Artificial Intelligence for Sustainability

aiESG Visualizes Corporate Impacts at the Product and Service Level

aiESG’s analysis service incorporates the company’s own AI into a database co-developed by Kyushu University and Harvard to perform comprehensive ESG assessments of each individual product and service throughout a supply chain.

Sponsored Content | / This article is sponsored by SUSCOM | By SUSCOM | Published 3 days ago | About a 4 minute read

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Companies are currently facing a wave of new ESG score-based analysis and assessment requirements. It is a tide that cannot be ignored, as the results also affect investor decisions and corporate branding. Yet at the same time, there are so many different measures that companies struggle to understand and meet each of their requirements.

It is with all this in mind that aiESG, Inc. began offering its ESG analysis service in 2022. We spoke with Shunsuke Managi — the company’s representative director, professor of Urban Systems Engineering and director of the Urban Research Center at Kyushu University — to learn how the service differs from other analyses and how it could impact corporate ESG efforts.

Comprehensive and effective ESG analysis utilizing AI

We have entered an age where companies are expected to have an end-to-end grasp of their product and service supply chains and demonstrate that there are no issues in any of the ESG pillars. To do so, major companies appoint personnel to create monitoring systems, but the enormous expense of continuously collecting and updating information makes it impossible for some to continue maintaining these accountability functions.

“As it is now, I think a number of companies continue their ESG initiatives just because they feel like they have to,” Managi explains. “But companies that saw what was happening, proactively established their own rules and took action are those that now have the competitive edge. As realistic solutions to this, predictions and simulations are key.”

aiESG’s analysis service can perform comprehensive ESG assessments of each individual product and service throughout an entire supply chain. It incorporates the company’s own AI into a database co-developed by Kyushu University researchers, together with Harvard and other academic institutions, enabling sophisticated analysis from a variety of perspectives.

“Corporate supply chains are linked to countries and regions worldwide. If there are risks with high likelihood when procuring from a certain country, we can use AI to see how switching to another region may reduce the risk. Rather than look at the entire extensive structure of the supply chain, we select certain products or processes and identify those that are high risk. Doing so allows for early-stage improvements and for activities to be continued.”

By entering cost or usage data for materials used in a product or service, aiESG helps companies visualize and quantify metrics at an individual level. The service can measure metrics related to approximately 3,200 ESG issues — including greenhouse gas emissions, biodiversity, air pollution, mineral resources, forced labor, child labor and gender equality. The service can also be customized according to a company’s own assessment indicators.

“aiESG can [also] compare a company with competitors to visualize strengths and weaknesses — allowing them to consider the relative benefits of strategies such as boosting strengths, improving weaknesses, or maintaining the current course if an immediate solution is difficult,” Managi adds. “For example, wellbeing is a target that many companies are focusing on but which is hard to compare. aiESG enables companies to quantitively understand which kinds of infrastructure, organizations and activities could improve wellbeing and can help communicate the level of those improvements.”

The service also uses AI to analyze daily news from approximately 60 countries and identify the latest assessment trends, which also helps provide various recommendations.

“Many surveys, major financial institutions and researchers have been indicating that ESG metrics have some degree of impact on corporate profits and stock prices, but I thought this should be probed more deeply. When we tried aiESG analysis, the results showed that these metrics can explain around 10 percent of stock price fluctuations. Ultimately, doing an analysis with comprehensive data makes it clear what needs to be improved — which should be of huge benefit for companies.”

Embedding sustainability throughout society

Managi has been active internationally, including serving as a representative for reporting by the United Nations’ Inclusive Wealth Index, and has also conducted joint research with companies and local governments to scale sustainability and ESG in Japan. These experiences led him to the realization that no progress can be made without an organization that drives it, so he is now working with companies through aiESG to create a more sustainable society together.

“Things are going well since service was launched two years ago, and aiESG has been introduced at both major companies and startups,” Managi says. “Moving forward, I’d also like to expand this to local governments. Matching the products, services, technologies and skills of companies to the issues and demands of local communities can be of benefit to both parties. Once we have excellent positive case studies, we can venture into other regions and countries. I think creating more of these opportunities will enable real regional revitalization, and specializing in unique strengths at an even earlier stage will likewise help companies survive.”