How AI Could Be The Key To ESG Working

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by Eric Burdon
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Due to the rise of ChatGPT, Midjourney, and other artificial intelligence (AI) tools, the companies and the tools themselves have received plenty of attention and criticism. Setting aside possible job loss (or transformation), as well as the legality of it all, no one can deny that AI has been very helpful, and the growth it is experiencing now could be significant in various areas.

Before ChatGPT, AI had been helpful in various tools we use every day, like cruise control, predictive text, and to show recommendations on TV. There are even medical facilities that use AI to great effect. But where AI can be truly helpful when it comes to ESG is ultimately in improving the performance of global sustainability.

It’s fair to be skeptical and concerned about AI. After all, you have CEOs halting hiring based on this technology alone. Beyond that, AI has other serious problems to deal with, like the legal ramifications. Not to mention the fact that bias will still be present since AI is still made by humans. This will influence how an AI will think, learn, and act.

But there is still hope beyond that, and there are some practical uses. Beyond showing recommendations and predictive texts, AI in ESG could be invaluable for one big problem it has.

AI can be key to dealing with the overwhelming amount of data that teams of people are currently sifting through when gauging a company's performance.

Featured Article: Top 10 ESG Software Platforms To Track Your Company Metrics

Scope 3 Emissions Are A Problem

The benefit of AI is that this technology can simplify specific tasks that would take humans hours or days to do and do them in a few minutes. It’s a highly efficient tool, but it’s not able to extend its usefulness beyond that specific task. While we're on this topic, here's a comprehensive guide to help you understand what ChatGPT can mean for your business.

The nature of AI in this case can be especially helpful in ESG because of the current issue many businesses have with measuring environmental performance. With governments making ESG reporting mandatory, large and public businesses from around the world need to provide standard reporting and measurements of emissions. Specifically ones that are divided into three categories.

Out of the three, the trickiest one is Scope 3 emissions—emissions coming from their supply and value chains directly. To do this, companies need to chase suppliers for that data, and even then, it’s hard to say whether they’ll get it or not.

This is a problem that the World Economic Forum predicted and has been saying since the start of this year that AI could truly help. Their argument for AI in this problem is simple. They point to a BCG study that concluded that when companies use AI, they’re twice as likely to measure emissions effectively and reach emission reduction targets.

What this would ultimately do is change the jobs of data analysts and company researchers. Instead of manually gathering that data and putting it into digestible information, this group would spend more time talking with the AI to ensure they’re getting the best quality data.

AI Could Also Help With The Social Front Too

Similar to automation, the mass adoption of that technology effectively changed how we do work. The problem was more in the fact that companies used this as a reason to lay off more workers and switch to new technology. Even though we’re going through a similar wave with AI once again, it doesn’t mean all AI is bad.

There is always going to be a risk that AI will only amplify humans’ biases. But when it’s used properly and effectively, AI could also help a company considerably in social aspects for a few key reasons.

The first is its ability to identify ideal candidates for particular positions and, by extension, identify current employees that are at risk of being disengaged from their work. This feedback would be able to assist managers in working with AI and identifying issues before they become considerable problems.

The second part is that, through AI, it can point out a lot of bias that is commonly seen in the workplace. The biggest is favouritism, where managers naturally gravitate toward certain personality types and ultimately assign them more tasks. AI can highlight these instances by simply comparing employees with the same number of years under their belt and looking at their goals or assignments.

And Governance Too… In Real-Time

The least-regarded aspect, but something more investors are adopting, is looking at a company's governance structures. While for a lot of us it is hard to track, AI can help immensely in keeping everything in order.

What this can amount to is an AI system that can track how regulations differ for different companies across the globe and even in specific states or provinces. Naturally, this would be ideal for companies that operate on a global scale.

It ultimately forms a highly sophisticated risk modelling system that allows for easier decision-making for corporate boards. They’ll be given accurate information that can then be used to evaluate trends and possible risks.

Narrow Focus, But A Big Help

In the end, AI is designed to have a narrow focus. Even with it being an ever-expanding tool these days, its functionality is still limited. What this means is that for specific tasks, especially ones where it takes humans a long time to perform them, it can be incredibly useful.

Setting aside the hype, it’s clear that AI could provide some incredible insight and information that could make ESG much easier to work with as companies adopt it.

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