Innovation and the convergence of AI and ESG in Philippines

MANILA, Philippines — The Philippines is experiencing a transformative period marked by the convergence of Artificial Intelligence (AI) and Environmental, Social and Governance (ESG) principles. This synergy is driving innovative solutions to address the nation’s most pressing challenges, from environmental sustainability to social equity.

The country has also seen a growing commitment to ESG principles, driven by both regulatory pressures and market demands. Local companies are increasingly recognizing that strong ESG performance can lead to better risk management, enhanced reputation and improved financial performance. According to KPMG’s 2023 ESG Assurance Maturity Index, businesses that effectively integrate ESG considerations with robust governance, data management and digital technologies tend to be more prepared for regulatory requirements and market expectations.

AI and ESG: A powerfulcombination

AI’s capacity to analyze vast datasets and generate actionable insights is being increasingly harnessed to tackle ESG issues. Conversely, ESG principles ensure that AI technologies are deployed ethically and responsibly, benefiting society and the environment. The convergence of AI and ESG in the Philippines fosters innovations that support sustainable development while promoting economic growth.

AI for environmental sustainability

The Philippines faces significant environmental challenges, including deforestation, pollution and climate change. AI is aiding in addressing these issues through innovative applications in environmental monitoring and management.

Being highly prone to natural disasters such as typhoons and floods, the Philippines is leveraging AI to enhance disaster preparedness and response. The Department of Science and Technology has implemented an AI-powered weather forecasting system to help the country build its climate resilience. In addition, the Philippine government inked a memorandum of understanding with a California-based startup focusing on AI weather forecasting. This agreement aims to provide the Philippines with a high-resolution AI-powered weather forecasting system, enabling our weather system run by PAGASA to use machine learning models of historical weather data to produce the forecasts. This will mean more time for local government units (LGUs) to prepare early against disasters.

AI for social equity and inclusion

The Philippines has a diverse population with varying access to social and economic resources. AI is being used to bridge these gaps, particularly in the fields of education and healthcare.

AI for governance and transparency

Governance is a critical aspect of ESG and AI is enhancing transparency and accountability in the Philippines.

The Commission on Audit (COA) of the Philippines has started using AI and data analytics to detect anomalies in government transactions. By analyzing large volumes of financial data, AI algorithms can identify patterns indicative of corruption, such as unusual spending spikes or discrepancies between reported and actual expenditures. This proactive approach helps in curbing corruption and promoting good governance.

Challenges and considerations

While the convergence of AI and ESG presents numerous opportunities, it also comes with challenges that need to be addressed:

- Data privacy and security. The deployment of AI necessitates the collection and processing of significant amounts of data, raising concerns about data privacy and security. Robust data protection frameworks and ethical guidelines are essential to safeguard personal information.

-  Bias and fairness. AI systems can reflect and amplify existing biases present in the data they are trained on. Ensuring fairness and transparency in AI algorithms is critical to prevent discrimination and ensure equitable outcomes.

- Regulatory compliance. Implementing AI-driven ESG initiatives requires navigating complex regulatory environments. Harmonizing regulations and developing clear standards can facilitate the deployment of these technologies.

As the Philippines continues to harness the power of AI for ESG, addressing these challenges will be crucial to maximizing AI’s potential to significantly contribute to the country’s sustainable development.

By leveraging AI, organizations in the Philippines are positioning themselves for long-term success in a rapidly changing global market.

Know more about tech and ESG at KPMG in the Philippines’ Innovation Summit 2024 on 4 July. Gain valuable perspectives from industry leaders as they explore the theme, ‘Tech Horizons: Unleashing the Future of Innovation.’ Seize the opportunity to learn the latest insights on Artificial Intelligence, ESG, Digital Trust and Digital Transformation. Join us virtually via Zoom by registering through this link: http://bit.ly/4bsxLlt.

Gilbert Trinchera is a Partner from the Technology Consulting Group of KPMG in the Philippines (R.G. Manabat & Co.), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

For more information, you may reach out to Gilbert Trinchera through [email protected], social media or visit www.home.kpmg/ph.