Today, finance leaders are increasingly facing challenges in managing ESG data. However, the recent surge of artificial intelligence has raised awareness of how important AI for ESG can be.
That’s why the latest EY Global Corporate Reporting Survey has shown that financial chiefs are deeply concerned about the integrity and reliability of data in corporate reporting. This ESG survey also shows how these financial chiefs are emphasizing the pressing need for advanced solutions such as AI for ESG.
Unreliability of ESG data
96% of global CFOs are concerned about the integrity of their organizations’ nonfinancial data – nearly 39% mentioned data format inconsistencies, while 35% are worried about data being unreliable.
The issue of a few missing rows in every document is not trivial. That’s why, half of the finance leaders acknowledged that inaccurate or poorly managed data can lead to missed sustainability goals. Therefore, an ESG tool can be used to streamline the ESG reporting process.
ESG survey shows that only 47% of finance chiefs and 53% of investors believe that most companies are on track to achieve their goals. 69% of finance leaders report a noticeable increase in investor inquiries about nonfinancial performance.
EY Global and Americas Strategy and Markets Leader (Financial Accounting Advisory Services), Myles Corson said: “The task of guiding an organization through short-term volatility while keeping a firm hand on long-term growth relies in no small part on the finance function’s effective use of data to paint a clear picture of future plans and prospects. But it’s clear there are major worries among CFOs and the investor community around data transparency and nonfinancial information, which they cannot afford to ignore.”
AI: A game changer for ESG data integrity and reporting standards
As ESG regulations tighten, 78% of investors are starting to believe that the new standard will positively impact sustainability disclosures. However, 55% are concerned about the cost of compliance, while 44% are worried about the complexity of these regulations.
That’s where AI in finance comes into play. It can be used to handle huge datasets more efficiently, automate compliance processes, and ultimately reduce operational costs. This EY ESG survey also showed that more than half of investors (57%) see AI as an instrument for ensuring the accuracy of data.
Related Articles: Investor Trust in Sustainability Data’: Key Takeaways From Global Study | Governments’ Role in Regulating and Using AI for the SDGs
Overcoming challenges in AI adoption for ESG reporting
No doubt, the potential of AI is here, but not all companies are ready to jump in yet. According to the EY survey, for example, 43% of finance leaders are excited about integrating AI into their processes, while 29% remain cautious due to uncertainties around regulations.
Nonetheless, businesses that embrace AI for ESG can get significant rewards, especially in data analytics and reporting. For companies looking to enhance their ESG reporting capabilities, Klimado ESG tool is an AI-powered solution that simplifies the complexities of ESG reporting.
***
This article is referenced from Global Finance Leaders Turn to AI to Solve ESG Data Problems: EY Survey by ESG News
Editor’s Note: The opinions expressed here by the authors are their own, not those of impakter.com — Cover Photo Credit: Adeolu Eletu
