AI's impact on environmental reporting

AI-generated content raises concerns when it comes to the accuracy and integrity of sustainability reports, and human judgement is vital, says University of Auckland Business School Professor Charl de Villiers.

In the paper, How will AI text generation and processing impact sustainability reporting? Professor De Villiers and co-authors Matteo Molinari (University of Kent) and Ruth Dimes (The Open University) suggest that although artificial intelligence (AI) can improve efficiency and data analysis in sustainability reporting, it also poses challenges in ensuring quality and reliability, and it falls short when it comes to addressing biases.

According to the paper, transparency and accountability are the main issues arising from the use of AI in sustainability reporting, which has seen an uptick in New Zealand as more companies seek or are mandated to provide an overview of the environmental, social and cultural impacts caused by their activities.

“AI systems learn from existing data, which may carry social and cultural biases, and these biases can inadvertently be embedded in AI-generated sustainability reports, perpetuating existing inequalities and overlooking important perspectives,” says De Villiers.

"While AI can significantly streamline the reporting process, we also need to be aware of the risks of greenwashing and the replication of biased content."

Greenwashing (the act of making a company appear more environmentally friendly than it really is) poses a substantial risk in AI-generated sustainability reports. This tendency is exacerbated by the fact that AI systems like ChatGPT are trained on vast datasets, which include both genuine and greenwashed sustainability information.

Meanwhile, with governments, investors, and other stakeholders increasingly valuing sustainability-related information, the role of AI in analysing these ‘green’ reports has become crucial.

"Investors rely on the accuracy of these reports to make informed decisions. If AI-generated reports are not critically assessed, we risk misleading stakeholders about a company's true environmental and social impact."

Despite these challenges, the study acknowledges the benefits of AI in sustainability reporting. Tools like ChatGPT, says De Villiers, can enhance the accessibility of non-financial information, making it easier for people to engage with and understand sustainability-related initiatives. Furthermore, AI's ability to process vast amounts of data can provide insights beyond human capability.

"The key, for now, is to balance AI's efficiencies with a critical, human-centric approach."