Enhancing CSRD Data Management with AI Solutions
The introduction of the Corporate Social Responsibility Disclosure (CSRD) regulation has greatly impacted the sustainability landscape in Europe and beyond and caught many businesses off guard. Introducing AI solutions plays a key role in supporting reporting needs and ensuring a smooth and effective transition to the new reporting regulations, which have affected over 50,000 further companies across all sectors. In this article, you will learn how technology can help with CSDR reporting.
How does technology support sustainability goals?
While aiming to fulfil growing expectations and keep up with ever-more-specific regulations, companies are required to consider not only the impact of their "in-house" operations but also the environmental and social implications related to external networks such as suppliers, partners, and contractors.
For instance, to report using the voluntary GRI Standards, a manufacturing company needs to consider aspects like end-of-life product management, health and environmental impacts of processes that occur in the supply chain, as well as labour practices related to sourcing prime materials. According to Assent's report concerning the manufacturing sector, only 31% of respondents are highly confident in the quality and accuracy of their organisation's supply chain data.
In response to the rising complexity of sustainability reporting, businesses are turning to advanced technological and data analytics solutions to support their reporting needs and access reliable, data-driven, and accurate information.
Current technologies, including software, IoT, and cloud-based solutions, enable sustainability professionals to streamline the reporting process. These technologies automate the collection and monitoring of large amounts of data from multiple sources, improve analytics and verification processes, and allow for interactive reporting with access to real-time data.
How can AI tools help with CSRD reporting?
The application of AI can streamline the reporting process and significantly improve the results, minimise the resources, and reduce the time required to comply with new CSRD regulations. Sustainability professionals and consultants, as well as businesses, can benefit from implementing AI tools into their operations. There are several areas where technology can play a key role in achieving the desired outcomes. Here, we list the main applications that are available today.
Digitising data collection
To comply with CSRD reporting requirements, businesses will need to submit sustainability data in a standardised digital format, which often means pulling and processing data from various sources.
According to the European Sustainability Reporting Standards (ESRS), officially adopted by the European Commission on 31 July 2023 as the CSRD guiding standards, the companies will be required to provide qualitative and quantitative disclosures across the 12 ESRS modules, including up to 1200 data points.
AI tools can help you filter, compare, tag and monitor the required data to create a centralised data collection and enable task automation.
Applying Natural Language Processing (NLP) in intelligent document processing
Sustainability professionals often have to rely on unstructured data, such as emails, web pages and text documents, to gather necessary information. NLP features algorithms that enable machines to process, understand and interpret human language, allowing for easy and accurate extraction of data from unstructured sources.
As an example, the CSRD regulations demand in-scope companies to report on Scope 3 emissions. Measuring these indirect emissions requires working with the company's business partners and suppliers across the value chain and collecting data from multiple sources in various formats, making it virtually impossible to scale up by relying on manual processes.
Smart reporting tools
Manual data entry is a slow process with a high margin of error. AI technology can boost performance results by analysing and interpreting historical data to transform it into predicted responses during the reporting process.
Furthermore, software tools with integrated guiding systems, such as the ESRS, verify compliance with the regulations.
The CSRD differs from other frameworks, such as ISSB and TCFD, by taking a double materiality approach. This means considering two perspectives: the company's impact on the planet and people and how sustainability influences the company's operation. Intelligent reporting tools can help pre-fill stakeholders and value chain data and formulate qualitative responses to support double materiality assessment.
Advantages of utilising technology to meet rising sustainability reporting demands
With the introduction of new EU regulations, companies are looking for innovative methods that will allow them to attract investors and stay relevant in the market. Automated data management and analysis services allow businesses and sustainability consultants to delegate mundane tasks and dedicate more time to focus on strategic planning and developing sustainability initiatives, enhancing their competitive position.
By improving reporting abilities, technology solutions support self-service data collection and automated report creation. The application of AI-powered tools can help increase accuracy and efficiency while minimising manual labour and reducing the costs required to meet rising reporting demands.
Future of AI in sustainability reporting
While the rising trends in the sustainability sector show that AI technology will continue to be a driving force enabling companies to innovate and improve reporting abilities, it's important to acknowledge the ethical considerations concerning AI and data analytics. Ensuring responsible data governance, protecting privacy, and promoting transparency in AI applications are critical for upholding stakeholder trust and achieving unbiased outcomes.
The lack of appropriate governing standards causes companies to create their own rules for how AI is applied to operations, making sure that information is clearly communicated to investors and reporting authorities.
Despite the challenges, AI tools offer a solid path for ESG to become an integral part of a business. However, companies must ensure consistency in providing high-quality data so that AI systems can function effectively.
FINGREEN AI helps you comply with the CSRD
At FINGREEN AI, we understand the critical role of CSRD reporting and are here to support your company at every step of fulfilling your obligations. From the start, we offer an eligibility tool to help you understand whether your company is within the scope of the new regulations. We streamline CSRD reporting by identifying and finalising material matters to perform a double materiality assessment, enabling smart data collection across ESRS modules, assisting with audits and providing reporting tools.
By adopting the best AI practices, we ensure greater accuracy while helping you reduce costs and optimise resources.
Contact us to enquire about CSRD reporting solutions that are suited to your business needs.