Tech to ensure transparency in corporate sustainability

In just a few years, the world of corporate sustainability reporting has exploded. Companies from around the globe are writing non-financial disclosures, climate transition plans, and glossy net-zero commitments. Regulators are demanding more transparency. Investors are hunting for credible data. And the public (perhaps rightly) is asking whether all this talk is backed by action.

But with this explosion in disclosure has come a new problem: information overload. We're not short on environmental, social and governance (ESG) reports anymore. We're short on clarity, comparability and trust.

That's where AI comes in.

For the past few years, I've been building and refining AI systems to analyze ESG and climate reports at scale. My team and I have processed more than 200,000 reports from 15,000 companies — line by line, paragraph by paragraph — using natural language processing and machine learning tools. The goal isn't to replace human judgment. It's to augment it. We want to cut through the noise, detect inconsistencies, and benchmark reporting quality in a fair and scalable way.

So what exactly can AI do in this?

One of the clearest contributions AI makes is helping us spot "cheap talk"-language that sounds impressive but lacks commitment or specificity. Think: "We are committed to a greener future" versus "We will cut Scope 1 and 2 emissions by 45 percent by 2030, from a 2019 baseline".

Our AI models analyze these differences, quantifying how concrete or vague a company's sustainability language is. We look at the frequency of commitments, the presence of measurable targets, and the use of hedging words like "aim", "consider", or "hope". Across sectors, we've seen clear patterns. Some companies publish reports that are heavy on values and vision but light on verifiable action. Others, often under stricter regulation or investor scrutiny, are much more disciplined and specific.

The ability to quantify "cheap talk" at scale is a game changer. It helps investors cut through the fluff and regulators identify outliers. It gives the public a clearer picture of which companies are talking the talk — and which are walking the walk.

Another major use of AI is benchmarking. With so many different sustainability frameworks out there, it's easy for companies to cherry-pick what they report and how. Our tools can evaluate whether a report aligns with the expectations of each standard, highlighting gaps and inconsistencies.

For example, when analyzing climate disclosures through the lens of the Task Force on Climate-Related Financial Disclosures, we check whether a company addresses governance, strategy, risk management, and metrics and targets. Some companies cover all four pillars comprehensively. Others skip the hard bits, often omitting climate risk modeling or transition plans entirely.

This kind of automated benchmarking isn't just useful for holding companies accountable. It also helps companies improve themselves. Many are under-resourced or overwhelmed by ESG reporting demands. By receiving objective, real-time feedback on their reports, they can course-correct before publishing.

Perhaps the most exciting frontier is what I call the "transition audit". Using AI, we analyze how well a company is preparing for the shift to a low-carbon economy, not just whether they say they support net-zero, but whether they've got a credible, measurable and time-bound plan to get there.

We break this down into 60-plus indicators, from how companies model transition risk, to whether they integrate climate scenarios into financial planning, to whether board members are trained in climate governance. The insights have been eye-opening. Many companies signal alignment with climate goals, but fewer have the internal systems, governance and accountability mechanisms to make good on those promises.

AI is not a silver bullet. It won't replace policy. It won't stop greenwashing overnight. But it does offer a scalable, systematic way to hold companies to a higher standard — and to support the regulators, investors, and civil society actors trying to make sense of an increasingly crowded ESG landscape.

As sustainability reporting continues to evolve, the challenge won't be more data; it'll be better data. Smarter, clearer and more honest. AI can't make companies act responsibly, but it can make it harder for them to hide behind buzzwords and boilerplate.

And that, at a time when transparency is everything, is a powerful start.

The views don't necessarily reflect those of China Daily.

If you have a specific expertise, or would like to share your thought about our stories, then send us your writings at opinion@chinadaily.com.cn, and comment@chinadaily.com.cn.