Mar 9, 2023

AI-Analysis Sheds Light on New Strategic Business Role of Climate Reporting

Today, large scale AI screenings of sustainability reports are building the data foundation for climate-relevant partnerships along whole supply chains.

At the same time, reporting is still often uncharted territory and many companies fall into common traps – resulting in greenwashing accusations and missed deals.

The Climate Choice, a pioneering climate tech startup, shares 5 Big key insights derived from AI screenings on climate reporting’s current issues and best practices.

Berlin, 4th of September 2023 – Communicating climate targets and transition plans clearly and authentically in their sustainability reports is now paramount for companies. Not only because disclosure requirements are steadily increasing, but more importantly because corporate climate maturity is becoming the central criterion for business partnerships in an emerging low-carbon economy. Particularly for supply chain decarbonization, where 90% or more of their total emissions occur, companies are now looking hard for ways to quickly collect climate data from their suppliers on a large scale. This is where AI pipelines come into play by automating the collection of publicly available data from supplier sustainability reports and analyzing it for strategic insights.

The Climate Choice, a pioneering climate tech startup, is at the forefront of this paradigm shift. From their extensive experience in analyzing thousands of sustainability reports using AI, The Climate Choice has identified Big 5 key insights for companies to avoid common mistakes. Because today, unclear communication in climate statements can not only lead to greenwashing accusations, but also destroy ties with B2B customers and strategic business partners. Here are the 5 best practices derived from AI screenings to avoid this by presenting one’s climate statements clearly and authentically:

Concise and Clear: Avoid beating around the bush. Keep your report brief and crystal clear, ensuring that the main points are easily understandable at a glance.

Specificity Matters: Dive deep into specifics. When for example discussing science-based targets, CO2 emissions or decarbonization actions, provide precise explanations. There are numerous ways to interpret these data points, so clarity is essential.

Transparent Disclosure: When talking about decarbonization, the holy grail are CO2e numbers. Be transparent! Display your CO2 emissions across all scopes and categories. This openness demonstrates your commitment to accountability and encourages trust.

Backed by Evidence: Every claim should be supported by robust evidence. Whether it’s emissions reduction achievements or environmental impacts, providing evidence bolsters your credibility.

Be thorough with dating: Information on the timing of actions and planning is extremely important. Most data needs yearly updates, such as emission calculation, certifications or validations. Therefore, date each point of the report and double check the numbers.

Lara Obst, Co-Founder and Chief Climate Officer of The Climate Choice, explains: “With the emergence of corporate sustainability regulations like CSRD (Corporate Sustainability Reporting Directive) and CSDDD (Corporate Sustainability Due Diligence Directive), companies are increasingly turning to AI algorithms to gather information about the climate maturity of their suppliers in order to understand the climate impacts of their whole supply chain. At THE CLIMATE CHOICE, we have recognized this trend and are leading the way in using AI to analyze sustainability reports to extract key climate-related supplier data. The insights from our AI analyses shed new light on current transparency issues and how companies can overcome them.”

As businesses embark on the journey to a future low-carbon economy, mastering the art of climate disclosure takes on a new level of significance. The Climate Choice underscores the importance of adhering to these strategies, as they provide a roadmap for companies to effectively communicate their environmental commitment to business partners, stakeholders, and the world at large.