Businesses could take advantage of the nascent artificial intelligence (“AI”) sector to improve their environmental, social and governance (“ESG”) reporting. Both ESG and AI are currently among the largest trends in the financial world, and some players in the sector are already considering the benefits of combining the two.
Artificial intelligence especially has drawn a lot of attention in recent months due to generative AI tools such as ChatGPT, which can generate incredibly impressive results from simple user prompts.
Although a lot of the focus on these tools has been around their potential impact on the creative industries, the financial sector also has significant demand for generative AI. Estimates from Statista show that generative artificial intelligence in the financial services sector will experience a compound annual growth rate (“CAGR”) of 28.1% to achieve a $9.4 billion valuation by the year 2032.
The sector could leverage generative AI to make internal ESG processes more efficient by using these tools to improve internal workflows and ensure they are in line with new environmental reporting requirements. With climate change becoming more critical, the public is more interested in corporate sustainability, and regulators are paying significantly more attention to ESG factors. This has put more pressure on businesses to meet increasingly stringent ESG reporting requirements such as the European Union’s Corporate Sustainability Reporting Directive (“CSRD”).
According to Position Green managing director Julia Staunig, generative AI tools can help users ensure all relevant data is gathered, provide a deeper understanding of that data, help identify trends in data from seemingly unreliable streams, and enable them to make actionable recommendations on how to cut emissions based on a company’s specific conditions.
Deepak Dastrala, CTO of Intellect AI, has stated that he is confident in the potential of using generative AI to enhance ESG processes. He has even outlined different ways AI could potentially enhance ESG. Dastrala explained that AI could aid in the navigation and consolidation of trusted environmental, social, and governance data from multitudes of sources.
Artificial intelligence could also help to mitigate fragmentation in the ESG data ecosystem and facilitate the construction of a complete and unified data set.
Another application of AI would see companies use the technology to create customized ESG insights. Deepak observed that corporations could use AI to generate differentiated insights or focus on topics that don’t typically receive a lot of coverage, such as biodiversity or oceans. Furthermore, generative AI could enhance corporate ESG by providing ESG metric simulations and estimates to help fill data gaps.
For companies that are among the preeminent entities embracing ESG, such as Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF), any novel technologies that can help the business streamline its ESG activities is a welcome addition to their toolkit.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
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