Experts: AI useful for biz to adopt ESG initiatives

KUCHING (July 27): With increasing awareness of sustainability issues and the impending effects of climate change, environmental, social and governance (ESG) initiatives have become a must for all businesses, large or small, to adopt.

However, doing so can be a costly and time consuming endeavour, especially for small and medium enterprises (SMEs) that lack the resources of large corporations.

Nevertheless, the democratisation of artificial intelligence (AI) technology in recent years has allowed businesses to be able to leverage on this platform to more easily and better plan their ESG initiatives.

During a panel session on ‘Driving Sustainable Business with AI’ held in connection with the inaugural ‘Affin BizChat Business Forum’ at Sheraton Hotel here recently, several industry experts discussed the ways businesses could utilise AI technology in their day-to-day operations to better plan and implement ESG initiatives and practices.

The session’s moderator was Hazwan Razak, Sarawak Digital Economy Corporation Bhd (SDEC) general manager of innovation and entrepreneurship, who handled the course of discussions presented by Accio technologies chief executive officer Dr Lau Cher Han, Syuen Zens Resources founder Sharon Goh, and Chemsain Consultant Sdn Bhd technology advisor (sustainability division) Henry Tay.

The panellists agreed that while AI could be regarded as a vital tool for businesses to improve their overall sustainability and efficacy, the uptake amongst Malaysian companies had been less than desired.

When asked about this, Goh pointed out ‘rigid and unchanging mindset amongst the workforce’ as one of the largest roadblocks that companies faced that prevented them from successfully adopting both ESG initiatives and new AI applications.

“For me, the one challenge that I really see on the ground is always how companies struggle to get things to move along, and the issue is always because they need a mindset change.

“We have witnessed many companies struggle with this, even those with strict top-down management,” said Goh, who runs a consultancy and training agency.

She added that many companies in this situation had engaged Syuen Zens in providing additional training to their employees and divisions in hopes that this could improve ESG and AI adoption rates.

“However, I believe that without true acceptance across the entire organisation, implementation and changes would still be a challenge in the long-run,” she added.

The panellists then continued on discussing the change of mindset, agreeing that it would be beneficial for businesses to recognise the numerous benefits deriving from the adoption of ESG initiatives and the transition into becoming green companies.

Tay and Lau talked about the staggering amount of large international corporations that had begun mandating their supply chains to adopt sustainability reporting and practices, and they reckoned that this trend could soon apply to large local and regional corporations.

In this regard, the two pushed for local businesses to be proactive in consolidating, compiling and analysing their existing data through the use of AI so that they would be able to keep themselves ahead of the curve, and capitalise on being the first few suppliers and manufacturers able to provide accurate ESG reports.

They argued that starting late would be detrimental as companies would need data involving ESG metrics across an adequate timeline, for them to show improvements or how close they were towards achieving their ESG goals.

Lau said: “It would also be opportune in allowing companies to scale up their operations and potentially, acquire larger MNCs (multi-national companies), as the adoption of these reporting practices would allow them to better comply with the strict international requirements that these MNCs have stipulated.”

To this, Goh pointed out: “There has also been increasing support from the banking institutions in green financing, with many of them now offering ‘green loans’ with substantially more attractive interest rates for businesses that are able to meet their ESG requirements.

“Without ESG reporting and metrics, companies would effectively exclude themselves from being eligible for these attractive green financing products.”

Lau added: “But apart from just having better reporting standards, I also believe the ESG data that the companies have gathered would help improve their overall operational efficiency.”

Pointing to the oil, gas and solar sectors as examples, Lau said the use of predictive AI tools would allow companies in these sectors obtain valuable estimates on when their equipment might require maintenance or replacements.

“With predictive AI, you could, for example, key in the data you have collected and predict when a solar panel might break and so, before that happens, you’d replace that panel because it’s less costly and more efficient than replacing it after it broke down.”

Asked about the best starting point for companies looking to adopt both ESG initiatives and AI tools, Tay said the adoption of carbon accounting software would be ‘among the easiest and most comprehensive tools’ as it would cover Scopes 1 and 2 of the Greenhouse Gas Protocol involving direct and indirect carbon emissions.

“The recent introduction of the Simplified ESG Reporting Guidelines by the government is a great initiative as it would help local SMEs meet the international standards.”

Adding to this, Goh said businesses that might find the terminology of AI to be ‘new and daunting’, should reframe their views and treat it as ‘just another software meant to simplify operations’.

“Leverage on it (AI) now, because if you don’t start, you would not enjoy the changing business landscape in the near future,” she said.