Here's how businesses are using AI to boost their ESG results

Environmental, social, and governance (ESG) is a framework used to assess a company's business practices and performance on various sustainability and ethical issues.

Today, many companies feel the pressure to respond to the growing public interest in ESG, viewing it as a set of regulatory pressures.

As companies find ways to cope with daily challenges, ESG frameworks create a strong overview that resists investors' demands and cultural shifts

Research from Kyndryl on consumer interest in sustainability shows the number of customers making socially-conscious purchases have increased. Today, more than 75 per cent of young shoppers consider ESG issues when buying products. Companies that lack clearly defined commitments, risk losing profit.

To optimise ESG outcomes, businesses are now turning to artificial intelligence. From current trends like ChatGPT, the Metaverse, and Web3, AI technology is reaching every aspect of the business industry.

More recently, AI trends have attempted at transforming the fashion industry. A recent Levi's campaign has introduced an AI-generated model in an effort to improve the brand's diversity.

While some took this news well, others have shown dissatisfaction. Photographer David Urbanke took to Twitter to tweet: "This has nothing to do with diversity and everything to do with companies wanting to cut costs."

Echoing the same sentiment, Amanda Y. Fung tweeted: "Your diversity doesn't count if you're not diversifying who's on the payroll,"

Another Twitter user claimed: "Levi's mocks the very notion of diversity."

Last week, Levi released a statement assuring critics they intend to commit to working with real live, diverse models and continue live shoots.

Despite this, the overall message from critics is that Levi's AI-generated models were a lazy way to address diversity issues and that many working in the industry would miss out on opportunities to be hired.

But despite the criticism they faced, businesses can still utilise technology to better their results. There are several ways they can make this improvement, like through data collection using AI and satellite, measuring environmental impact and keeping long-term goals.

Data is the building block of any company and its vital for making accurate decisions. US-based company AiDash is one of the companies that use satellite monitoring to provide actionable data, using AI to analyse satellite imagery and detect in-depth trends. Modern satellites now produce beneficial data that help to evaluate what happens on the ground. Satellite data can therefore analyse and discover key ESG risks and opportunities.

The World Economics Forum stated that tracking Scope 3 emissions requires greater data collection and processing, something most companies would struggle with. But with trained reporting systems that run AI, the problem can be solved. WEF points to a BCG study showing that companies using this technology are twice as likely to reach their emission reduction targets.

ESG is all about ensuring consistency. Ultimately, AI technology ensures information collected is accurate, and enhances the effectiveness of companies' ESG efforts.

But without committing to a standard, and maintaining long-term effective plans this won't work. While companies are not held to a global standard to disclose ESG reports, many are advancing to help set their long-term ESG goals and tracking, aiming for more ambitious standards.