AI and ESG Integration in Organisations: Transforming Sustainability Through Intelligent Systems

Abstract

Artificial Intelligence (AI) and Environmental, Social and Governance (ESG) go hand in hand to change the way of working and sustainable development in organisations. Regulators, investors, and stakeholders are increasingly pressured to act on implementing responsible practices, and AI is one of the key enablers to enhancing responsible practices, measurement, and reporting. This chapter delves into the transformative role of AI technologies such as machine learning, NLP, predictive analytics, and blockchain in the evolving landscape of ESG implementation in various sectors. It discusses some of the theoretical foundations of the incorporation of ESG: stakeholder theory, legitimacy theory, the resource-based view, and implications for corporate governance, environmental monitoring, and social impact assessment. Case studies of global companies, the European Union and India are also featured in the chapter, illustrating how AI has been applied in practice on sustainability. Everything from data bias to ethics and regulatory and tech uncertainties is discussed in detail. Finally, the paper proposes some recommendations for strategies and future directions for organisations to take to leverage AI for sustainable change. AI and ESG are not merely tools but a transformative approach to corporate sustainability. The use of AI and ESG is not just about using tools; it’s about a paradigm shift in corporate sustainability, based on data, transparency and accountability.