ESG Ratings: Aion Tech's Innovative Approach Combining Human Intervention and AI/ML Tools

ESG and SDGs are both important concepts in the realm of sustainability and responsible business practices, and they can complement each other in helping companies to achieve their sustainability goals.

What is SDG?

Sustainable Development Goals (SDG), which are a set of 17 global goals adopted by the United Nations in 2015 as part of the 2030 Agenda for Sustainable Development. They cover a wide range of topics, including poverty, hunger, health, education, gender equality, clean water and sanitation, affordable and clean energy, sustainable cities and communities, responsible consumption and production, climate action, and more.

Companies can benefit from SDGs in several ways:

1. Reputation and brand image: By aligning their business practices with the SDGs, companies can improve their reputation and brand image. Customers are increasingly looking for sustainable and socially responsible products and services, and by demonstrating a commitment to the SDGs, companies can attract and retain more customers.
2. Access to capital: Investors are increasingly interested in companies that are committed to sustainability and the SDGs. By aligning their business practices with the SDGs, companies can access capital from investors who prioritize sustainability.
3. Innovation and cost savings: Sustainable business practices can drive innovation and cost savings. For example, by reducing waste and using resources more efficiently, companies can reduce their costs and improve their bottom line.
4. Access to new markets: The SDGs are a global agenda, and companies that align their business practices with the goals can access new markets and customers around the world.
5. Regulatory compliance: The SDGs are being integrated into national and international regulations, and companies that align their business practices with the goals can ensure compliance with these regulations.

What is ESG?

ESG stands for Environmental, Social, and Governance. It refers to the three key areas that investors and other stakeholders consider when evaluating the sustainability and ethical impact of a company.

• The "E" in ESG refers to a company's environmental impact, including its carbon emissions, waste management, energy efficiency, and other related factors.
• The "S" refers to the company's social impact, including its labor practices, human rights policies, community engagement, and other related factors.
• The "G" refers to a company's governance, including its leadership, executive compensation, shareholder rights, and other related factors.

ESG and SDGs are related in that they are both focused on sustainability and responsible business practices. While ESG focuses specifically on the environmental, social, and governance impact of a company, the SDGs provide a broader framework for sustainable development, covering a wide range of topics beyond just business practices.

Many companies use the SDGs as a guide for their sustainability initiatives, and ESG factors are often considered in the context of the SDGs. For example, a company might focus on reducing its carbon emissions (an ESG factor) in order to contribute to SDG 13, which is focused on taking urgent action to combat climate change and its impacts. Similarly, a company might prioritize fair labor practices (an ESG factor) in order to contribute to SDG 8, which is focused on promoting sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.

Regulation: ESG regulation is evolving fast and the challenge of competing regulations, jurisdictions, interoperability, alignment and more makes the adoption very hard when it comes to assimilating policies and regulations across the global or local markets. While businesses are struggling to meaningfully integrate ESG, there is already pressure to report on different controlling bodies.

Data assurance: That’s a critical topic for addressing. The breadth, availability, and veracity of underlying ESG data is key to overcoming the issue of greenwashing, and the subsequent risk to the investors. We should be monitoring and properly validating ESG data, working with its subjectivity rather than overlooking its subjective nature but, in order to deliver meaningful results, in relation to ESG.

Expertise and capability: Currently there is a huge talent gap in the ESG market gap, which is getting worse as existing once are split between various stakeholders from business and consulting firms to ESG rating companies and institutions. The talent gap ultimately affects the application of ESG, and the quality of the underlying data being collated and provided to or by businesses. Talent supply will only grow as academic institutions start to scale up their offerings in this space.?

ESG integration: with the required talents and tools, integrations continuous continue to be predominantly superficial across a great number of businesses. This is not helpful in any way, as it only adds to the doubts surrounding ESG’s usefulness. Businesses, more than anyone else, need to recognize the usefulness of ESG adoption if it is to become truly material in the manner it ought to be.

The key for proper implementation is a selective integration of AI technology into current ESG processes and methodologies. We have managed to develop and deliver for our customers an AI and ML enhanced ESG rating outputs.

Aion Tech have utilized a calibrated approach involving mix of human intervention and capability, backed by #ai and #ml tools and models which are providing rating focused on the business requirements. That way we enabled the quality assured scalability which is a must for ESG integration. We have utilized AI and ML for rapid data aggregation, data quality assurance, analytics and smart reporting to achieve effectiveness and efficiency. Leveraging AI and ML, we managed to drive deep and meaningful business integration and provide analytics based on the bottom-up designed models to deliver results. We have visualized all of the meaningful data in a dashboard where the information can be reachable real-time and comparable between different companies in scope (rating could be made for 1 or many companies or portfolios simultaneously). Reporting is based on questionnaire which is collecting data against the regulations and summarizing the results.?

4 recent innovations in advanced manufacturing that support ESG reporting

Industry 4.0 and company cultures roles in advancing sustainability

With Industry 4.0 businesses are enabled to reach their short and long-term goals faster and more effectively when sustainability is integrated into their systems. For example, Chinese-based company Flex developed a system that can detect abnormal usage trends for energy, water, and other resources in 2019.?The system implements automation, analytics and IoT technologies to send SMS alerts to engineers when or deploy self-correcting optimization processes to resolve the issue. The system has helped reduce energy consumption by between 20-90% within various ecosystems. The system also helped lower Flex's Chinese office overall electricity and water consumption by 29% and 31% last year.

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The use of digital tools to help improving the well-being of people and the planet

Wearable devices and software can be implemented to help improve the wellbeing of people and the planet. The technologies, for example, can be used to train workers faster and more efficiently. According to Magic Leap CEO Peggy Johnson, the use of such techs eliminates travel by 50%, which leads to a 50% decrease in carbon footprint while also increasing the efficiency of production rates by 220%, with the reduction in ramp-up time leading to 33% time savings for assembly operators.

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How Edge AI sensing quality control can help reduce waste

AI-driven sensing solutions at the edge can help reduce energy consumption and improve operational efficiency using cloud-based alternatives. Companies can gain insights into asset performance while also removing energy-intensive processes by implementing edge-based solutions for tasks like condition-based monitoring, which leads to a 98% reduction in the energy consumed by monitoring activities as they are analyzed in the cloud instead.

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Energy data-driven decision making in achieving sustainability

Intelligent devices and energy management software that enables real-time energy management can help manufacturers achieve net-zero Scope 1 and 2 commitments by helping reduce their environmental footprints. Schneider Electric Lexington Smart Factory in Kentucky, US, for example, integrates IoT connectivity to their power meters. They have also been enabled to optimize their energy costs by implementing predictive analytics. So far, they have successfully recorded a 26% energy reduction (GWh), 30% net CO2 reduction, 20% water use reduction, and a Superior Energy Performance 50001TM certification by the US Department of Energy.