Workshop Takeaways: AI-Powered ESG Governance Best Practices for Business Leaders

On day one at GreenBiz 24, we were joined by 170+ attendees for a Datamaran-hosted workshop on the hot topics of ‘AI’ and ‘governance’, specifically discussing how to use AI to strengthen and support your Executive decision-making on ESG-related risks and opportunities. I had the honor of facilitating the session, alongside a panel of experts, comprising Datamaran clients, including Niki King, VP & Head of Sustainability, from Clorox, Colleen Wade Spelder, Impact Reporting and ESG Governance Director, from McDonald’s, and Jacob Bernstein, Deputy Counsel & Secretary, from Booz Allen Hamilton. 

Read on for an overview and recap of our workshop along with the key takeaways. 

What the Workshop Covered

I asked the panel to explain how they are using AI to build robust and defensible ESG strategies based on what’s most important to their business, gather timely strategic insights to influence C-suite decision-making, keep up-to-date with changing regulations and requirements, and bridge the ESG skills gap. The panel shared actionable advice to help attendees emulate their achievements and establish smarter ways of working and managing ESG for themselves. 

Regulation, disclosure requirements, and reporting frameworks have gotten us so far but now the focus is on governance - the process and people underpinning how companies make decisions about where to invest their time and resources and ultimately, unlock strategic value. When technology is adopted upstream, companies can build the in-house infrastructure necessary to make better-informed decisions, navigate the ESG landscape with confidence, and deliver real-world change. For these reasons, our workshop at GreenBiz this year focused on sharing learnings and best practices for using AI for governance from those ESG leaders and pioneers who have done just that. Here’s their expert advice.

1. Technology is essential to do your job well; it’s no longer a nice-to-have: The challenges and complexities of the ESG landscape are driving the need for AI-powered solutions that enable and empower businesses to take better control of their strategy. Smart ESG software is a business-critical resource for Executives as their workload grows at pace and ESG strategies, decisions, plans and goals increasingly come under the spotlight by investors and regulators. The old ways of working - depending on endless spreadsheets of information, often biased stakeholder opinion, and outsourcing to consultants - are no longer fit for purpose. ESG teams need smarter ways of working that enable them to focus on what matters most, execute confidently on their strategy, and gain foresight into changing requirements and expectations. This is underpinned by Smart ESG tech-led solutions.

2. Use AI to gain a clear picture of what matters most: AI-powered technology enables you to perform a more comprehensive, strategic, and therefore robust materiality assessment that gives you the evidence you need to inform, support, and defend your ESG decisions. It’s not just about accelerating the process; it’s about optimizing this with a documented, repeatable methodology and credible insights that build consensus more quickly.

Niki reflected on how long a materiality assessment used to take versus her process today using AI: “My first materiality assessment took me nine months to complete. And at the end of the day it was probably still quite biased as you come out with this matrix and you sit down with your leaders who then tell you that those issues aren’t really that important. Now we do our materiality assessment, which takes no time at all, and instead of pulling in our leaders and wasting their time we go to them and say here’s this unbiased materiality matrix and here’s what we think are our material issues. We can focus on the four things that are most material. We’re taking fact-based and unbiased materiality to them.” 

Jacob also shared how he’s benefited from using AI: “It’s really helped reduce the number of person hours needed to do these tasks. It’s really helped us speed up the materiality assessment process.”

Colleen explained how AI-powered materiality has helped with shareholder engagement: “Having a solution that is evidence-based has been a really helpful part of pushing our conversation forward. We would like this to be a conversation with our top shareholders, giving them something to react to and then probing them with related questions to ensure we get their input.”
 
3. Focus on setting the right targets not reporting metrics: Using insights from the Datamaran platform, I shared that 97% of S&P 500 companies refer to ‘Diversity & Inclusion’ in their disclosures but only 28% of those companies have included time-bound and measurable targets related to D&I within those reports. So what are the vast majority doing and how are they tracking their progress?

Many companies aren’t where they want to be when it comes to setting goals because it's not an easy process due to the complexity of ESG issues, limited data availability, and resource constraints. This is another area where AI can really help ESG teams by providing real-time visibility of peers' targets reducing the benchmarking exercise from hours or days down to minutes.

4. Monitoring and ongoing management are easier with AI: When the landscape is rapidly changing you need to monitor it more closely and frequently and share your findings with senior management and stakeholders to build trust and credibility. 

Niki shared how AI is supporting her and her team: “I have a small team and I don’t have unlimited budget to hire consultants so I’m using AI to pull together data on the landscape for our quarterly reporting. Using Datamaran, I can see how things are trending and present that to the board to bring some credibility to what I’m saying. It helps me inform the ESG Executive Committee ahead of time if something is trending that I need to bring to their attention. I remember way back when I used to spend hours per week building emerging issue alerts and digging through media articles to take to leadership to show them the things that I was seeing. Now I don’t need to do that. I can push a button and its built for me. It’s all about efficiency. It enables me to reduce the bias and reduce the resources I need to use. It allows me to present information in a credible way and quickly.” 

5. Data-driven insights are key to influencing stakeholders: By gathering and presenting compelling evidence-based insights your stakeholder conversations - internally with your team and key leaders, and externally with investors and partners - become more meaningful and focused. It’s easier to gain buy-in and harder for people to push back when you have hard data and facts that pinpoint the risks, opportunities, and intelligence on the commitments your peers, competitors, and value chain have made. 

As Colleen explained, it also helps you broaden the lens and get away from your strategy being driven by one set of internal or external stakeholders: “Whether you’re a big name brand or a company with loud internal or external stakeholders that are advocating for issues that are not the most material issues for your company to be building out your governance, risk management and strategy around. Having a tool that is data-driven, AI-driven, and can provide a third-party perspective can be helpful in broadening the lens.”

6. Educate and upskill the business with timely relevant information: For those colleagues not as close to ESG there is often confusion and hesitation due to a knowledge gap when it comes to ESG topics, factors, and impacts which has a knock-on effect on the decision-making process. A show of hands amongst the workshop attendees demonstrated that this is a common problem for ESG leaders - and one that they are all trying to address. Using AI, you not only have the relevant information to help educate internally; you have expert-led processes and insights at your fingertips. This helps you to take colleagues on the journey with you and give them a better understanding of the importance of your ESG strategy, the decisions behind that strategy, and how they can support it through their actions. 

Jacob spoke about the need to monitor the landscape to stay ahead of issues and regulations so you can inform and educate your stakeholders: “You build a layer of trust by monitoring and getting ahead of issues and developing policies before the SEC requires it. You build this confidence in what you’re doing.” 

Colleen spoke about the importance of speaking a shared language when it comes to ESG: “How do we create a shared understanding of the concepts so we can chart a course into this new frontier together?”

To find out more about our Smart ESG platform visit our Product page.