Green AI has the potential to revolutionize sustainability efforts in emerging economies, but new research suggests that adoptions could be limited to a small number of early adopters without leadership, targeted investments and stronger institutions.
In a large-scale empirical study published in Sustainable Futures (Elsevier), the researchers looked at 399 manufacturing small and medium-sized enterprises across Pakistan's major industrial sectors. They found that green AI (AI designed to minimize energy use, emissions and waste) significantly improves both operational and environmental performance only when critical enablement conditions are met.
“Green AI is not a silver bullet. Our findings show that it is working, but only in leads, investments and evolving organizations,” says Faizan UL HAQ, director of Bentham Science Publishing and researcher at the University of Malaysia.
Recruitment works, but only under the right conditions
Using partial least squares structural equation modeling (PLS-SEM), this study demonstrated that adoption of green AI strongly predicts sustainability benefits, including a 30% increase in energy efficiency and a 25% decrease in top-performing SME waste.
However, it is only recognized that ease of use and usefulness (the doctrine of the Technology Acceptance Model (TAM)) directly influenced recruitment behavior. Internal organizational preparation factors such as resource availability and change management capabilities either show limited impact on ease of use or ineffective, indicating that even interested companies struggle to implement AI in their workflows, unless their systems are intuitive and visible and beneficial.
Investment and leadership are game changers
The study found that green investments (expenditure on infrastructure, software and training) amplified the impact of green AI on sustainability performance. However, access to green finance in Pakistan is low and limits widespread spread.
Even more critical are leaders who model environmental values and empower their teams. This leadership style has significantly enhanced adoption by increasing the recognition of useful and usable AI tools. However, such leadership remains rare in Pakistan's typical hierarchical, cost-driven small business culture.
Policy, regulations, culture: Missing link
Market demand for greener production increased adoption, while regulatory and competitive pressures had little impact. According to the authors, this reflects the gaps in policy enforcement, weak institutional guidance and low consumer awareness.
“Regulations exist on paper, but they lack surveillance or incentives, and teeth are lacking. Many small businesses do not have the digital or human capital to act without assistance,” Haq pointed out.
Calling for systematic reform
Researchers urge policy makers to:
- We will introduce a green finance scheme (concessional loans, tax incentives) tailored for small and medium-sized businesses.
- It promotes leadership development focused on sustainability across the SME ecosystem.
- We use regional models from Vietnam and Malaysia to implement consistent and reliable environmental standards.
- It will launch a nationwide digital and environmental literacy campaign, particularly for manufacturing-intensive regions such as Lahore, Sialkot and Faisalabad.
The author also advocates multi-stakeholder collaborations that drive scalable green AI deployments, including academia, industry clusters, NGOs and donor-backed innovation hubs.
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