Adam J. Sulkowski (Babson College) has posted “AI, ESG, and Law: Potential, Limitations, and Strategies Concerning Artificial Intelligence in Sustainability Reporting” on SSRN. Here is the abstract:
Sustainability reporting, also known as environmental, social, and governance (ESG) reporting, is the practice of publishing information on an organization’s non-financial performance, including its impacts and actions related to climate change, human rights, and diversity, equity, and inclusion (DEI). ESG reporting, however inconsistently executed and questioned by some critics, is used by management to affect perceptions and relationships with stakeholders, including investors, employees, customers, and regulators. It can also, some argue, result in better management. This article will consider the deployment of artificial intelligence (AI) in the context of sustainability reporting. As with other technologies, like blockchain, AI may, on its own, be overhyped as single factor that could bring about substantive, widespread change in ESG reporting practices and outcomes. This is because, as in other contexts, some degree of human involvement and the quality of data inputted into systems will remain critical. Voluntary standards and regulations with consequences for non-reporting and fraud will remain salient. This paper explores the potential and limitations of AI in the context of ESG reporting, and suggests strategies for managers, attorneys, and policy makers in addressing related legal issues.