Today, organisations face an enormous compliance challenge in understanding and demonstrating their Environmental, Social and Governance (ESG) credentials
The foundations of ESG reporting are built on data, yet simply learning the ‘lay of the land’ is no longer enough – organisations must be able to identify and assemble enterprise data across their entire supply chain, in all operations and jurisdictions.
Compounding the issue are complex corporate structures. Legally relevant data is often siloed; whether that be across various cloud storage environments, different computers due to Bring Your Own Device and remote working, or even in the minds of employees following personnel changes. The scale of this challenge is obvious, but with next-generation technology like AI at organisations’ disposal, difficulty is no longer an excuse.
Walking the Talk
With ESG set to remain a major compliance responsibility in the coming years, organisations must turn to AI technology as a solution. Not only can AI facilitate the smoother implementation of an organisation’s ESG policies, but it can also help to ensure they uphold their commitments and policies in dealings with customers and suppliers. Importantly, AI will also help organisations to maintain their ESG program as operations scale and data proliferates in the wake of increased headcount and expanded operations across different territories.
Take climate risk, for instance. Advanced technology can comprehensively track critical indicators such as raw material sourcing, carbon emissions and electronic waste. The latest advances in AI mean that you can track exposure across your existing contracts and, for the first time, all incoming contracts too. Given that accusations of greenwashing lie in wait for those who fake or exaggerate their eco-credentials, organisations cannot afford to get this wrong.
Three Major Benefits of AI for Meeting ESG Targets
So, what does this mean in practice? Let’s imagine a global energy company based in the UK needs to review and understand its contractual landscape, so it can assess its ESG position and exposure to any changes in legislation. Historically, manual contract review was the only way to do this, causing a significant drain on resource. But using AI, this company could gain three major benefits and improve its overall ESG approach.
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