IDEAS home Printed from https://ideas.repec.org/a/wly/sustdv/v31y2023i2p1027-1037.html
   My bibliography  Save this article

The AI ESG protocol: Evaluating and disclosing the environment, social, and governance implications of artificial intelligence capabilities, assets, and activities

Author

Listed:
  • Henrik Skaug Sætra

Abstract

AI and data are key strategic resources and enablers of the digital transition. Artificial Intelligence (AI) and data are also intimately related to a company's environment, social, and governance (ESG) performance and the generation of sustainability related impacts. These impacts are increasingly scrutinized by markets and other stakeholders, as ESG performance impacts both valuation and risk assessments. It impacts an entity's potential to contribute to good, but it also relates to risks concerning, for example, alignment with current and coming regulations and frameworks. There is currently limited information on and a lack of a unified approach to AI and ESG and a need for tools for systematically assessing and disclosing the ESG related impacts of AI and data capabilities. I here propose the AI ESG protocol, which is a flexible high‐level tool for evaluating and disclosing such impacts, engendering increased awareness of impacts, better AI governance, and stakeholder communication.

Suggested Citation

  • Henrik Skaug Sætra, 2023. "The AI ESG protocol: Evaluating and disclosing the environment, social, and governance implications of artificial intelligence capabilities, assets, and activities," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 1027-1037, April.
  • Handle: RePEc:wly:sustdv:v:31:y:2023:i:2:p:1027-1037
    DOI: 10.1002/sd.2438
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/sd.2438
    Download Restriction: no

    File URL: https://libkey.io/10.1002/sd.2438?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Stefan Ambec & Mark A. Cohen & Stewart Elgie & Paul Lanoie, 2013. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 2-22, January.
    2. Sivarajah, Uthayasankar & Kamal, Muhammad Mustafa & Irani, Zahir & Weerakkody, Vishanth, 2017. "Critical analysis of Big Data challenges and analytical methods," Journal of Business Research, Elsevier, vol. 70(C), pages 263-286.
    3. Li Li Eng & Mahelet Fikru & Thanyaluk Vichitsarawong, 2021. "Comparing the informativeness of sustainability disclosures versus ESG disclosure ratings," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 13(2), pages 494-518, December.
    4. Saeed Nosratabadi & Amir Mosavi & Shahaboddin Shamshirband & Edmundas Kazimieras Zavadskas & Andry Rakotonirainy & Kwok Wing Chau, 2019. "Sustainable Business Models: A Review," Sustainability, MDPI, vol. 11(6), pages 1-30, March.
    5. Magdalena Marczewska & Mariusz Kostrzewski, 2020. "Sustainable Business Models: A Bibliometric Performance Analysis," Energies, MDPI, vol. 13(22), pages 1-30, November.
    6. Li Li Eng & Mahelet Fikru & Thanyaluk Vichitsarawong, 2021. "Comparing the informativeness of sustainability disclosures versus ESG disclosure ratings," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 13(2), pages 494-518, December.
    7. Verhoef, Peter C. & Broekhuizen, Thijs & Bart, Yakov & Bhattacharya, Abhi & Qi Dong, John & Fabian, Nicolai & Haenlein, Michael, 2021. "Digital transformation: A multidisciplinary reflection and research agenda," Journal of Business Research, Elsevier, vol. 122(C), pages 889-901.
    8. Florian Berg & Julian F Kölbel & Roberto Rigobon, 2022. "Aggregate Confusion: The Divergence of ESG Ratings [Corporate social responsibility and firm risk: theory and empirical evidence]," Review of Finance, European Finance Association, vol. 26(6), pages 1315-1344.
    9. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
    10. Fafaliou, Irene & Giaka, Maria & Konstantios, Dimitrios & Polemis, Michael, 2022. "Firms’ ESG reputational risk and market longevity: A firm-level analysis for the United States," Journal of Business Research, Elsevier, vol. 149(C), pages 161-177.
    11. Du, Shuili & Xie, Chunyan, 2021. "Paradoxes of artificial intelligence in consumer markets: Ethical challenges and opportunities," Journal of Business Research, Elsevier, vol. 129(C), pages 961-974.
    12. Ricardo Vinuesa & Hossein Azizpour & Iolanda Leite & Madeline Balaam & Virginia Dignum & Sami Domisch & Anna Felländer & Simone Daniela Langhans & Max Tegmark & Francesco Fuso Nerini, 2020. "The role of artificial intelligence in achieving the Sustainable Development Goals," Nature Communications, Nature, vol. 11(1), pages 1-10, December.
    13. R. Freeman & Kirsten Martin & Bidhan Parmar, 2007. "Stakeholder Capitalism," Journal of Business Ethics, Springer, vol. 74(4), pages 303-314, September.
    14. Geert Demuijnck & Björn Fasterling, 2016. "The Social License to Operate," Journal of Business Ethics, Springer, vol. 136(4), pages 675-685, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Henrik Skaug Sætra, 2021. "A Framework for Evaluating and Disclosing the ESG Related Impacts of AI with the SDGs," Sustainability, MDPI, vol. 13(15), pages 1-16, July.
    2. Di Vaio, Assunta & Palladino, Rosa & Hassan, Rohail & Escobar, Octavio, 2020. "Artificial intelligence and business models in the sustainable development goals perspective: A systematic literature review," Journal of Business Research, Elsevier, vol. 121(C), pages 283-314.
    3. Danny Zhao‐Xiang Huang, 2022. "An integrated theory of the firm approach to environmental, social and governance performance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(S1), pages 1567-1598, April.
    4. Giglio, Stefano & Maggiori, Matteo & Ströbel, Johannes & Tan, Zhenhao & Utkus, Stephen & Xu, Xiao, 2023. "Four Facts about ESG Beliefs and Investor Portfolios," CEPR Discussion Papers 18052, C.E.P.R. Discussion Papers.
    5. Wang, Weilong & Xiao, Deheng & Wang, Jianlong & Wu, Haitao, 2024. "The cost of pollution in the digital era: Impediments of air pollution on enterprise digital transformation," Energy Economics, Elsevier, vol. 134(C).
    6. Brewis, Claire & Dibb, Sally & Meadows, Maureen, 2023. "Leveraging big data for strategic marketing: A dynamic capabilities model for incumbent firms," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    7. Alexandra Köves & Tamás Veress & Judit Gáspár & Réka Matolay, 2021. "Conceptualizing Cuvée Organizations: Characteristics Leading towards Sustainable Decision-Making Practices," Sustainability, MDPI, vol. 13(24), pages 1-24, December.
    8. Ferriani, Fabrizio, 2023. "Issuing bonds during the Covid-19 pandemic: Was there an ESG premium?," International Review of Financial Analysis, Elsevier, vol. 88(C).
    9. Francesco Cesarone & Manuel Luis Martino & Federica Ricca & Andrea Scozzari, 2023. "Managing ESG Ratings Disagreement in Sustainable Portfolio Selection," Papers 2312.10739, arXiv.org.
    10. Tao, Hu & Zhuang, Shan & Xue, Rui & Cao, Wei & Tian, Jinfang & Shan, Yuli, 2022. "Environmental Finance: An Interdisciplinary Review," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    11. Márkus, Martin, 2023. "A társadalmi felelősségi pontszámok és a működési kockázat kapcsolata kockázati kategóriák szerint [The relationship between the ESG score and operational risk in different risk categories]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 746-771.
    12. Dechezleprêtre, Antoine & Kozluk, Tomasz & Kruse, Tobias & Nachtigall, Daniel & de Serres, Alain, 2019. "Do Environmental and Economic Performance Go Together? A Review of Micro-level Empirical Evidence from the Past Decade or So," International Review of Environmental and Resource Economics, now publishers, vol. 13(1-2), pages 1-118, April.
    13. Carnevale, Concetta & Drago, Danilo, 2024. "Do banks price ESG risks? A critical review of empirical research," Research in International Business and Finance, Elsevier, vol. 69(C).
    14. Danisman, Gamze Ozturk & Tarazi, Amine, 2024. "ESG activity and bank lending during financial crises," Journal of Financial Stability, Elsevier, vol. 70(C).
    15. Chen, Zan & Jin, Jun & Li, Meng, 2022. "Does media coverage influence firm green innovation? The moderating role of regional environment," Technology in Society, Elsevier, vol. 70(C).
    16. Soh Young In & Young Joon Lee & Robert G. Eccles, 2024. "Looking back and looking forward: A scientometric analysis of the evolution of corporate sustainability research over 47 years," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2225-2259, May.
    17. Ancín, María & Pindado, Emilio & Sánchez, Mercedes, 2022. "New trends in the global digital transformation process of the agri-food sector: An exploratory study based on Twitter," Agricultural Systems, Elsevier, vol. 203(C).
    18. Armin Varmaz & Christian Fieberg & Thorsten Poddig, 2024. "Portfolio optimization for sustainable investments," Annals of Operations Research, Springer, vol. 341(2), pages 1151-1176, October.
    19. Huarng, Kun-Huang & Yu, Tiffany Hui-Kuang, 2024. "Causal complexity analysis of ESG performance," Journal of Business Research, Elsevier, vol. 170(C).
    20. Rajesh Chidananda Reddy & Biplab Bhattacharjee & Debasisha Mishra & Anandadeep Mandal, 2022. "A systematic literature review towards a conceptual framework for enablers and barriers of an enterprise data science strategy," Information Systems and e-Business Management, Springer, vol. 20(1), pages 223-255, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:sustdv:v:31:y:2023:i:2:p:1027-1037. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-1719 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.