What is the SEC and How is it Related to the Environment?
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How does the SEC, otherwise known as the U.S. Securities and Exchange Commission, help the United States regulate environmental policies?
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Greenly solutions
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How AI Helps ESG Managers
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As Artificial Intelligence, or AI, continues to evolve and take over the world – many people across various fields, from marketing to even doctors looking to avoid writing monotonous emails to patients, are looking to use AI: but should ESG managers do the same?
ESG managers are professionals who are responsible for monitoring and managing the ESG factors in a business, and as these tasks can easily become numerous and complex – AI may be able to help reduce the stress that ESG managers often take on.
In this article, we’ll review what an ESG manager is, how AI could help them, and other ways to use AI to boost sustainability and productivity.
What is an ESG Manager?
ESG managers refer to the people in a company who are responsible for overseeing all Environmental, Social, and Governance (ESG) factors across business activities.
This can include but is not limited to:
- Organizational & machinery operations
- Investment strategies such as with sustainable finance
- Various business practices
💡 ESG managers are imperative seeing as they work to ensure that companies develop a portfolio aligned with ESG principles to adhere to future environmental regulations, suppliers, stakeholders, and more.
“ “When managers use ESG frameworks to inform choices, risk is inherently minimized.” – Hendrith Vanlon Smith Junor. ”
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Overview of ESG Manager Position
ESG managers utilize various sustainable practices and investment strategies to greater transparency, ethical responsibility, and long-term business growth.
Here’s a breakdown of some of the roles and responsibilities of ESG managers:
- Investment Analysis & Decision-Making – ESG managers will evaluate other companies and potential business partners on their individual ESG performance. This can include using ESG metrics to analyze and deduce from various data or deciding how to communicate with investors, customers, and stakeholders.
- Boost Strategy Development – ESG managers will work to develop and implement ESG policies within a company, such as by creating carbon emission reduction goals, DEI policies for the office, or partnering with other organizations or internal departments to boost ESG into business operations.
- Risk Management – Various ESG-related risks such as the effects of a natural disaster, social injustices, or regulatory changes are all the responsibility of your company’s ESG management. This can include working to develop new strategies to mitigate these risks in addition to staying up-to-date on the current news.
- Compliance & Reporting – Perhaps one of the most important roles for ESG managers, it is crucial to adhere to the various ESG-related regulations such as UN Sustainable Development Goals (SDGs) or the Task Force on Climate-related Financial Disclosures (TCFD). ESG managers will often be tasked with drafting reports to further communicate their ESG progress and performance.
👉 Overall, ESG managers are important because they help to ensure that a company’s business operations remain as sustainable and efficient as possible – while also helping to mitigate the consequences of lack of compliance or failing to recognize ESG-related risks.
How can AI prove useful for ESG managers?
There are several ways in which AI can help ESG managers, such as by helping to automate time-consuming tasks and process large volumes of data – leaving more time for ESG managers to apply a human touch to another task.
💡As ESG managers are often tasked with mundane and numerical based tasks, AI could help ESG managers by freeing up more time for them to cultivate more meaningful communication that AI simply cannot accomplish in the same capacity as a human can – such as by writing reports and improving communication between stakeholders.
“ While it’s important for ESG managers to not become too dependent on AI in the same way that writers, journalists, engineer students and more shouldn’t – there are ways that Artificial Intelligence can help accommodate the daily responsibilities of ESG managers. ”
How AI Can Help ESG Managers
Artificial intelligence offers various applications that can help reduce the workload ESG managers are faced with – such as by helping to collect data, provide analysis, and perform simpler tasks to allow ESG managers to spend more time on heavy-duty responsibilities.
Here are some ways that AI could prove useful for ESG managers:
Improved Data Collection Accuracy & Quality
Collecting and analyzing various data is a pivotal role for any ESG manager looking to be effective in boosting ESG tactics within an organization’s operations – meaning that it is essential for data to be accurate and detailed for effective ESG management.
👉 At the end of the day, ESG managers are only people – leaving ample room for potential human error and possibly incorrect data analysis. However, AI could help to reduce the stress of processing large volumes of data from multiple sources – and help ESG managers to more easily pinpoint discrepancies in the data that could go unnoticed without the help of AI.
Therefore, AI could prove extremely useful in helping to ensure that all the data being used for a potential reporting requirement or meeting with stakeholders is 100% accurate.
Projected Analytics
Just as writers will sometimes get stuck in the brainstorming phase of writing and could potentially utilize the help of AI to job the creative side of their mind, ESG managers may find AI useful to ask its opinion on data analytics.
Artificial Intelligence is able to forecast future trends, potential ESG risks, and provide its own analysis – all of which ESG managers can use to bounce off of their own ideas without needing to start from scratch.
💡 In this sense, AI can be viewed as a secretary to an ESG manager – helping to collect all of the facts and provide an overview in order to help the ESG manager make a more informed decision.
Real-Time Data & Insight to Patterns
ESG managers are tasked with several duties, meaning there isn’t enough time in the day for them to constantly keep an eye on the data they are collecting – but AI can.
As AI is able to collect and analyze data in real-time, it could help to provide ESG managers with advantageous information to help identify and solve problems which could be hindering the company’s sustainability goals or efficiency in business operations.
For instance, AI could help to detect possible machinery that is contributing to excess carbon emissions – something that may have gone entirely unnoticed if AI hadn’t been used by the company’s ESG manager.
“ In this sense, think of AI like the blinking lights on your car that may pop in your car to alert you when your tire pressure is low or the oil needs to be changed – most car owners cannot think to check all of these things by themselves, but the blinking lights in the car help remind them to take care of their vehicle. The same goes for AI and how it can enlighten ESG managers to monitor other components of their business operation they may have previously missed. ”
👉 Ultimately, Artificial Intelligence (AI) can prove itself as an indispensable tool to help ESG managers by providing advanced analytics and automation to assist with more additional, complex duties such as decision-making for the company’s finances or business operations.
What are the downsides of ESG managers using AI?
There could be potential downsides to the use of AI in ESG management, since ESG managers could become overly reliant on data analysis drafted by AI and neglect overviewing the output of information.
💡 It is important to remember that in the same vein of using spellcheck to proofread a paper, human oversight is still essential – especially in something as subject to change as sustainability tactics under ESG management.
Here are the potential downsides to the use of AI in ESG management:
- Reliance on Data – Even AI could potentially miscalculate something, meaning although it can help save time on crunching the numbers yourself – it is still essential to review all data yourself before submitting or sharing this information with others.
- Potential Bias & Lack of Variety – AI systems are only as reliable as the data they analyze, meaning – not all subjects may be available for review or data collection under Artificial Intelligence. This is why ESG managers are still required to ensure a complete data analysis without flawed conclusions.
- Privacy Concerns – Using AI to monitor environmental or social activities could possibly violate privacy rights, especially in community or employee assessments.
👉 In the end, while AI can help to complete long-term tasks, ESG managers shouldn’t undermine the value of involving human judgement – as heavily using AI could result in oversimplified solutions that require the nuanced-thinking of a human being.
How else could your ESG manager use AI to boost productivity and sustainability?
Despite the potential over-dependence that could be created from the use of AI in ESG management, it’s a worthwhile tool for ESG managers to have a “sparring partner” when deciding on the best way forward for sustainability for business operations.
Here are some more ways that ESG managers could utilize AI to help boost productivity and sustainability:
- Advanced Data Analytics & Scenario Planning – AI can simulate multiple scenarios under various sustainability initiatives, which can help ESG managers decide which protocol may prove most effective. Furthermore, AI can be used to predict future ESG risks and help ESG managers anticipate the consequences of regulatory changes or supplier shortages.
- Supply Chain Risk Monitoring – AI can identify supply chains which are at further risk of experience a resource shortage, such as by detecting potential unethical labor practices or overreliance on finite resources. After all, supply chain management is essential to get to the bottom of your company’s scope emissions – meaning AI can help ESG managers tackle this complex task.
- Optimize Resource Efficiency – In the same way that many people use mobile apps to track their spending and finances, AI can be used to help ensure energy efficiency and efforts to employ water usage are well integrated. For example, AI could detect leaks or other equipment failures – something an ESG manager may not have time to check manually.
The table below will further depict the pros of ESG manager using AI:
| Category | AI Application | Description |
|---|---|---|
| Biodiversity and Ecosystem Protection | Deforestation Monitoring | Uses satellite imagery to track deforestation and assess environmental impacts. |
| Biodiversity and Ecosystem Protection | Wildlife Conservation | Monitors species populations and predicts risks to biodiversity. |
| Biodiversity and Ecosystem Protection | Sustainable Land Use | Analyzes land use patterns to minimize environmental impact and promote sustainable practices. |
| Supporting Innovation and Creativity | Idea Generation | Analyzes global ESG trends to inspire innovative sustainability strategies. |
| Supporting Innovation and Creativity | Crowdsourcing Solutions | Facilitates collaboration and collects ideas from stakeholders to improve ESG performance. |
| Supporting Innovation and Creativity | AI-Assisted Decision-Making | Provides data-driven recommendations to empower ESG managers for impactful decisions. |
| Scaling ESG Programs | Global Integration | Manages ESG initiatives across locations, standardizing practices and scaling efforts. |
| Scaling ESG Programs | Localization | Tailors ESG programs to specific regional or cultural contexts for better adoption. |
| Scaling ESG Programs | Sustainability Certification | Streamlines the process of obtaining and maintaining certifications such as LEED or ISO 14001. |
Overall, ESG managers could recruit the help of AI to help them unlock new levels of sustainability – and maybe even find themselves making improved progress in reaching their company’s emissions reduction targets, boosting stakeholder engagement, and fostering new collaborations to promote the importance of sustainability in business.
What About Greenly?
If reading this article on how AI helps ESG managers has inspired you to consider your company’s own carbon footprint, Greenly can help.
At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. We offer a free demo for you to better understand our platform and all that it has to offer – including assistance with boosting supplier engagement, personalized assistance, and new ways to involve your employees.
Learn more about Greenly’s carbon management platform here.
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