamlining across many sectors and functions. It makes sense then that AI is also being leveraged in fashion and retail.

In fact, using AI for sustainability in the sector has become absolutely necessary. As it stands, the retail industry accounts for around 25% of global emissions, occurring across the value chain — and fashion alone is on track to release around 2.7 billion metric tons a year by 2030 if no abatement actions are taken. But the good news is that AI is already being used in fashion and the rest of retail to improve sustainability in many ways while increasing profits and optimizing business, and it’s only set to grow. In fact, the global AI in retail (including fashion) size was valued at USD 3.75 billion in 2020 and is projected to grow to USD 31.18 billion by 2028, exhibiting a CAGR of 30.5% from 2021-2028.

From smart inventory management and sustainable sourcing to improved energy efficiency and waste reduction, using AI for sustainability has been transforming the retail industry’s emissions for a while now. With its ability to analyze large sets of data, AI is being used in fashion and retail for individuals to make informed decisions, enhance customer experience and streamline their operations. Using AI for sustainability is crucial.

When it comes to AI and climate change, crucial reduction paths are still emerging, with AI being used in fashion and retail to:

  • Reduce carbon emissions within the entire supply and value chain
  • Provide real-time emissions and impact data
  • Enable product-level footprinting for customers. 

For years, retailers have wanted the ability to hit these massive KPIs for the sake of the climate and their business, but have lacked the tools and climate change AI projects that can make a real difference. Vaayu is using AI for sustainability in this sector — our technology is the world’s first automated AI carbon emissions and impact software in fashion and retail, built to empower retailers to cut their carbon emissions and impact in real-time and at scale. The platform works by leveraging proprietary AI and machine learning technology in fashion and retail to draw carbon emissions and other impact insights from production, sales and logistics to provide retailers with actionable insights into their supply chain.

When it comes to climate change AI projects, Vaayu has also developed the world’s first calculation model for product carbon emissions footprinting (PCF) using AI, which has the potential to dramatically change consumer behavior by providing detailed information on the carbon life-cycle of individual products. There are no signs of the push for conscious consumerism slowing down, and the calls are coming from within. More than half (58%) of consumers are actively looking for ways to track their own carbon footprint while shopping, and leveraging AI in fashion and retail enables this opportunity.

Using Vaayu’s product carbon footprinting calculation model that leverages our AI, users can identify reduction opportunities within the fashion and retail value chain while allowing consumers to make more sustainable choices in tandem. In action, this looks like our climate change AI project with Klarna on its new carbon tracker that provides users with an enhanced breakdown of their carbon footprint across over 50 million fashion items. Since the tracker’s successful launch with Vaayu in 2022, Klarna’s 150 million global shoppers are receiving tangible insights into the environmental impact of their completed purchases, helping them make more thoughtful and sustainable shopping decisions.

In short, the use of AI in fashion and retail's climate change projects makes this all possible. Throughout all of these breakthroughs using our proprietary AI for sustainability, we are empowering retail businesses, including those within fashion, to lower their emissions and collectively reduce 1 gigaton of carbon emissions by 2030.

AI’s Role in Retail’s Climate Future video

Challenges and Limitations of AI and Climate Change in Retail

Although AI and technology has immense potential to lower carbon emissions and decelerate climate change, it also faces several challenges and limitations. Here are some potential problems with using AI for sustainability in this sector.

One of the main challenges in using AI is the lack of carbon emissions and impact data currently collected, its substantial data-lag, as well as interoperability between different systems. AI algorithms require vast amounts of data to train and improve, and the lack of data in some cases can limit their effectiveness. When it comes to AI being used to track carbon emissions, accurate Scope 3 data, for example, could be hard to find from down the supply chain. Interoperability between different systems is also crucial to enable data-sharing and collaboration, but it can be challenging to achieve due to differences in standards and protocols.

One of the other significant limitations and challenges in using AI for sustainability is the high cost of AI implementation and maintenance, which can be a barrier to adoption, especially for small and medium-sized businesses. The complex nature of AI algorithms and their integration with existing systems can also make it challenging to implement and maintain them.

The Future Applications of AI to Fight Climate Change

Using AI to solve climate change is no simple task, but despite these challenges, the future of AI and climate change looks bright. AI and technology still has immense potential to decelerate climate change by reducing greenhouse gas emissions at scale. By addressing the obstacles and understanding the impact of AI on the retail industry, we can harness the full potential of AI to solve climate change and accelerate the transition to a more sustainable future. 

The impact of AI on the retail industry is immense, and ongoing research and development in AI and its nuanced fields, such as data science and machine learning, are likely to soon overcome some of AI’s current limitations. Using AI for sustainability is imperative, and partnerships between governments, industries, businesses and research institutions can also help accelerate the adoption and implementation of AI-powered systems. Through this work, using AI for sustainability can be a powerful means to help solve climate change.

It is crucial to continue investing in AI and technology for research and development in the fight against climate change, and implementing AI solutions early on helps harness its full potential in lowering evironmental impact. Vaayu is proud to drive the impact of AI on the retail industry as the only impact solution built for retail. To find out how AI could support the decarbonization and lower-impact of your business, get in touch.

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