Green finance is a primary focus for the many companies working toward emissions reduction targets. It involves making financial decisions with sustainable development in mind, such as investing in renewable energy or issuing loans tied to carbon offsets. In Southeast Asia, considerable attention has been paid to sustainable financing, as evidenced by the establishment of organizations like the Singapore Green Finance Centre (SGFC).
While there are a plethora of ways to “greenify” financial decision-making, one recurring theme is the use of Artificial Intelligence (AI). AI is used for anything from assessing a company’s climate risk to identifying instances of greenwashing.
Financial institutions in Southeast Asia have been ramping up their green financing efforts. Three prominent examples come from UOB, OCBC, and RHB.
As Southeast Asian companies increasingly link finances with sustainability, AI-based technologies will be critical. Climate tracking software infused with AI can facilitate Environmental, Social, and Governance (ESG) integration, perform climate risk modeling, identify sustainable investment opportunities, and accurately verify a company’s eco-friendly claims.
Investors and potential customers alike are increasingly preferential toward companies that demonstrate their commitment to building a sustainable planet. Financial decision-making is the catalyst for every business project imaginable. Whether executives at a hedge fund are discussing potential companies to acquire or a manufacturing plant wants to transition to renewable energy, a transaction must be made. In this vein, it’s only natural to bake sustainability into all things finance to support climate goals. Where can your company improve in terms of decarbonization? How well does a potential partner adhere to climate regulations? Questions such as these, once a mere afterthought among upper management, are now starting points in many discussions.
But relying solely on human intellect is a mistake if you want to ensure the most optimal outcome. AI-based software tools can shed light on things that humans cannot. AI identifies trends and patterns that the human eye would never see. What might look like a great investment on paper could very well be a disaster lurking in the shadows. Whatever the goal may be, AI is an invaluable technology for any firm aiming to streamline finance decision-making and maximize its positive impact on the environment.
For a more thorough assessment of how companies’ sustainability goals, such as green finance, can be supported with AI tools, download the report: Leveraging AI and ML for Sustainable Growth in Southeast Asia. The report dives into the latest AI innovations, recent activities, key use cases, and notable solution providers.
Rachel Kong is a Research Analyst within ABI Research’s Asia-Pacific Advisory team, focused on issues related to sustainable technology implementations and digital transformation. She conducts research and analysis on areas such as sustainable software and the carbon footprint of key emerging technologies driving sustainable growth. Rachel also monitors key technological developments within the Southeast Asian region as part of the Southeast Asia Digital Transformation Research Service.