All of the new global financial reporting, GRC and ESG legislation is putting new pressure on businesses to consolidate and clean up their data and processes. Could generative AI help alleviate some of this pressure? Businesses are unsure how to make the most of it, and the regulations themselves continue to evolve.

This was a priority for delegates at last week’s Amplify EMEA conference in Amsterdam, hosted by Workiva, which provides a cloud-based platform for integrated reporting on ESG, financial reporting and GRC (governance, risk and compliance). The agenda highlighted trends aimed at rethinking data, reporting and governance. In this complex market, where a mix of consultants, auditors and suppliers work closely with their clients, AI is starting to have an impact, particularly in the ESG space, where data sources and processes are not are not as predictable as for financial information.

Speaking on a panel titled “Can You Anticipate Regulatory Change?” » Andie Wood, vice president of regulatory strategy at Workiva, told delegates that even regulators are now trying to streamline the increasingly complex requirements placed on organizations. She says:

Over the past five years, many new regulations have been introduced, and regulators have been told by businesses that they are feeling extremely under pressure. I’m not just talking about big reporting regulations, but a whole suite of regulations under the Green Deal and other environmental changes.

We hear them starting to talk about focusing on implementation. What are we going to do next? We’ve actually seen all commissioners given a mandate to specifically find reductions in reporting burden. So we’re very interested to know what they actually think about reducing the reporting burden. Everyone gathers together. They decide what their new policy will be.

According to panel moderator Paul Dickinson, founder of the CDP, robust data and processes will undoubtedly play an important role in new regulatory frameworks. He comments:

We’ve already explained that if you really want to make the best use of the almost unlimited and almost unimaginable capabilities of artificial intelligence, artificial intelligence, you need incredibly good data benchmarks right now to be able to take advantage of them in the future. future.

The growing role of generative AI

In the ESG space in particular, having robust data and processes is an important step in enabling generative AI to play an important role. Naval Khana, director of PwC UK, says technology could help businesses meet their commitments under updated regulations such as CSDR and ISSB.

He presented figures at the conference from this year’s PwC Annual CEO Report, which revealed that 68% of CEOs believe generative AI will increase employee efficiency, and 44% expect it increases profits. In the report, PwC says it is currently actively engaged with 950 of its top 1,000 U.S. consulting clients and is currently discussing its use and implementation with its audit clients. Khana says:

Everyone has access to generative AI, which has led to an unusual situation, the democratization of a new technology, where personal use of generative AI, like ChatGPT, came before companies get in tune. It is unique and has a massive impact, which businesses view with a mixture of enthusiasm and trepidation.

Generative AI is already making inroads in content generation, analysis and interpretation, according to Khana. He says trends such as interpreting data from multiple media inputs using AI agents that can handle text, video and audio inputs are having a major impact on efficiency. Domain-specific models such as Harvey in the legal fieldand AI systems that use “Human in the Loop” models are also becoming more efficient.

However, Jeannette Gorzala, vice-president of the European AI Forum, told delegates they needed to guide the technology until they were confident they could use the models and alleviate any fears of risk. She says:

Two thirds of employees now use ChatGPT secretly at work, but only a third of companies offer their employees advice on how best to use gen AI. So there is a gap, a void of sorts, and for businesses to overcome the problems and innovate using AI generation, we need to have a top-down approach, as well as the current bottom-up approach.

Gorzala, who represented more than 2,000 European AI companies during the legislative process of the European AI law, says the approach taken by the law will help organizations define the scope of their systems based on risk . She comments:

AI generation will be disruptive and there will be problems in reporting, but data literacy will gradually develop and the use of AI generation tools in specific areas will increase, without adding any risk.

Different paths to adoption

But while these companies may need the efficiencies offered by generative AI-based platforms, it makes no sense to start building their own generative AI systems from scratch, according to Simon Atherton, director CFO Advisory Practice at Deloitte UK. He believes it makes more sense for organizations to use software companies like Workiva that integrate generative AI into their platforms. He says:

In some areas like the front office, we all collaborate with organizations that are already using Generation AI. But from a finance and GRC perspective, I think people are just trying to understand what the use cases are. My view is that most will never buy and build their own generational AI applications, but will use them when companies like Workiva integrate them into their platforms.

He draws a parallel with the emergence of Robotic Process Automation (RPA):

About 5 years ago, there was a massive trend for RPA software. Everyone was going to use RPA. I actually don’t think many people in finance use RPA because the way you report, the way you invoice, the way you pay invoices, the way you keep logs, requires the same organization .

So I think vendors will integrate AI generation into their platforms. This is how finance works. If Workiva creates something that uses AI generation, it’s all about risk. Workiva will say, “We tested this. We have these protocols. That’s it, otherwise you have to build it yourself. It makes no sense to build it yourself.

Workiva’s Wood says organizations aren’t yet sure about integrating generative AI into their reporting processes, but that it has become a learning process. She comments:

There is uncertainty. How well can AI actually write? Does it produce high-quality disclosure? Does this produce a common disclosure? But we certainly see it used to produce the initial outline and then the circumstances. I think it’s already helping, but we’re still learning.

Gorzala, of the European AI Forum, believes it will be essential for companies to take their employees on this learning journey, if they want to use generative AI effectively and safely to meet their regulatory obligations. She says:

The disruptions brought by AI will drive innovation, provide ample opportunities to achieve more, and bring benefits to all organizations. Supporting employees on the learning journey is an important first step. There will be huge real-time savings from automating reporting of real-time information sources and using more generational AI tools to ensure compliance.

My opinion

Delegates at the Workiva Amplify EMEA conference are fed up with the ever-changing global regulations hitting them. And while financial reporting has evolved incrementally over several decades, the ESG field raises all sorts of additional concerns, including the robustness of different data sources and the processes they now face. One delegate told a panel that she was tired of constantly thinking about risk and wanted to start thinking about creating business value.

It doesn’t make sense for these organizations to start integrating generative AI from scratch. They should start adopting this disruptive technology as it expands through the platforms they already use. Vendors like Workiva, as well as management consultants and auditors working in this area, are ready to step up their efforts.