By Michael Stiller
Submitted by Nasdaq
Many promises have been made about the potential of artificial intelligence (AI)—and one more can be added to the list. In the domain of sustainability, especially when it comes to disclosures, applying AI may help make us better leaders.
By leveraging AI for today’s manual environmental, social, and governance (ESG) and sustainability activities, humans can shift their focus to be strategic leaders in areas such as the net zero transition. So, why not harness the potential of AI in ESG and sustainability today? At a time when the stakes are only going up, ESG working groups can leverage AI to drive credible, data-driven answers to questions when they need them most.
These are some of the learnings I uncovered in conversation with Natasha Tuck, Director of Sustainability & ESG at Dolby, during Nasdaq’s NY Climate Week Conference. We discussed how AI may help create more impact, a view into what’s to come for companies that add ESG disclosures to their financial filings, and how companies can scale their ESG programs using technology.
Making an Impact
Much of the early sustainability and ESG community landed where they are today because they wanted something more—they wanted to make an impact, have purpose, and drive value for their companies.
Tuck is a prime example. “I wanted to do work that aligned with my values and have a bigger impact in the world,” she shared. Departing from her 15-year career in commercial real estate, Tuck pursued a master’s degree in sustainable management (Sustainable or Green MBA) at Presidio Graduate School and kicked off her career in sustainable packaging, organic produce, and green building. She eventually landed an opportunity at VMware as the company’s first full-time sustainability hire and her first corporate sustainability role.
Whether you’re here for impact or tasked with leading ESG and sustainability from another corporate function, many quickly realize the level of manual tasks performed around ESG and sustainability disclosures. These manual tasks are only set to increase in response to new demands placed on companies off the back of global regulations, an early discovery Tuck made during her time at VMware.
Lessons Learned as an Early ESG Leader
Today, VMware has positioned itself as a leader in ESG and sustainability. The company’s commitment is demonstrated through its investment, dedicated sustainability team, and buy-in from its board and executive leadership team. Starting in 2015, when VMware published its first Global Impact Report, Tuck observed the company’s ESG journey unfold in real time.
Reflecting on the company’s first Global Impact Report, Tuck shared, “We went from no disclosures to really starting to integrate sustainability and ESG into our public-facing documents.”
“I also remember the first time we included the words’ sustainability’ and ‘ESG’ in our 2020 10K. We had a small section in that 10K on ESG, but the internal eyes on that were incredible. I really got to experience the level of scrutiny placed on regulatory filings.” She shared that the finance and legal teams were asking: Who else does these types of 10K disclosures? How are they talking about it? What language are they using? Tuck and her team were tasked with this “very manual, time-consuming research, finding examples to bring back to the finance and legal teams to support their recommendations.”
The VMware experience in 2020 provides a playbook for what companies should expect in 2023 and beyond. As the global regulatory environment pushes ESG and sustainability disclosures into financial filings, Tuck provided some guidance. Companies need to think critically about implementing a rigorous research process and backing up claims with data. Activities like peer benchmarking, knowing what peers are disclosing, and going beyond a core set of peers to a broader set of leading companies for best practices will provide companies with the confidence and credibility to engage internal audiences (i.e., legal, accounting, and executives) and external audiences (i.e., regulators, investors, and customers).
How to Scale Under Pressure
Companies do not always have the luxury of sizable budgets to scale a sophisticated ESG and sustainability program. With recent challenges, like the economic headwinds of elevated interest rates and political forces, companies are feeling the pressure to do more with less when it comes to their ESG and sustainability efforts.
Tuck confirms this by explaining, “I left VMware at the end of 2022 and am now with Dolby. Dolby is a purpose-driven company and has bought into ESG and sustainability, but the company does not have the same resources as VMware. But we are on our own journey, doing great work, and I’m excited about the opportunities that lay ahead.” Dolby recently released its third Sustainability Report and received validation of their science-based targets from the Science Based Targets Initiative (SBTi).
Despite feeling the pressure to do more with less, smaller companies, like Dolby, are also feeling some of the same pressures faced by larger companies, driven primarily by global regulations kicking in. Tuck suggested that instituting a data-driven research process will be paramount for all companies.
Operating with a smaller team requires companies to scale in different ways. Tuck shared, “Consultants can be a great option, but they are expensive, and by relying too heavily on them, you lose the ability to deepen your in-house expertise.” Therefore, companies like Dolby have looked for other ways to perform research activities. “We want to do more on our own and have tools and best practices at our fingertips to conduct peer benchmarking and identify emerging trends,” according to Tuck. That’s when AI comes into the picture.
ESG and sustainability disclosure is an ideal AI and language model use case. These disclosures are largely qualitative, unstructured, and dispersed across several documents. Combine that with the fact that humans are reading thousands of pages to identify a best practice sentence or single data point, benchmarking their company disclosures against peer disclosures, and scanning the news to stay ahead in a competitive landscape. All tasks that are better suited for software and AI to handle, freeing up time for humans to focus on more strategic and impactful work.
While there are concerns around the environmental footprint of training and running AI models, I am optimistic that we will find solutions to solve these near-term headwinds. By using AI to complete more manual tasks, humans can focus on leading efforts around the energy transition and decarbonization.
According to Tuck, “Software and AI really should be doing a lot of the work that our teams are doing. It gives us more comprehensive and data-driven answers to questions that come from executives, colleagues, and external audiences like investors and customers. We can get answers instantly rather than waiting weeks and spending a lot of time and energy, getting us back to the strategic and impactful work of why I got into this space.”
Meet Nasdaq Sustainable Lens
In response to these trends and technology advancements, Nasdaq has developed Sustainable Lens, an AI-powered ESG intelligence platform. Shaped by experts and powered by AI, Nasdaq Sustainable Lens helps companies expedite better decisions, boost productivity, and enhance credibility.
Tuck shared her experience using Nasdaq Sustainable Lens, expressing that “It is more important than ever to understand what is being disclosed and, as my experience at VMware showed, these disclosures are going to become more scrutinized. Having a tool like Sustainable Lens at your fingertips is huge. It helps me quickly respond to executive questions and instantly understand what is being disclosed by my peers and sector, on-demand.”
Nasdaq Sustainable Lens eliminates the need for manual research and equips ESG working groups with on-demand, data-driven insights from over 9,000 companies globally. Moreover, Nasdaq’s AI-driven workflows lead ESG working groups to discover best practices, benchmark against competitors, and monitor trends to focus their ESG programs and ensure they can address growing pressures.
To learn more about Nasdaq Sustainable Lens, visit our website.
Nasdaq helps companies of all ESG maturity levels through a unique combination of technology, tools, data, insights, and capital market solutions. Our ESG Advisory Program provides a team of analysts to prioritize and guide your ESG efforts, as well as engage stakeholders to secure ESG capital. Nasdaq's easy-to-use SaaS solutions are purpose-built for ESG and simplify the process of ESG data capture, engagement, oversight, and disclosure. We offer greater piece of mind with risk management via auditability and assurance of data. These offerings are backed by our own experience as a public company, applying and honing these practices over our tenure as a market leader.
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