© Bianca Moraes
A new AI tool will help investors and regulators assess whether a company’s transition plans are robust enough to reach net-zero targets and identify if a company is greenwashing.
Properly assessing the credibility of corporate climate transition plans is essential for the transition to net zero, said Maud Abdelli, head of WWF’s greening financial regulation initiative.
“Greenwashing threatens financial stability because market participants are relying on misleading claims to price transition risks,” she said.
The project was commissioned by WWF and co-produced with the University of Zürich and University of Oxford, and follows the structure of the ChatReport tool. It is meant to address a gap in data and methodology to assess company plans and will be a first screening tool for regulators. It can also be used to assess risk exposure and demand more rigorous transition plans.
A structured analysis is needed to ensure the feasibility and credibility of transition plans, said Julia Bingler, research associate and head of the NLP4SF programme at the University of Oxford.
“Our red flag approach enables artificial intelligence-based analyses, which scales up information extraction and assessment for transition resilient capital allocation,” she said.
The AI tool is aligned with various frameworks published between 2021 and 2023, with 250 individual indicators to create a condensed framework. That includes several requirements, priorities, and red-flag triggers. It offers data-driven tools to assess the claims of a company and then allows regulators to select suspected greenwashing companies for further assessment.
The proposed tool is currently under development and the final results of a pilot test will be published at the end of the year.
This page was last updated September 27, 2023
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
