AI and Sustainable Accounting: Balancing Innovation and Responsibility

There are prospects for using artificial intelligence (AI) to enhance methods of sustainable accounting for Environmental, Social, and Governance (ESG) reporting. However, this adoption also brings about the following ethical considerations that the government needs to address: algorithmic bias, lack of transparency, and data privacy. Objective: The study aims to review the role of AI in enhancing the quality and/or credibility of ESG disclosures while also exploring the emerging ethical issues concerning the use of AI and establishing ways AI can be adopted responsibly in sustainable accounting to improve stakeholders’ trust. Methodology: The study used quantitative research by analyzing survey questionnaires completed by 20 organizations that applied AI in ESG reporting and qualitative data from interviews with 30 practitioners. Parameters such as accuracy, report generation time, and stakeholder satisfaction were considered. Results: The assessment results show an overall enhancement of the navigational key’s effectiveness: the specific accuracy of ESG reports increases to 17.67%, whereas the time taken to produce the reports decreases to 58.33%. An analysis of qualitative literature emphasizes the need to respond to ethical concerns that are likely to be experienced while implementing AI. Conclusion: AI holds promise for the overall change towards more sustainable accounting through improving ESG reporting standards. Nevertheless, its further application must be incorporated based on strong ethical and governing standards to overcome the lack of rationality and orientation to trust.