Fair Isaac Corporation (FICO): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear-eyed view of Fair Isaac Corporation (FICO)'s operating environment, and honestly, the 2025 picture is a high-stakes balancing act. The company is defintely pushing hard into its cloud-based FICO Platform, which is projected to bring in a significant chunk of revenue, specifically around $400 million this fiscal year out of a total projected revenue of nearly $1.75 billion. But, for every dollar of growth from that platform, there's a corresponding political and legal risk from the Consumer Financial Protection Bureau (CFPB) pushing for more transparency and alternative data. We need to look beyond the score to see how these intense political, economic, and technological forces are shaping FICO's next move and what that means for your investment or strategy.

Fair Isaac Corporation (FICO) - PESTLE Analysis: Political factors

The political landscape for Fair Isaac Corporation (FICO) in the 2025 fiscal year is defined by an aggressive regulatory push for fairness and competition, especially within the U.S. mortgage market, and a growing global fragmentation of data policy. This environment is forcing FICO to make strategic, market-altering moves like its new direct licensing program, but it also creates a massive opportunity in the emerging alternative data space.

Increased government pressure on credit reporting agencies for accuracy and fairness.

Government pressure on the credit ecosystem is at a multi-decade high, driven by concerns over consumer fairness and market competition. The Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, has been a key driver. FHFA Director Bill Pulte has publicly criticized FICO's pricing, labeling the company a monopoly amid soaring score fees.

This pressure culminated in two significant actions in 2025. First, the FHFA approved the use of FICO's competitor, VantageScore, in the mortgage market. Second, the FHFA is aligning the transition from the older Classic FICO model to the new FICO 10T model for loans sold to the government-sponsored enterprises (GSEs) in the fourth quarter of 2025. FICO's direct response to this regulatory siege was the launch of its Direct License Program for Mortgage Lending, effective October 1, 2025, which allows mortgage lenders to bypass the major credit bureaus for FICO Scores. This move is designed to lower costs and increase price transparency for lenders, directly addressing a core regulatory criticism.

Consumer Financial Protection Bureau (CFPB) scrutiny on credit scoring models, pushing for transparency.

The Consumer Financial Protection Bureau (CFPB) is actively shaping the credit scoring environment through targeted rules and supervision. The Bureau's 2025 supervision priorities place a high focus on mortgages and violations of the Fair Credit Reporting Act (FCRA) and Regulation V, specifically targeting data furnishing accuracy. The CFPB's final rule on January 7, 2025, removed the exception that previously allowed creditors to use medical debt information in credit eligibility decisions. This shift forces FICO to ensure its models and data feeds are compliant with the new, stricter definitions of permissible data. It's a clear signal: the focus is on eliminating potentially discriminatory or misleading data from the credit profile.

To be fair, the CFPB's scrutiny isn't just punitive; it's also driving innovation. The push for transparency and fairness is a tailwind for FICO's newer, more inclusive scoring models like FICO 10T and UltraFICO, which are designed to use more predictive and less traditional data. That's a defintely necessary evolution.

Potential for federal legislation to mandate use of alternative data in credit decisions.

The legislative momentum behind alternative data-information not traditionally found in a credit file, like rent, utility, and telecom payments-is strong. Congress is actively considering bills like the Credit Access and Inclusion Act, which aims to mandate the inclusion of this data by the major credit reporting agencies. This is a massive opportunity for FICO, as alternative data can make credit-invisible consumers-an estimated 80 million U.S. consumers lack reliable access to credit-scorable.

FICO is already moving to capitalize on this political shift. In November 2025, FICO announced an upgrade to its UltraFICO score, adding real-time cash-flow data through a partnership with the data aggregator Plaid. This is a direct, preemptive action to align with the political goal of financial inclusion. The political pressure is essentially validating FICO's strategic pivot toward a more comprehensive, platform-based decisioning system that moves beyond the traditional credit file.

• Monitor: Bills like H.R. 123, which would establish a pilot program for alternative data at the Federal Housing Administration.
• Action: FICO's partnership with Plaid to integrate real-time cash-flow data.

Global trade tensions affecting cross-border data flow and international licensing agreements.

FICO is a global company, and its international licensing agreements are increasingly complicated by geopolitical tensions and data localization policies. Governments worldwide are prioritizing data sovereignty, which means requiring data to be stored and processed within their national borders. This is a direct threat to FICO's cloud-based platform model, which relies on the seamless, cross-border flow of data.

The geopolitical risk is clear: the World Trade Organization (WTO) and OECD estimate that global GDP could fall by 5% if countries severely restricted data flows. Furthermore, the U.S. government is actively scrutinizing foreign digital policies that restrict data flows, with a report from the U.S. Trade Representative due in April 2025. For FICO's international software and decisioning platform business, this means:

• Increased cost to comply with diverse data localization obligations.
• Risk of sanctions-related compliance failures, especially given that global fines for sanctions breaches surged to $228.8 million in H1 2025.
• Need to adapt licensing agreements and platform architecture to meet varying national data protection standards, like the General Data Protection Regulation (GDPR) in Europe.

Here's the quick math: if a major market like the European Union or a key Asian nation implements a strict data localization law, FICO must invest heavily in in-country data centers and compliance teams, which directly impacts the margin on its software-as-a-service (SaaS) offerings in those regions.

Fair Isaac Corporation (FICO) - PESTLE Analysis: Economic factors

High interest rate environment dampening credit demand, slowing origination volume growth.

The persistent high-rate environment, driven by the Federal Reserve's efforts to curb inflation, creates a dual effect for Fair Isaac Corporation. On one hand, elevated rates typically cool consumer credit demand, which should slow origination volume-the number of new loans being issued. Yet, FICO's Scores segment has shown remarkable resilience, largely due to its pricing power and the essential nature of the FICO Score in lending. For instance, in the third quarter of fiscal year 2025, the Scores segment revenue was $324.3 million, an increase of 34% year-over-year, with B2B revenue up 42%. This growth is defintely a testament to price increases and the stickiness of the product, not just volume.

The pressure is real, though. The average FICO credit score in the U.S. fell to 715 in 2025, down two points from 2024, signaling consumer financial strain and leading to tighter underwriting standards by lenders. When lenders tighten standards, they rely even more heavily on the FICO Score for risk-based pricing, which supports FICO's revenue per score despite lower overall origination volume in certain non-mortgage verticals.

Mortgage market volatility directly impacting FICO Score usage and transaction revenue.

The mortgage market remains highly sensitive to interest rate fluctuations, directly impacting FICO's transaction-based Scores revenue. The good news is that 2025 is projected to be a rebound year for originations, albeit with significant volatility. The Mortgage Bankers Association (MBA) forecasts total mortgage origination volume for 2025 to be around $2.1 trillion, a notable increase from the $1.79 trillion expected in 2024. Fannie Mae is slightly more conservative, projecting single-family mortgage originations at $1.94 trillion for 2025.

The Scores segment's B2B revenue surge in Q3 2025, up 42%, was explicitly attributed to an increase in volume of mortgage originations and a higher unit price. The average 30-year fixed-rate mortgage is expected to hover between 6.3% and 6.5% in 2025. This rate level supports purchase activity, which is a more stable revenue stream for FICO than the volatile refinance market. The key risk here is the Federal Housing Finance Agency (FHFA) transition to new credit score models, which is expected to occur in the fourth quarter of 2025, potentially ending FICO's long-standing exclusive position in the GSE (Government-Sponsored Enterprise) mortgage market.

Strong U.S. labor market still supporting low default rates, stabilizing FICO's risk management product sales.

While the economy shows signs of slowing, the U.S. labor market remains a pillar of stability, which is crucial for FICO's core business of risk management. The Mortgage Bankers Association (MBA) projects the unemployment rate to rise moderately from 4.1% to 4.7% by the end of 2025. This is a cooling trend, but historically, a sub-5% unemployment rate is considered strong, keeping widespread default rates low.

This stability translates to consistent demand for FICO's Software segment products, which include fraud and compliance solutions, and its risk management scores. Though overall mortgage delinquencies remain below pre-pandemic levels, rising credit card utilization, which climbed to 35.5% in 2025, signals that lenders need sophisticated tools to manage risk at the margin. This shift in consumer behavior, coupled with a tight labor market, creates a perfect environment for FICO's predictive analytics software, helping financial institutions manage the subtle increase in risk without resorting to a complete lending freeze.

Financial institutions increasing spend on fraud and compliance analytics due to economic uncertainty.

Economic uncertainty, coupled with the rise of sophisticated, AI-powered criminal activity, is forcing financial institutions to significantly increase spending on RegTech (Regulatory Technology) solutions, directly benefiting FICO's Software segment. The global RegTech market is projected to exceed $22 billion by mid-2025, growing at a Compound Annual Growth Rate (CAGR) of 23.5%.

The sheer scale of the problem drives this spending: financial institutions already spend over $275 billion annually on compliance measures. Fraudulent activity in financial services increased by 21% between 2024 and 2025, with one in every 20 verification attempts now deemed fraudulent. FICO's Software segment, which includes its analytics and digital decisioning technology, is a direct beneficiary, though its Q3 2025 revenue growth was a more modest 3% year-over-year to $212.1 million. The long-term opportunity is massive, as U.S. financial institutions are forecasted to save $23.4 billion by adopting AI-powered financial crime compliance solutions, which is exactly where FICO's platform is positioned.

Fair Isaac Corporation (FICO) - PESTLE Analysis: Social factors

Growing demand for financial inclusion, pressuring FICO to expand its score's reach beyond traditional data.

The social imperative for financial inclusion is a major driver of innovation and risk for Fair Isaac Corporation. You have a significant portion of the US population-nearly 53 million consumers-with either scant credit bureau data or none at all, and roughly 25 million of those are considered credit invisible. That's a huge, untapped market that traditional FICO Score models simply can't assess, creating pressure from regulators, advocacy groups, and lenders themselves.

FICO is responding to this pressure directly through its Global Financial Inclusion Initiative, which has seen over 50% of the Scores segment's R&D investment since 2015 focused on this goal. This push has resulted in alternative data products like FICO® Score XD and UltraFICO® Score, which use non-traditional data-things like utility, phone, and trended cash flow data-to safely score more applicants. The potential global reach is massive, with FICO estimating that scores using alternative data sources could enable credit access for an estimated 1.3 billion consumers worldwide. That's a powerful social and business opportunity.

Here's the quick math on the US opportunity FICO is targeting:

Public sentiment shifting towards greater control over personal financial data and privacy.

Honest to goodness, the public is tired of their data being treated like a free-for-all, and that sentiment is now a critical risk factor for any analytics firm. The rise of Open Banking and the use of consumer-permissioned data (where the consumer explicitly grants access) is the new standard. For FICO, this means their new alternative scoring models must be built on trust and transparency.

For example, the upgraded UltraFICO Score, which uses real-time cash flow data from bank accounts, is fundamentally dependent on the consumer's explicit consent to share that sensitive information. Also, we see research showing that privacy concerns actively and negatively affect younger consumers' willingness to engage with digital financial platforms. This means FICO's success with its newer, more data-intensive scores is tied to its ability to manage privacy and security better than ever before. Any perceived data breach or misuse could defintely undermine the adoption of these new, inclusive products.

Younger generations (Gen Z) demanding more personalized and instant credit decisioning.

Gen Z (ages 18 to 29) is a unique challenge because they are highly engaged with their finances but are also facing structural barriers to building traditional credit. Their financial health has actually seen the steepest decline of any age group in 2025. FICO's own Credit Insights Report from April 2025 showed the national average FICO Score at 715, but the average score for Gen Z was only 676-a significant 39-point deficit.

This generation is demanding instant decisions and transparency, but their financial profile is volatile. In 2025, 14% of Gen Z saw their score drop by 50 points or more, the largest share since 2020. This volatility is driven by factors like student loan debt (held by 34% of Gen Z versus 17% of the total population) and a reliance on non-credit-building tools like Buy Now, Pay Later (BNPL) services. They are constantly monitoring their status, with nearly half (46%) checking their scores monthly. FICO must deliver scoring models that are instant, personalized, and can accurately assess risk using the non-traditional data this generation generates.

Increased focus on ESG (Environmental, Social, and Governance) metrics in lending portfolios.

The 'S' in ESG is becoming a major factor in lending, shifting from a corporate-level disclosure to a granular, loan-level decision. For FICO, this means incorporating social impact metrics into their risk models. The market is already moving: global ESG assets under management are projected to reach US$34 trillion by 2026, and the issuance of green, social, and sustainability-linked bonds is expected to surpass US$1 trillion in 2025.

What this means for FICO is that lenders are increasingly looking for tools to evaluate the social impact of their loan portfolios. FICO itself anticipates that ESG and climate risk evaluations will become an integral element of credit risk and affordability assessments. This trend requires FICO to evolve its software platform to ingest and analyze new, non-financial data sets to assess social risks and opportunities, such as:

• Integrating social impact scores for small business lending.
• Developing models that reward borrowers for positive social behaviors.
• Providing lenders with tools to comply with new regulations, like the EU's Corporate Sustainability Reporting Directive (CSRD), which requires disclosure of a company's impact on society, with reports due in 2025.

The core challenge is translating vague social goals into precise, predictive analytics that fit within FICO's updated fiscal 2025 GAAP net income guidance of $630 million. It's no longer just about default risk; it's about responsible lending risk.

Fair Isaac Corporation (FICO) - PESTLE Analysis: Technological factors

Rapid adoption of FICO Score 10 T, which uses 30 months of trended data, providing a more precise risk view

The core technological shift for Fair Isaac Corporation is the migration to FICO Score 10 T, which fundamentally changes how credit risk is assessed by incorporating 30 months of trended data. This means lenders see a borrower's history of balances and payment amounts over time, not just a snapshot. This is a game-changer for precision.

The early adoption results from the mortgage industry are defintely strong. As of early 2025, clients representing over \$264 billion in annualized mortgage originations and approximately \$1.43 trillion in eligible mortgage portfolio servicing have signed up for the new score. This adoption is driven by clear performance gains:

• 51% of mortgages scored higher with FICO Score 10 T compared to the Classic FICO Score.
• It can expand mortgage approval rates by up to 5% without increasing risk.
• Default risk and losses can be reduced by up to 17%.

What this estimate hides is the significant lift-and-shift effort required by lenders and the GSEs (Fannie Mae and Freddie Mac) to fully integrate the new model, but the predictive power makes the investment necessary.

FICO Platform revenue accelerating, projected to hit \$400 million in 2025, driven by cloud migration

The FICO Platform is the company's future, moving from selling individual software products to offering a cloud-native, end-to-end digital decisioning ecosystem. The goal is to make all FICO's analytics and AI tools accessible in one place, accelerating client cloud migration. Here's the quick math on its acceleration:

While the total Software segment revenue for Fiscal Year 2025 was well over this figure, the FICO Platform component is on a rapid growth trajectory, with internal or analyst projections targeting the platform's accelerating revenue to hit \$400 million in 2025. This is supported by the platform's Annual Recurring Revenue (ARR) growth, which was up 20% year-over-year in Q1 2025.

The platform's success is measured by its stickiness, shown by a Dollar-Based Net Retention Rate (NRR) of 112% in Q1 2025, meaning existing customers are spending more as they adopt new use cases on the platform. For context, the total Software segment revenue for Q4 2025 was \$204 million.

Competitors using advanced Machine Learning (ML) and Artificial Intelligence (AI) to challenge FICO's traditional model dominance

The biggest near-term risk is the rapid advancement of competitors using advanced Machine Learning (ML) and Artificial Intelligence (AI) to challenge FICO's traditional, rules-based model dominance. The global AI-driven scoring market is expected to surge from \$2.25 billion in 2025 to \$16 billion by 2034, so the opportunity is huge, but the competitive pressure is real.

Competitors like SAS, IBM, and Google (with Vertex AI) are all pushing advanced data science platforms that financial institutions can use to build their own proprietary credit and risk models. FICO is fighting back on two fronts:

• AI Innovation: FICO launched its FICO focused foundation model (FFM) for financial services, a generative AI model designed for domain-specific accuracy. This FFM has shown a 35% lift in world-class transaction analytic models, like fraud detection, while requiring up to 1,000x fewer resources than conventional Generative AI models.
• Data Expansion: The company is strategically partnering, such as with Plaid, to enhance the UltraFICO Score by incorporating real-time cash flow data, moving beyond traditional credit bureau files.

Need for continuous investment in cybersecurity to protect massive consumer data assets

FICO holds a massive, sensitive data asset, and protecting it is not just a cost center-it's a critical differentiator. The global security market is forecasted to rise 12.2% year-over-year in 2025, reflecting the escalating threat landscape, particularly from AI-driven cybercrime.

FICO's decisioning and fraud solutions already protect an estimated 4 billion payment cards globally. To maintain trust and compliance, the company is prioritizing security in its platform strategy.

Key actions taken in 2025 include:

• Platform Security Integration: The FICO Marketplace, launched in May 2025, integrates partners like SentiLink for synthetic fraud detection and Prove for identity authentication, embedding security into the decisioning workflow.
• AI Governance: FICO's blockchain-based AI governance system, which ensures every AI model's lifecycle is auditable and compliant, won a 2025 BIG Innovation Award.

This security-first approach is essential for maintaining the confidence of the 90% of top US lenders who rely on the FICO Score.

Fair Isaac Corporation (FICO) - PESTLE Analysis: Legal factors

Stricter enforcement of the Fair Credit Reporting Act (FCRA) regarding data accuracy and dispute resolution

The regulatory environment for consumer reporting is defintely tightening, putting pressure on Fair Isaac Corporation (FICO) and its data partners. The Fair Credit Reporting Act (FCRA) remains the core legal framework, but its enforcement by the Consumer Financial Protection Bureau (CFPB) is getting more aggressive in 2025, focusing heavily on data accuracy and the dispute resolution process.

You need to see this as a systemic risk. Over 80% of all complaints filed with the CFPB are related to credit reporting, which signals a massive operational challenge for the entire ecosystem FICO relies on. In a clear signal of this crackdown, the CFPB issued a consent order against a large consumer reporting agency in January 2025, including a $15 million Civil Penalty for failing to properly investigate consumer disputes. This action highlights the high cost of inadequate compliance systems.

Plus, state-level laws are adding complexity. For instance, California's SB 1061, effective July 1, 2025, prohibits consumer reporting agencies from including medical debt in credit reports, which forces FICO's data furnishers to adjust their reporting standards nationwide to avoid legal risk.

Global data privacy laws, like GDPR and CCPA, increasing compliance costs for data usage and storage

FICO operates in over 80 countries, so global data privacy laws translate directly into significant, ongoing compliance costs. The European Union's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) are the two biggest drivers here, mandating strict controls over how FICO's software and scores handle personal data.

The cost of non-compliance is staggering, and it's rising. The average GDPR fine in 2024 was approximately €2.8 million, and penalties can reach €20 million or 4% of a company's annual global turnover, whichever is higher. In the US, CCPA violations can cost up to $7,500 per incident with no cap on the total penalty. Here's the quick math on what this means for FICO's compliance budget:

This is not a one-time expense; it's an annual investment in legal counsel, policy updates, and IT infrastructure to manage data subject access requests (DSARs) and cross-border data transfers.

Ongoing litigation risk related to the perceived monopolistic nature of the credit scoring market

FICO's dominant market position, with its score used by 90% of top US lenders, is a double-edged sword that attracts significant antitrust scrutiny. The most immediate legal risk is the In re FICO Antitrust Litigation, a class action filed by direct purchasers alleging FICO violated Section 2 of the Sherman Act through anticompetitive and exclusionary agreements with the major US credit bureaus.

This litigation is amplified by regulatory actions. The Federal Housing Finance Agency (FHFA) approved the use of VantageScore 4.0 for mortgages sold to Fannie Mae and Freddie Mac, effective July 8, 2025, directly challenging FICO's near-monopoly in the mortgage sector. This regulatory shift is a clear attempt to foster competition.

The recent price hike for FICO's mortgage scores has further inflamed this issue. The wholesale royalty for a mortgage score is set to rise to $4.95 per score in 2025, a notable increase from the prior cost of $3.25, which prompted calls from lawmakers for the Department of Justice (DOJ) and the CFPB to investigate FICO's alleged anti-competitive behavior.

New state-level laws regulating the use of AI in lending decisions, creating a patchwork of compliance

FICO's business is built on predictive analytics and Artificial Intelligence (AI) in its Software and Scores segments, making it a primary target for new AI governance laws. The lack of a comprehensive federal AI law in the US has created a complex regulatory patchwork at the state level that FICO must navigate.

The main challenge is the requirement for algorithmic transparency and bias mitigation in lending decisions, which directly impacts FICO's core products. Key state and international developments include:

• Colorado's SB24-205 (the Colorado AI Act), taking effect in February 2026, requires companies to take reasonable care to protect consumers from algorithmic discrimination and conduct risk assessments for high-risk AI systems.
• California's SB 942 (the AI Transparency Act), effective January 1, 2026, requires AI developers to disclose details about the datasets used to train their models.
• The EU AI Act, which classifies credit scoring as a 'high-risk' AI application, mandates strong risk controls, explainability, and human oversight for any FICO products used by European clients.

The need to prove that AI models do not result in disparate impact under the Equal Credit Opportunity Act (ECOA) across all 50 states, each with its own emerging AI law, increases the complexity and cost of model validation and governance. You can't just roll out a new AI-driven score; you have to document its fairness and explainability in multiple jurisdictions.

Next Step: Risk Management: FICO's legal team needs to finalize the $4.95 per score antitrust defense brief by the end of the quarter.

Fair Isaac Corporation (FICO) - PESTLE Analysis: Environmental factors

Here's the quick math: If FICO Platform revenue hits its \$400 million target, it will represent nearly 23% of the total projected \$1.75 billion revenue, showing a clear shift from the legacy Scores segment. Finance: Draft a sensitivity analysis on the impact of a 10% drop in mortgage origination volume by Friday.

Indirect pressure from financial clients' commitment to Net-Zero, requiring FICO to report on its own carbon footprint

You operate in a value chain dominated by major financial institutions-banks, insurers, and asset managers-who are increasingly bound by Net-Zero commitments and new regulatory disclosure rules. Since financed emissions often account for over 90% of a financial institution's carbon footprint, your clients need to account for the emissions of their key vendors, like FICO. This creates a significant, indirect pressure for FICO to provide its own environmental data.

The current reality is that FICO does not publicly report its specific carbon emissions data, including Scope 1, Scope 2, or the critical Scope 3 (value chain) emissions. We also see no documented 2030 or 2050 Net-Zero targets aligned with frameworks like the Science Based Targets initiative (SBTi). This lack of transparency is a material risk, as it makes FICO a 'blind spot' in a client's own mandatory climate risk disclosures. It's a clear competitive disadvantage right now.

Increased demand for tools to assess climate-related financial risk in lending portfolios

Regulatory bodies like the European Banking Authority (EBA) are mandating the integration of environmental, social, and governance (ESG) risk drivers into loan origination and portfolio management. This is a massive opportunity for FICO, whose core business is risk analytics. The demand is for tools that can quantify both physical risks (like flood damage to mortgage collateral) and transition risks (like the impact of a carbon tax on a commercial borrower's profitability).

FICO is responding by integrating climate risk into its analytics solutions, which combine traditional logistic modeling with alternative machine learning approaches. The FICO Platform is positioned to help banks with:

• Orchestrating data collection, including customer climate commitments.
• Optimizing the ingestion of third-party climate risk scores.
• Enabling climate-related stress testing and strategic model adaptations.

This is a smart pivot, leveraging your existing strengths in credit risk. You're selling the engine for climate risk, not just the raw climate data itself. The 2025 FICO Decision Awards even recognized an 'ESG Champion,' E-agro, for using cloud-based decisioning to solve specific ESG challenges, showing real-world traction.

Focus on digital transformation reducing paper use, aligning with broader corporate sustainability goals

The shift to FICO Platform-a cloud-first, Software-as-a-Service (SaaS) model-is a major environmental positive, even without FICO publishing its own paper-saving data. Your core product helps clients eliminate paper-intensive processes like manual loan applications and collections letters. This is a powerful, embedded sustainability benefit.

Industry data for 2025 shows the scale of this impact. The adoption of automated digital workflows, which FICO Platform facilitates, can reduce paper printing in offices by up to 50%. Furthermore, paperless billing and online statements have already led to a reduction of approximately 15% in paper usage in the banking sector. By enabling financial institutions to move away from physical documentation and manual decisioning, FICO is defintely a key enabler of their clients' own waste reduction goals.

Need to address the energy consumption of cloud-based analytics platforms

The environmental benefit of reducing paper is offset by the growing energy footprint of cloud computing and Artificial Intelligence (AI) models. FICO Platform relies on hyperscale cloud providers like Amazon Web Services (AWS). Global data center electricity consumption is projected to be about 536 terawatt-hours (TWh) in 2025, and the power demand from AI workloads is a significant and escalating factor.

FICO's core products-data science platforms and credit reporting services-are already identified as having a negative contribution to the 'GHG Emissions' category. While FICO uses technology consolidation and virtualization to conserve energy internally, the company's growth is directly tied to the growth of its cloud-based analytics platform, which means its Scope 3 emissions via its cloud providers are a rapidly increasing liability. The focus must shift from simply using cloud to actively demanding and reporting on the energy efficiency and renewable energy mix of the specific cloud regions hosting FICO Platform. This is a financial risk that needs to be modeled into your cloud procurement strategy.