When green isn't enough: How AI and compliance reframe energy efficiency for sustainable investment

Abstract

As technological advancements, artificial intelligence (AI), and climate change become increasingly intertwined, energy efficiency has emerged as a crucial issue for organizations and public authorities. This research examines how firms can align financial and environmental goals to attract diverse investor groups, focusing on AI-driven energy efficiency strategies. To do so, we use the Economies of Worth framework and explore how investors respond to energy strategies framed by financial or environmental motivations (i.e., market or green worlds), depending on the type of AI adopted and the nature of compliance. Across four experimental studies with 1,500 investors, we find that environmental motivations can reduce investor willingness to invest, mediated by perceived energy efficiency. However, AI implementation and certification mechanisms act as critical boundary conditions that can legitimize environmental strategies and enable compromise between market and green logics. Specifically, coupling environmental motivations with AI for energy efficiency and third-party certification leads to higher investor willingness to invest. This study contributes to sustainable investment research by highlighting the critical role of AI and compliance in building hybrid justifications that can facilitate alignment between environmental and financial priorities in investor decision-making.