Australian firms deepen tech role in climate strategy

Australian business leaders are giving information technology a greater role in environmental strategy, but progress on turning sustainability ambitions into measurable outcomes remains uneven, according to new industry research from Kyndryl and Microsoft.

The third Global Sustainability Barometer Study, carried out by research firm Ecosystm, finds 43% of Australian organisations now say technology teams drive environmental outcomes across the enterprise. This is up from 28% in the previous year and reflects growing convergence between IT and sustainability functions, which the study says are aligned in 62% of organisations.

Reporting on environmental performance is also becoming more common. The research shows 62% of Australian organisations now produce some form of environmental sustainability reporting. Of these, 58% report voluntarily or without public disclosure.

Despite this, the study indicates that sustainability remains secondary in many modernisation and investment decisions. Only 23% of organisations say they fully use digital solutions to improve sustainability. Just 18% apply clearly weighted sustainability criteria in all major technology selections, while 40% do not use such criteria at all.

Erandhi Mendis, Social Impact, Government Affairs and Policy Leader at Kyndryl ANZ, said IT has moved closer to the centre of climate strategy in Australian companies.

"Technology is now at the heart of climate action in Australia. We are seeing IT teams step up as key enablers of sustainability outcomes," said Erandhi Mendis, Social Impact, Government Affairs and Policy Leader, Kyndryl ANZ. "The next step is to move beyond isolated energy efficiency wins. Organisations need to embed sustainability into modernisation decisions, fix data integration, and use AI responsibly and be climate-aware to turn goals into measurable results."

The study reports that 95% of organisations rate environmental sustainability as a top strategic priority. Half say they are driving sustainability through proactive or consistent initiatives. Yet only 15% say sustainability is a core driver of innovation, cost savings and long-term resilience, which points to what the report describes as a gap between board-level intent and operational practice.

Policy uncertainty

The research links a slowdown in environmental sustainability programmes with uncertainty around climate legislation. The share of organisations maintaining or advancing sustainability initiatives has fallen by 25 percentage points compared with the previous year. The study notes that all surveyed organisations had previously planned to maintain or advance initiatives in anticipation of the Climate Bill. With the legislation now in place, the authors expect a renewed focus on measurable climate impact in corporate AI strategies.

AI use and gaps

Australian organisations are increasing their use of predictive AI for sustainability monitoring and planning. The study says 53% use predictive tools to forecast resource use and emissions, and 52% use them to anticipate climate risks. Only 37% use AI centrally to inform environmental decision-making, which indicates that many projects remain at the pilot or reporting stage.

Consideration of AI's own environmental footprint has weakened. Only 20% of Australian businesses say they currently consider the environmental impact of AI, down from 35% a year earlier and below the global average of 43%. Regulatory and operational efforts are focusing more on safety, accountability and infrastructure efficiency than on emissions from AI systems.

Ricardo Davila, GM, Enterprise Partner Solutions at Microsoft, said the study highlights a shift in how organisations are applying AI to sustainability.

"The 2025 Global Sustainability Barometer Study shows that more than half of leading organisations now use predictive AI to anticipate and act on sustainability challenges - rather than just to track and analyse - making forward-looking intelligence central to sustainability strategy," said Ricardo Davila, GM, Enterprise Partner Solutions, Microsoft. "We're proud to partner across the ecosystem to help every organisation turn sustainability into a data-driven operating capability.

The survey suggests early stages for so-called agentic AI-systems that can act on insights with a degree of autonomy-in environmental programmes. Some 48% of Australian organisations have no plans to incorporate agentic AI into sustainability initiatives. Another 18% are only considering it and 13% are unsure of its relevance. About 21% are piloting or deploying such tools.

Sash Mukherjee, Vice President, Industry Insights at Ecosystm, said recent advances in AI give companies new ways to connect strategy with operational delivery.

"Organisations today have the opportunity to overcome long-standing challenges in bridging strategy and execution," said Mukherjee. "Predictive and Agentic AI create a closed-loop system where insight meets action. Predictive AI anticipates risks, while Agentic AI responds in real time, turning strategy into execution. When technology and business strategy align, organisations can truly embed measurable environmental outcomes into everyday operations."

ROI and data hurdles

The study points to financial outcomes from sustainability investments but also highlights data and measurement obstacles. It finds 53% of organisations report financial benefits from environmental initiatives, mainly through operational efficiency, customer retention and new markets. At the same time, 57% say unclear return on investment and difficulty in measuring impact are major barriers to further progress.

Only 33% of organisations use environmental data to guide decisions and optimise performance, despite this being an identified route to improve ROI visibility. Among organisations that accelerated sustainability efforts in the past year, 45% did so after establishing a stronger business case, clearer ROI or new revenue linked to environmental programmes.

Structural data issues are widespread. Some 58% of organisations struggle to collect environmental data from internal systems. Another 42% cite challenges integrating this data with business systems. Difficulties in accessing external data affect 37%, and 35% report missing or incomplete information. The study notes that these data gaps limit the reliability of AI insights and analytics.

Quick wins dominate

Large numbers of Australian organisations still concentrate on short-term or infrastructure-focused IT measures. The research finds 78% focus on energy-efficient hardware and systems. Some 63% emphasise server utilisation and consolidation and 60% concentrate on FinOps initiatives. More complex lifecycle measures feature less often. Only 33% pursue heat recovery or energy reuse. Just 28% focus on extending asset life and managing e-waste, and 22% prioritise sustainable IT procurement practices.

Investor pressure is emerging as a major influence on environmental strategies. The study finds 57% of organisations now view investors and shareholders as the strongest voice on sustainability issues. This share surpasses customers, employees and regulators.

The latest edition of the Global Sustainability Barometer draws on responses from 1,286 enterprise leaders across 20 countries and nine industries. The Australian findings indicate that local organisations are likely to reassess data systems, AI deployment and governance structures as they seek more consistent and measurable sustainability outcomes in the coming years.