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Annual sustainability and ESG reporting is now becoming a necessity for many businesses, whether driven by region specific regulations and legislation, industry expectations or client demand.
However, doing so is definitely easier said than done. It requires a complex network of data being gathered from multiple sources which then needs to be collated, analysed and summarised in a cohesive report for leadership and possible public publication.
Thankfully, there have been developments in new AI driven technology that can help ease this annual burden, allowing you to focus on utilising the results to make meaningful sustainability impacts.
In this episode Mel Blackmore is joined by Darayush Mistry, Head of Product at Pulsora, to discuss how AI can make a difference in ESG and sustainability reporting, including its benefits, pitfalls and the balance of utilising AI while considering its environmental impact.
You’ll learn
- Who is Darayush?
- Who are Pulsora?
- When did Darayush realise how AI could be utilised for ESG and sustainability reporting?
- What are the positives of AI in this space?
- Why is AI for ESG and sustainability reporting becoming more necessary?
- What are the risks involved in using AI for ESG and sustainability reporting?
- Where is AI making a real difference in reporting?
- What parts of ESG and sustainability reporting need human judgement?
- How does AI help collate data from multiple sources?
- How might regulators react to AI being utilised in reporting?
- How can businesses utilise AI while still considering it’s environmental impact?
- Darayush’s advise to sustainability leaders looking to explore AI solutions
Resources
In this episode, we talk about:
[00:25] Episode Summary – Mel is joined by Darayush Mistry, Head of Product at Pulsora to discuss the use of AI tools in ESG and Sustainability reporting, how you can leverage this technology and what risks you need to be aware of before doing so.
[02:40] Who is Darayush Mistry? Darayush has been working with enterpirise software for the past 2 decades. This technology is used by companies to help operationalise their business.
He began his career at a company called Siebel Systems, which operated in the CRM space, spending 10 years there before moving onto the world of sustainability.
Darayush recalls how everyone was so used to working from a set of spreadsheets just 20 years ago, whereas now most will use a central CRM for business operations.
This is an area that sustainbilty reporting seems to have lagged behind, with many still trying to collate their data from multiple spreadsheets and other external sources rather than having a dedicated central system. This is why he was eager to work with Pulsora, to bring similar solutions to businesses as he once had with CRM’s in the past.
[05:25] Who are Pulsora? Pulsora are an AI-forward SaaS (software as a service) platform.
The Pulsora platform helps businesses to operationalise their sustainability initiatives, which includes data collation, calculation and reporting features. This is set up for scope 1, 2 and 3 level reporting, with considerations for climate related goals, waste water monitoring, biodiversity and policy oriented information.
Darayush’s role as Head of Product means he sits at the intersection between customers and Pulsora’s engineering and design teams. His job is to ensure that whatever Pulsora created ultimately provides value to their customers in the form of successful sustainability outputs.
[07:50] When did Darayush realise how AI could be utilised for ESG and sustainability reporting? Darayush can pinpoint a time four years prior when he first stepped into a more sustainability focused role, speaking to the co-founders of Pulsora back in 2021 they were sharing experiences of using the then early versions of AI tools such as ChatGPT and Gemini.
It clicked for them then that they could do something similar for sustainability reporting, making it as easy as possible while still being accurate. It wasn’t until 2 years later that they had a product to launch with Pulsora AI in late 2024.
This initial product allowed users to write long from narrative responses for carbon disclosures. Regulations like CSRD require a comprehensive disclosure, but not everyone is an expert in parsing the data to write that, so Pulsora AI helped get past that writers block, to give people the building blocks for that professional disclosure.
[11:55] What are the positives and negatives of AI in this space? The biggest benefits include:
- Giving professionals and sustainability teams more time back to achieve their desired outcomes.
- Cutting down on spending time in spreadsheets and on calculations on an annual basis.
- Reduction of repetitive tasks
- Ease of data collection from multiple sources and locations
- Ease of data calculation
- Allowing for pre-audit of data using AI tools
- Highlighting data gaps when rationalizing the data
[17:20] Why is AI for ESG and sustainability reporting becoming more necessary? People are starting to move on from the mindset of ‘Let’s try AI’ to ‘Let’s use AI’.
Time is one of the most precious resources we have, and any tool that can help accelerate more mundane tasks so that people can focus on making results happen should be a priority.
Sustainability teams are under increasing pressure to produce tangible results, something that can be made easier with the help of AI tools.
[20:06] What are the risks of using AI in ESG and Sustainability reporting? Don’t treat AI as this magic wand, it’s a tool you can leverage. At the moment, it’s good at certain tasks, but it cannot act on its own.
In order to progress, sustainability teams need to push on the initiatives to produce results. People know their business best, and though AI can infer certain information and produce a result, it may not always be the best solution for you. You still need that human input into areas such as strategy and action planning.
Darayush reminds us of Amara’s Law: “We as humans severely overestimate technology outcomes in the short-term, and severely underestimate that in the long-term”
Don’t fall into the trap of thinking AI can do everything.
[22:30] Where is AI making a real difference in reporting? Data collection, ad-hoc sustainability reporting and providing insights into the data provided. It can also help with providing a starting point for carbon disclosures or options for various strategies that you could explore.
Currently, the biggest one is data collection, as it can help do this efficiently and consistently, allowing for improved accuracy in your overall sustainability data.
[25:20] What parts of ESG and sustainability reporting need human judgement? Darayush states that these are complementary to each other, it should never be all of one and none of the other.
There will be elements that need more human in the loop and areas where it’s required less. It’s applicable in degrees.
One example of where the human input will be higher is in completing a materiality assessment and figuring out how to execute your decarbonisation strategy, which will require your knowledge and experience of how the business operates, it’s core values and what your ultimate goals are.
AI can do the heavy lifting in areas such as sustainability reporting, as it can collate all the data and create initial reports very fast. But, at the end of the day, humans still need to understand these outputs and provide their own judgement.
‘AI’ today isn’t true AI, they’re LLM’s with a great capacity to collect data, analyse it and provide outputs that can be starting points. It cannot replace human judgement, as we provide the nuance in context and experience needed to apply those results effectively.
AI responses operate in a perfect world where everything is an easy step by step process, which we all know does not reflect reality.
[29:40] How does AI help collate data from multiple sources? Older technologies like OCR (optical Character Recognition) was the go to years ago when scanning various different documents like spreadsheets, PDF’s, receipts etc. This required specific code to be written to read these docs accurately, this would then feed into pipelines to bring this data together. This code was quite rigid, so any changes to document layouts would cause things to break.
AI in comparison is much more adaptable, it’s capable of reading much more natural language and extracting what’s required for its designated task. It also provides a much more friendly UI (user interface), meaning you don’t need an IT specialist to utilise the technology.
[33:15] How might regulators react to AI being utilised in reporting? Based on Darayush’s previous experience in the finance sector when people were using dedicated platforms for financial reporting, the regulators didn’t care where the data came from or how it was collated, they just card if it was accurate.
Regulators want transparency, accuracy and a big part of this is providing an audit trail so they can see where the data came from. They simply want businesses to follow their guidelines, the how you get from A to B is of little importance so long as the result is accurate.
If anything, the existence of these tools will raise the bar of expectations from regulators, as businesses should be able to provide the required information with these tools readily available.
[36:30] How can businesses utilise AI while still considering it’s environmental impact? – AI can certainly aid the sustainability industry in certain areas, such as reporting, but it’s a resource intensive tool.
It consumes a lot of energy and water. Like with most emerging technology, the sustainability impact usually isn’t addressed until much later. Much like with mobile phones, which create tonnes of E-waste every year, not to mention the mined material required to make them. It’s factors like this which eventually get regulators involved to help reduce the overall harm caused.
AI is yet to go through this evolution, but both regulator and consumer pressure is building to reduce the impact of AI. This will inevitably lead to innovation as companies seek to find more sustainable ways to cool data centres and reduce the resource burden.
On the flip side, AI can help save energy in other ways, such as time taken to complete the tasks for a human, which will include travelling to an office and amount of time they use a device for the task. This also has its own carbon footprint, which can comparatively be reduced by using AI to complete the tasks in minutes as opposed to hours or days.
The bottom line as of the start of 2026 is, we know there is a resource issue when it comes to AI, and companies are looking at better ways to address it as the technology develops.
[42:20] Darayush’s advise to sustainability leaders looking to explore AI solutions – Identify a problem space where you can apply AI in a measured way an start using it. The only way you can find out how it impacts you is to use the technology.
Currently, AI shines is areas such as collating data from multiple sources and locations, so if that’s an issue you’re tackling where sustainability reporting is concerned, that’s a good place to start with utilising AI.
If you’d like to learn more about Pulsora, check out their website.
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One of the biggest hurdles for businesses when embarking on their journey to net zero is the calculation required for carbon verification. Depending on the nature and size of a business, it can be quite the undertaking!
Those looking to tackle this challenge have various options available to them, including the use of dedicated carbon accounting software, which we’ll explore in our latest mini-series: From Platform to Proof.
In the first episode of this series, we introduce Jay Ruckelshaus, Co-Founder and Head of Policy and Partnerships at Gravity, to explore the key drivers behind carbon accounting and reporting and how you can maximise value from going through the process.
You’ll learn
- Who is Jay Ruckelshaus?
- Who are Gravity?
- Why do businesses measure their carbon footprint?
- Why is the language of business value becoming more important for sustainability professionals?
- What are the key drivers for carbon accounting?
- How has GHG emissions reporting helped to drive business value?
- What should businesses be thinking about to maximise business value?
- How can businesses keep up with ever changing sustainability legislation?
- The importance of data quality
- How can carbon accounting software help?
Resources
In this episode, we talk about:
[02:05] Episode Summary – We introduce Jay Ruckelshaus, Co-Founder and Head of Policy and Partnerships at Gravity, who will accompany Mel on a 3-part mini-series diving into carbon accounting software and the value it can bring.
In this first episode, they explore the key drivers behind carbon accounting and reporting, and how businesses can maximise the value from the process.
[03:10] Who is Jay Ruckelshaus? Jay’s involvement in sustainability was almost an inevitability, coming from a family of environmental lawyers.
Energy, climate and sustainability were topics that often came up at the dinner table, and so it remained a subject near and dear to his heart.
Initially, Jay thought he would remain in the academic world, studying polarisation and exploring how energy intensive industries think about sustainability. He found his enthusiasm spiked when working directly with companies and individuals on these topics.
As a result, he broke out of the academic world to join forces with a few technology leaders to develop a solution to help businesses measure and reduce their emissions.
[04:45] Who are Gravity?: Jay founded Gravity 4 years ago (2021). It provides a carbon and energy management platform, which assists businesses with compliance to the alphabet soup of sustainability legislation currently in effect, such as CSRD and TCFD.
This platform also uses the data collected to help businesses find and invest in projects to help reduce their emissions, which ultimately saves on energy, costs and utilities.
Their aim was to make it easier for businesses to report their emissions, by streamlining the collection process, and using the data to pre-qualify potential vendors that would fit the businesses needs when it comes to the reduction phase.
Jay initially started with emissions heavy industries such as construction, manufacturing logistics, utilities, metals, mining, energy ect. These are industries where data collection can be very challenging, so it provided a very solid base for their software so that it could tackle these challenges first and provide a way for them to work with various e-commerce, software companies and financial institutions, all within one system.
[09:05] Why do businesses measure their carbon footprint? Historically, back in the 70’s, 80’s and 90’s, sustainability was often wrapped up in the wider corporate social responsibility movement.
We’ve seen a lot of change in the last decade, where we used to have strictly voluntary schemes such as CSR, that are now transitioning into a requirement. Whether that be by stakeholders or legislation.
We’ve also seen a greater interest in ESG metrics, which require solid figures to back up your claims. This trend follows from the introduction of mandatory legislation from the European Union’s CSRD, which is trickling into California law as around 10,000 companies of a certain size that operate in California must now disclose their carbon emissions.
[11:40] Why is the language of business value becoming more important for sustainability professionals? It wasn’t too long ago that sustainability professionals were lumped in with groups that managed general social responsibility.
We’re seeing more dedicated and senior roles in relation to sustainability, such as ‘Chief Sustainability Officer’. These roles now integrate with most every branch of an organisation, from the financial reporting to the general strategy for the business. It becomes a central part of the business.
Its role can reap many benefits for businesses that embed it effectively, including cost cutting, energy reduction, creation or use of innovative products, opening doors to new markets and investment opportunities.
[14:15] What are the key business drivers for carbon accounting? There are many benefits for carbon accounting, such as: –
Saving energy: Energy prices are volatile, and often on the rise. Carbon accounting allows you to have a full view on what you’re consuming and where you can reduce or look to more efficient options.
Building in sustainability from the top down: With increasing scrutiny from stakeholder and consumers regarding sustainability, it’s in leaderships interest to ensure that sustainability is embedded in your business strategy. This alignment sets you up well for the future, In addition to creating an avenue to reap other benefits from meaningful sustainability action.
New opportunities: Embarking on your sustainability journey will open many new doors. Whether this be for innovative new technology, new partners and suppliers that better align with your values, or access to new investment opportunities.
[18:05] How has GHG emissions reporting helped to drive business value? Businesses that get their emissions verified against ISO 14064 can benefit from improved insurance rates and access to green finance.
It’s also a necessary step towards energy and cost savings. You can’t reduce what you can’t measure. Doing this correctly will require time and resources, thankfully we’re at a time where there are a lot of tools to help businesses with data collection for reporting purposes. The key is to understand where you currently stand, and where you can make improvements. From there you can look at vendors to assist and what financing is available to help facilitate the required changes.
Jay states an example of where Gravity managed to save a US based aluminum foundry over $400,000 in energy costs from their initial assessment. This was achieved through identifying energy hotspots and finding vendors and initiatives to help reduce the energy use and costs.
[21:15] What should businesses be thinking about to maximise business value?: The biggest challenge for carbon accounting is typically gathering the data. There are a lot of things to consider, facility energy usage, travel, home workers ect.
To make this easier, you should ideally have a centralised location to report and track your emissions data. You also need to ensure that this is as accurate as possible.
In order to make sure this doesn’t turn into an annual tick-box exercise, you need to embed proactive processes for monitoring and measuring this data. This way, when you have anomalies in energy usage, you can identify these quickly and put plans in place to address it.
[24:25] How can businesses keep up with ever changing sustainability legislation? In recent years, the goal posts for specific sustainability regulation and legislation has changed a lot.
This is in part due to convergence that is happening between the frameworks, countries and Governments adopting the best bits out of other requirements to make theirs more robust. So, while a lot of the information they’re asking for is largely the same, it can still be very confusing to navigate.
Jay advises that businesses focus on getting a core system for reporting, monitoring and measuring energy usage and carbon emissions in place. Depending on the requirements that you need to adhere to, you can slice and dice that data up however it’s needed, but setting up a unified approach that’s embedded throughout your business to get the data needed is they key.
[28:40] The Importance of data quality: Your first attempt at this process will likely be rough and ready. Gathering the basics of what’s available such as utility bills and general energy usage. Presenting this estimation can make for a great business case to put in place measures to get more granular data.
The more granular the data, the more insightful it can be, offering you more opportunities to save money and implement reduction initiatives.
This data will reveal trends, form benchmarks and present opportunities for meaningful action that benefits both the business and the environment, all while satisfying your legal and regulatory requirements.
[30:50] How can carbon accounting software help?: Data collection is hard, getting the data where you need it to be can be nightmare, especially when multiple departments are involved. Having a centralised location makes this task a lot easier.
Calculating this data into something usable is also tricky, and would likely require a skillset that you won’t have readily available. This may also involve knowledge of conversion factors if you have multiple international locations. Having a system that can manage all of this, while using methodologies that are in alignment with best practice standards is crucial.
Lastly, technology such as carbon accounting software, can really help with creating a proactive approach to the measurement and reporting process. It can reveal anomalies and trends to be acted on, as it can help source vendors and projects to help with emission reductions.
If you’d like to learn more about Gravity and how their energy and carbon accounting software can help you, check out their website.
If you’d like any assistance with Carbon Verification, get in touch with the Carbonology team, they’d be happy to help!
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2030 is fast approaching and we’re already falling behind on our Net Zero targets, which will take a coordinated collective effort to get back on track.
As a result, businesses are coming under increasing pressure to monitor, report and reduce their energy use and carbon emissions to meet net zero targets.
This has led to an increase in both mandatory and voluntary regulations that require carbon emissions reporting to verify your net zero claims.
In this episode, Mel continues the ESG Reporting Disclosures series by explaining what the Corporate Sustainability Reporting Directive (CSRD) is, how it affects your emissions reporting, the verification requirements and who qualifies for CSRD.
You’ll learn
- What is CSRD?
- How will the CSRD affect your Emissions Reporting?
- What are the emissions verification requirements for CSRD?
- Who qualifies for ISSB S2?
Resources
In this episode, we talk about:
[00:30] Join the isologyhub – To get access to a suite of ISO related tools, training and templates. Simply head on over to isologyhub.com to either sign-up or book a demo.
[02:10] Episode summary: Over the course of September, Mel will be exploring the latest climate change regulations that may affect your organisation. In this episode she dives into Corporate Sustainability Reporting Directive (CSRD).
[02:55] What is CSRD? – The Corporate Sustainability Reporting Directive (CSRD) is a new EU directive that modernises and strengthens the rules concerning the social and environmental information that companies have to report. It revises the 2014 Non-Financial Reporting Directive (NFRD), extends the scope of covered companies, and strengthens the reporting requirements.
The CSRD was formally adopted by the European Council on 28 November 2022.
The directive is transforming ESG reporting and will start affecting almost 50,000 companies from 2024 by expanding the scope to include all large companies, all companies listed on regulated markets, and non-EU companies with substantial activities in the EU. This includes non-EU companies with subsidiaries operating within the EU or those listed on EU regulated markets.
Many companies located both within and outside the EU will be affected during the CSRD’s phase-in period beginning in fiscal year 2024.
[05:10] How will the CSRD affect your Emissions Reporting?: Under the CSRD, companies are required to report on their greenhouse gas (GHG) emissions. This includes:
- Scope 1 Emissions: Direct emissions from owned or controlled sources. For example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.
- Scope 2 Emissions: Indirect emissions from the generation of purchased energy. This includes emissions from the production of electricity, steam, heating, and cooling consumed by the company.
- Significant Scope 3 Emissions: Other indirect emissions that occur in a company’s value chain. Companies are required to report on significant Scope 3 sources. This could include emissions from business travel, employee commuting, waste disposal, etc.
[07:10] What are the Emissions Verification Requirements? Under the CSRD, companies are required to have their reported GHG emissions data verified by an independent third party. The verification process ensures the accuracy and reliability of the reported information.
Verification options for CSRD include:
- Independent Verification: Companies must engage an accredited third-party verifier to audit and confirm the accuracy of their GHG emissions reports.
- Verification Standards: The verification must be conducted in accordance with recognised international standards, such as ISO 14064-3.
- Assurance Levels: The verification should provide a reasonable level of assurance that the emissions data is accurate and complete.
- Frequency of Verification: Verification is required on an annual basis to ensure ongoing accuracy and compliance with the CSRD.
[10:10] Who qualifies for CSRD? The Corporate Sustainability Reporting Directive (CSRD) applies to a broad range of companies based on the following criteria:
- Companies listed on regulated markets in the EU (excluding listed micro-enterprises).
- Large companies, classified as those meeting at least two of the following three conditions:
- More than 250 employees.
- A turnover of over €40 million.
- Over €20 million in total assets.
- Listed Small and Medium-sized Enterprises (SMEs), although there will be a transitional period when SMEs can opt out until 2028.
- Non-EU companies with a net turnover of €150 million in the EU, and with at least one subsidiary or branch in the union.
If you would like to learn more about CSRD or inquire about the related course, please get in touch with Carbonology.
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