Diligent's Keith Fenner on AI for Innovation and Compliance

The adoption of artificial intelligence (AI) is accelerating rapidly, even as concerns about its environmental impact continue to grow.

According to government research, around one in six UK organizations have already integrated at least one AI technology into their operations.

While the energy-intensive nature of AI systems raises important sustainability questions, many argue that AI has the potential to drive significant positive change in areas such as ESG (Environmental, Social and Governance) and sustainability for businesses.

Keith Fenner, SVP and GM International at Diligent, a leading governance, risk and compliance (GRC) software provider, asserts that as ESG and sustainability become increasingly important, the need for consistency and transparency in organisational reporting also rises.

With more than 20 years of international leadership experience at companies like Microsoft and Sage, Keith advocates for utilising AI to monitor ESG metrics, gain regulatory insights and streamline reporting through customised dashboards.

In this Q&A, he delves into the intricate relationship between AI and sustainability, discussing the necessity for regulation, the influence of shareholder activism and how AI can be leveraged to tackle urgent environmental challenges.

Q. What is the primary environmental concern associated with AI? 

Despite the excitement and hype around the promise of AI, attention has now been drawn to the harmful environmental impact of this technology. 

It's true that with AI demands, data centres are taking a lot of power. With the introduction of any new technology, even PCs in the early 80s, the initial phase demands a higher power requirement. This is because AI servers are incredibly energy intensive, consuming nearly 10 times the power of traditional data servers. 

But as technology gets better, the cost is going to significantly reduce. With AI models, as they get better day by day, the need for LLMs is slowly reducing and the industry is evolving toward small language models, closer to the end user and end device. 

The way the models are being used today versus how they are being used tomorrow is different. 

In the future, they will be a lot more efficient and the cost per unit will go down. AI will also offset many other things that we do in day to day life, and the overall ESG impact will be minimal in future.

Q. What are the key ESG regulations that businesses need to be aware of, and how can AI help? 

There has definitely been increased scrutiny on corporate sustainability over the last few years. This is seen through the UK government’s recent plans to regulate ESG raters which will help to improve the lack of transparency behind ratings, as well as through EU regulations such as the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the Sustainability Disclosure Requirements (SDR). 

Businesses must stay informed and compliant to avoid fines and maintain a positive reputation. This is where AI comes in.

AI can play a significant role in helping companies conduct gap analyses to align with regulation requirements and gain a clear view of how their data measures against standards and frameworks.

Q. How can AI be used to improve sustainability within businesses and what are some specific examples of its applications? 

There are high ambitions when it comes to ESG, as 36% of UK leaders want to be recognised as sustainability leaders within their industry. According to the same survey, 41% of UK and Irish business leaders said boards need more data or insights for clarity and progress on sustainability goals.

Successfully implementing technology that enables your organisation to automate data collection, cleansing, analysis and reporting will be what sets the frontrunners apart in terms of achieving these sustainability goals.

This is where AI tools can be useful in providing greater clarity and sustainability report analysis to boards and executives. In this way, AI can support sustainability professionals, the board and executive team in instantly understanding how their organisation’s focus on ESG topics not only compares to their own metrics, but also industry peers, wider industry standards in reporting and emerging ESG trends.

Q. What are the challenges and opportunities for businesses in balancing innovation with sustainability? 

 The integration of AI into business processes, including the GRC systems that keep organisations secure and leaders informed, presents both challenges and opportunities for sustainability.

On the one hand, AI can streamline processes, support data collection and conduct gap analysis to align with regulatory requirements. On the other hand, the development and deployment of AI can be resource-intensive and impact the environment.

To navigate this, businesses must implement AI in a responsible way. This involves ensuring transparency, accountability and ethical considerations throughout the AI lifecycle. 

Leveraging AI that is reliable and transparent, while remaining mindful of the environmental impact is important for businesses to ensure they continue to meet sustainability goals, while also reducing costs and improving process efficiencies. 

Through embracing innovative technologies, businesses can more easily comply with regulations and avoid costly fines or even legal challenges. In this way, AI can help in future proofing the business.

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