Real-time Artificial Intelligence monitoring to boost ESG scoring

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AI is a means to enhance human well-being and freedom and in the global drive to bring sustainable development in line with the UN Agenda 2030, AI might just be the tool to do so.

Globally there is a rapidly growing divestment movement that is seeing more businesses moving away from investing and engaging with companies that are not embracing the ESG (Environmental, Social and Governance) criteria. Just recently The Rockefeller Foundation, a 107-year-old philanthropy built by oil tycoon John D. Rockefeller, pledged to dump its fossil fuel holdings for the sake of the environment. There are now more than 1,300 institutions controlling $14.5 trillion which have divested in some way from fossil fuels, according to a tally by environmental group 350.org. 

This move will certainly create a much-needed domino effect as more businesses begin to follow suit. Who we are seen to be doing business with is certainly going to impact on our long-term sustainability. If we are to remain relevant we will need to take ESG ratings seriously. Mark Germishuys, CEO at NGA, a data science company who specialise in ESG real-time monitoring using AI, says, “As the ESG trend grows, and more businesses align their sustainable development goals (SDG) with their growth strategies, using AI as a social impact tool has become more mainstream. Market risk can instantly affect share prices, or a pending merger or acquisition. Businesses who are able to monitor their suppliers and other business associates’ ESG scores in real-time will give them an advantage over the competition.”

In South Africa, ESG is still to some degree considered a luxury. High unemployment rates and the state of the economy, have previously been prioritised over ESG, which is why we’ve been slow off the mark. Germishuys continues, “As a business owner in South Africa, I’d be very concerned about being left behind. As consumers become savvier about ESG, they will begin to hold companies they support accountable. In fact in Morgan Stanley recently reported that 95% of millennials (those born between 1981 and 1996, approximately) were interested in sustainable investing as recently as 2019, up 9 percentage points from 2017. Being anti-ESG will not be an option in the very near future.”

Key to AI and ESG monitoring is the quality and quantity of the data sets used to generate the score. The AI engine is trained to identify content related to the search terms and industry focus, so business owners can either get deep insight into what actual customers are saying about their product or brand, or what their suppliers are doing that might impact their ESG rating negatively. Less transparency typically means a lower score which – worst case scenario – can lead to major shareholders divesting. Proactive ESG communication will prevent this from happening and instead lead to a score that truly reflects a company’s sustainability efforts.

As we consider our impact on the planet, and question if our businesses are sustainable or not, the need to integrate responsible AI metrics into ESG databases is how we’re going to effectively monitor our success. 

Article: Mark Germishuys, NGA Data Science Experts (www.nga.co.za )

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