Data and generative AI in the world of ESG

Do you know what risks your company might face from the impact of climate change? How are the assessments made? How will you communicate the results to different stakeholders and formulate a plan to manage the risks?

Sounds like a tall order, doesn’t it? Yet, it’s increasingly something that corporations need to tackle, regardless of where they reside. The good news is, this is also an area where technology can act as a co-pilot to humans.

Potential of generative AI

As organizations continue exploring the potential of leveraging generative AI in the workplace, use cases such as data analytics, reporting and organizational learning are good places to start.

One of the biggest challenges facing companies is the massive volume of data involved in ESG reporting. Deciphering pages of text can be taxing and time consuming. Here, generative AI can be used to analyze data including corporate sustainability reports, press releases and news articles; to identify trends and patterns; and to generate insights that leadership can use to assess risks and act accordingly.

Additionally, generative AI can be used to create different reports for different audience and purposes. This enables organizations to more effectively communicate various topics of interest and details of their initiatives, as well as progress to different stakeholders. In fact, content creation is often one of the most cited use cases for generative AI.

From an internal knowledge management perspective, generative AI can also help make knowledge faster and easier to access. Instead of going manually through directories of information, employees can turn to AI-powered chatbots for questions and answers, or AI-powered search engines to retrieve relevant assets.

What’s next?

But this, of course, is just the beginning. One of the biggest advantages of not only generative AI but also AI in general is that it makes far better and faster use of data than other technologies or human beings. That gives it enormous potential for tackling the whole complex business of reporting on climate risk.

So, how do we make best use of AI tools to cut through the noise and create a better and more well-informed ecosystem? How can we safely use data to inform strategic choices and subsequent actions? What role can AI ultimately play in crafting ESG strategies?

And before we proceed further, it is also important to consider the potential risks and downside of using such powerful technology.

As with any tools, thorough testing and validation are critical to ensuring results are auditable and explainable. Think about the data sets used for training. Where does the data come from and how can we account for biases? Are we clearly communicating when we’re using AI to create content, such as sustainability reports? Are subject matter experts helping validate the output and what roles do humans play in generating the final product?

Plus, what about the environmental impact of the boom in AI, especially since much of the electricity is generated from non-renewable sources? To use the technology responsibly and in a sustainable manner, companies must design and develop their AI models carefully to reduce energy and clean water consumption.

Trust is another big challenge that we need to surmount. For total faith in the output of the technology, we must have proper guardrails in place. This is especially important in financial services and the highly regulated business of money movement, where?transparency is key to building and maintaining trust. ?

It is worth noting that we are still in the early days of ESG data. As the ecosystem matures, we should see more guidelines and regulations established, and the proper metrics can be set up to measure ESG in a thoughtful and impactful way.

But it makes me wonder out loud: If our world is a business, and if numbers tell a story, what would our ESG score be?

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For more insights on the future of ESG in financial services and how advancements in technology can help with disclosures, risks and analytics, watch a video of my recent conversation with FIS ’ Richard Peterson .

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This post was sponsored by FIS. But the opinions are my own and don’t necessarily represent FIS’ positions or strategies.