Episode No: 6: AI Impacts ESG
Host: Michael Baxter, Co-Founder and Editor-in-Chief at Techopian
Guests: Robert Bateman, Data Privacy and Protection Writer and Journalist
Sue Thomas OBE, AI & data governance & ethics specialist
Kerry Sheehan, Head of Service Development and Innovation; Business, AI and Communication
ESG, which stands for Environmental, Social, and Governance, is a framework that evaluates the sustainability and ethical impact of a company or organization. This concept is gaining momentum as businesses and investors recognize the need for responsible and sustainable practices that go beyond mere financial performance.
AI can help companies streamline ESG reporting by automating data collection and analysis, which can save time and provide insights that might be missed in manual reporting. AI can also help standardize and validate data across multiple sources, providing a more consistent and transparent view of ESG performance. However, there are risks in trusting AI-powered tools to complete these tasks with the necessary accuracy. For example, AI models can "hallucinate" inaccurate information, and automating too much ESG reporting could open a company to compliance risks.
AI can enhance risk assessment and management by analyzing complex datasets to identify potential threats and vulnerabilities. AI systems can also detect and prevent fraud by monitoring transactions and identifying suspicious activities in real-time.
AI can also help with:
Tracking sustainability activities: AI can help manage the influx of data and provide valuable insights.
Reducing consumption of natural resources and energy demands: AI can assist in this area using neural networks, pattern recognition, and fuzzy logic models. For example, one model uses AI techniques to predict energy efficiency and conservation with an energy efficiency rate of around 97.32%.
Decision-making: Computer vision techniques can aid decision-making in traffic management, public transportation, and urban mobility
ESG Factors
Environmental factors focus on how a company interacts with the natural environment. This includes considerations such as carbon emissions, resource use, waste management, and biodiversity conservation. By integrating environmental considerations into their strategies, companies can reduce their ecological footprint, leading to more sustainable business models and contributing to global efforts to combat climate change rs
Social factors pertain to the relationships and impacts that businesses have on their stakeholders, including employees, customers, suppliers, and the communities in which they operate. This includes labor practices, community engagement, diversity and inclusion, and human rights. Prioritizing social factors helps businesses create positive social impacts, enhance employee satisfaction, and build a loyal customer base .
Governance factors involve the internal systems and controls that govern a company’s decision-making processes, including board diversity, executive compensation, ethics, and transparency. Strong governance practices ensure accountability and mitigate risks, fostering trust and long-term value creation for shareholders .
Keep in mind ESG is still in the “works in a vacuum” and should be discussed, vetted and challenged until more concrete rules and regulations are finalized.
ESG is a very big area and is not without its critics. With greenwashing, capitalism and the argument of transparency and authenticity gaining traction it is imperative right now to break down these barriers and correct misinformation about ESG.
The ESG show aims to promote greater understanding of ESG issues and is the home of interesting and thought provoking discussions on ESG.
Powered by Techopian Limited and hosted by Co-Founder and public speaker, Michael Baxter to fly the ESG flag and speak openly about the positives and drawbacks around ESG and the use of technology in ESG strategy.
An ESG is not just a nice-to-have, it is absolutely essential to businesses now to sustain business longevity, attract sustainable funding and reduce the impacts of climate change.
Join The ESG Show every Wednesday for free to meet with various sustainability and diversity specialists and investors and Michael to discuss topical subjects which relate to ESG and debate the responsible use of technology in implementing ESG strategies.
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