AS THE push for greater ESG transparency grows, companies are increasingly turning to advanced technologies such as artificial intelligence (AI), blockchain, and big data analytics to optimise and improve their ESG reporting.
These innovations are making it easier for businesses to collect, analyse, and report data, while also building trust with stakeholders through enhanced accuracy and accountability.
With regulatory demands intensifying and investors becoming more selective, the adoption of these technologies is expected to accelerate, marking the beginning of a new chapter in corporate responsibility and transparency.
In particular, the integration of automation and AI into ESG reporting is seen as a game-changer for businesses, enabling them to manage vast volumes of complex data more efficiently.
“AI in particular expands the capabilities of tech tools to manage large volumes of data on ESG metrics, forecast emissions, link emissions to financial performance, and conduct climate risk assessments,” says Ian Hong, partner at KPMG ESG, KPMG in Singapore.
He adds that Internet of Things devices such as smart meters help to track resource consumption in real-time, with the data automatically fed into ESG systems, enhancing the accuracy of emissions reporting.
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Josette Soh, sustainability and climate assurance partner at Deloitte Singapore, notes that blockchain offers a high level of transparency and traceability to ensure data integrity, while data analytics enables companies to process vast amounts of information, uncover patterns, and make informed decisions.
Blockchain solutions can be particularly useful for reporting Scope 3 emissions, where verifying the ESG credentials for suppliers and tracking emissions across the entire supply chain can be complex. Scope 3 emissions refer to the indirect greenhouse gas emissions that occur throughout a company’s value chain.
“These technologies collectively enhance the accuracy and efficiency of ESG reporting, positioning businesses to better meet stakeholder expectations and regulatory demands,” Soh explains.
Effective ESG reporting requires input and access from various business units and stakeholders across a company’s value chain, and the right technological tools can facilitate this process.
“A robust digital platform can seamlessly integrate these diverse contributors, ensuring comprehensive and cohesive ESG reporting,” says Sammie Leung, sustainability and climate change partner at PwC Singapore.
Improving accuracy and efficiency
One of the biggest challenges companies face in ESG reporting is ensuring the accuracy and quality of data. AI-driven platforms are helping to address these issues by automating the data input process. For example, some platforms are integrated with utilities, allowing for automatic interpretation of electricity bills, which speeds up the reporting process and reduces human error.
Businesses should also implement robust data governance frameworks to maintain the integrity of ESG data. Soh advises companies to conduct regular audits and validation checks to verify data sources and outputs to ensure that AI-generated insights are accurate and reliable. Businesses should also invest in employee training to effectively manage and interpret AI-driven insights, she adds.
Overcoming barriers to adoption
While the benefits of data analytics and business intelligence tools are clear, companies still face challenges in fully utilising these technologies for sustainability reporting. The cost of adoption and the availability of skilled personnel are two significant barriers to entry.
KPMG’s 2024 Sustainability Organisation survey found that while many companies see themselves as ahead of their peers in sustainability reporting, nearly half still rely on spreadsheets for managing their sustainability data. “However, most of these organisations are looking to upgrade their data collection and management systems, recognising that AI tools can significantly enhance reporting efficiency,” says Hong.
To overcome obstacles, companies should consider a phased technology implementation, starting with high-impact areas to demonstrate value and secure stakeholder buy-in, advises Soh. “In addition, collaborating with technology partners can provide access to expertise and shared resources, reducing upfront costs,” she says.
The future of ESG reporting
Looking ahead, the role of AI and advanced analytics in ESG reporting is set to evolve further. For instance, advancements in natural language processing and predictive analytics could provide more nuanced understanding and forecasting of ESG trends.
In particular, Hong sees immense potential in AI’s ability to enrich the narrative within sustainability reports. “AI-powered tools are now capable of transforming raw data into compelling narratives that highlight an organisation’s sustainability journey, achievements, and areas for improvement,” he explains. This shift will significantly improve the quality of sustainability disclosures, making them more engaging and informative for stakeholders.
As businesses continue to adapt to increasing ESG demands, the adoption of advanced technologies will be essential for staying ahead of regulatory changes and meeting stakeholder expectations. By building a robust digital infrastructure and embracing a data-driven approach, companies will be better equipped to navigate the complexities of ESG reporting and contribute to a more sustainable future.
This series features some members of CPA Australia, which marks 70 years in Singapore, sharing strategic insights on business, finance and accounting
