Researcher unveils AI-powered ESG model to boost investments

Nigerian-born Chartered Accountant and Artificial Intelligence sustainability specialist Feyisayo Michael has developed an AI-powered carbon accounting model aimed at enhancing corporate transparency and Environment, Sustainability, and Governance compliance.

Michael, an award-winning researcher, said in a statement on Wednesday that the AI-integrated model could help companies attract sustainable investments by addressing longstanding challenges in carbon footprint measurement, which are often hindered by inconsistent reporting standards and manual data collection.

His research proposes a system leveraging machine learning for real-time emissions tracking, blockchain technology for verification and transparency, and predictive analytics to align businesses with global sustainability goals such as the Paris Agreement and the Science-Based Targets Initiative.

“This AI-powered approach ensures greater accuracy in carbon reporting and helps businesses optimise their ESG performance,” Michael said.

The development comes as companies worldwide face growing regulatory scrutiny and investor demand for more transparent ESG reporting.

He noted that AI is reshaping sustainable finance by optimising investment decisions and risk assessments, particularly as ESG considerations become central to corporate governance.

For Nigeria and other African countries grappling with an energy crisis amid dwindling finances and climate challenges, Michael said AI-driven risk modeling could improve climate finance and due diligence.

His research highlights how green bonds and sustainability-linked loans can benefit from machine learning, while AI-powered carbon credit valuation enhances emissions trading.

“AI-powered ESG analytics are transforming compliance by enabling businesses to automate reporting, enhance transparency, and proactively identify sustainability risks,” he said, adding that AI-driven ESG monitoring could detect reporting anomalies and ensure regulatory alignment.

Michael stated that integrating AI into climate finance could help organisations reduce uncertainty, attract ESG-conscious investors, and lower capital costs for renewable energy projects.

While Nigeria has about 39 million small and medium-sized enterprises navigating a challenging business environment, he said financial and technical barriers limit their ability to adopt AI-driven carbon accounting.

His research suggests that AI-powered financial tools could bridge this gap through AI-based credit scoring for green finance access, automated ESG analytics for compliance and reporting, and AI-driven carbon credit trading platforms to monetise emissions reductions.

“Governments and financial institutions must support SMEs by creating regulatory sandboxes that allow them to test AI-driven sustainability solutions without excessive compliance burdens,” he said.

Michael, who holds an advanced degree in Sustainability with a specialisation in Energy & Finance from Eastern Illinois University, won the Best Paper Award in 2023 from the International Journal of Multidisciplinary Research in Science, Engineering, and Technology.

His paper, AI-Powered Carbon Accounting: Transforming ESG Reporting Standards for a Sustainable Global Economy*, was selected from over 500 submissions.