Why is Artificial Intelligence (AI) so important?


Tristan Patience

Nanuk Asset Management sees growing evidence that listed global companies engaged in artificial intelligence and machine learning are contributing towards more environmentally sustainable and resource efficient outcomes.

The simple answer is that AI has advanced to a point where it is fundamentally changing industries by creating commercial solution efficiencies on an unprecedented scale. The application of Machine Learning in data centre power management illustrates this.

Data centres are being built around the world by private companies and governments in response to the rapid growth in data being generated by web-based activity. Google have shown that when they turn on machine learning they can reduce the power usage effectiveness of data centres, reducing cooling costs by 40%.

When scalable, this AI application could be replicated across other power usages to generate vast efficiency gains that will improve cost and environmental metrics.

AI Applications: A closer look at AI in the sustainability sector

AI excels at interpreting signals and real-time analytics which underpin a number of megatrends, five of which we touch on below.


Autonomous machines

Computer vision allows cars and industrial robots to identify objects around them. Real time analytics allows them to categorize and understand those objects. Predictive analytics allows whole fleets of vehicles or machines to be managed effectively.

The combination of those aspects enables fully-automated factories, which can work with humans and efficient fleets of self driving cars. Recognising their potential and the future shape of the industry, McKinsey has estimated that the auto industry has spent $50bn on AI, while robotic companies are also investing heavily to improve their ability to automate factories.

Smart Infrastructure

Renewable energy and predictive analytics can be used to manage intermittent generation sources and optimize battery storage. Vestas recently spent $100 million purchasing a data analytics company to improve its wind product offering.

Hexagon is working with government agencies to make smarter decisions for urban planning. This includes using security cameras with computer vision and predictive analytics which can better monitor the flow of people and vehicles, improving public transport utilisation and lowering congestion.

Resource efficiency – Water

Xylem manufactures technologies that can identify water pipeline leaks 150 times faster using AI tools that interpret the sound of the leak, resulting in faster repairs and less water loss.


Autonomous machines play an increasingly important role in surgery, improving patient outcomes and reducing costly hospital stay times. Elsewhere, computer vision and improved analytics are improving diagnostic technologies and making them more accessible, while predictive algorithms are facilitating more rapid drug discovery.

Food and agriculture

AI is improving yield management and population monitoring methods. Marine Harvest, a Norwegian salmon farming company, is using computer vision to find holes in salmon farm nets and predictive analytics to mitigate sea lice outbreaks.

Deep learning is also changing internet service interaction with customers, with key advances in the areas of speech interpretation and natural language. A prominent example is Amazon’s Alexa product.

The growing relevance of AI in listed companies

One way to measure the changing relevance of AI in the investment sector is to look at the frequency of AI references in listed company annual reports. Since 2014 the number of references to AI has exploded, rising from less than 200 annual reports to more than 3500 annual reports in 2018.


While further analysis is warranted in respect of the quality of the AI references in these reports – and indeed the materiality underpinning them – the data does indicate that companies are increasingly turning their minds to AI.

Our observation and analysis is that AI applications are proliferating and that business is approaching and/or embracing AI to extract meaningful resource and commercial efficiencies. AI is playing its part in what Nanuk sees as an unfolding “Sustainability Revolution” in which more sustainable technologies and practices will surpass and supplant existing unsustainable technologies and practices in coming years and decades.

By Tristan Patience, Investment Manager

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