Artificial Intelligence for Sustainable Finance: Why it May Help

Abstract

Developments in Artificial Intelligence (AI) and machine learning have led to the creation of a new type of ESG data that do not necessarily rely on information provided by companies. This paper reviews the use of AI in the ESG field: textual analysis to measure firms’ ESG incidents or verify the credibility of companies’ concrete commitments, satellite and sensor data to analyse companies’ environmental impact or estimate physical risk exposures, machine learning to fill missing corporate data (GHG emissions etc.). Recent advances in LLMs now make it possible to provide investors with more accurate information about a company’s sustainable policy, innovation or supply chain relationships, or to detect greenwashing, We also discuss potential challenges, in terms of transparency, manipulation risks and costs associated with these new data and tools. 

Keywords: Artificial Intelligence, Machine Learning, sustainable finance, ESG, Large Language Models, satellite imagery, investment

JEL Classification: G11