Balancing Efficiency and Human Oversight in AI-Driven ESG Audits: The Roles of AI Automation and Decision Making

Abstract

The growing use of artificial intelligence (AI) in Environmental, Social, and Governance (ESG) audits has created new opportunities to enhance corporate governance through faster and more consistent assurance processes. However, concerns remain regarding accountability, transparency, and the role of human oversight in AI-assisted auditing. Prior research has predominantly examined AI adoption in traditional financial auditing, leaving its role in the more qualitative and judgment-intensive context of ESG assurance comparatively underexplored, particularly with respect to how AI decision-making authority should be balanced against human oversight. This study examines the effects of AI automation and AI decision making on audit efficiency, accountability, and transparency, while assessing the mediating role of human oversight. A quantitative research design was adopted, and data were collected from 150 professionals involved in ESG audit-related functions (including ESG auditors, compliance officers, sustainability managers, and AI governance analysts) across private, public, and non-governmental organizations, recruited through purposive and snowball sampling via professional networks, audit forums, and LinkedIn ESG groups. The data were analyzed using partial least squares structural equation modeling (PLS-SEM). The findings indicate that AI automation significantly improves audit efficiency, accountability, and transparency. Similarly, AI decision making within governance structures exerts positive effects on all three outcome dimensions. Furthermore, human oversight partially mediates these relationships, strengthening the overall impact of AI on ESG audit outcomes. These results suggest that AI enhances ESG auditing effectiveness, but its benefits are maximized when supported by strong governance and human supervision. The study contributes to the emerging literature on AI-enabled ESG assurance by demonstrating the importance of balancing technological efficiency with accountability and transparency in corporate governance.