Just over a year on from the EU’s Corporate Sustainability Reporting Directive (CSRD) entering into force, companies are having to navigate and digest swathes of information to enable them to comply with the disclosure regulation.
While the CSRD has already begun to apply to larger companies with over €40m ($43m) in annual revenue, it will also start to apply to small and medium enterprises in 2026.
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To help companies comply with the CSRD and other regulatory requirements, sustainability software platform Sweep has rolled out new GenAI features.
Its AI assistant Sweepy can ingest large quantities of data, suggest mapping of financial materiality and automate non-financial data reporting and disclosure. Alongside this, Sweep is offering AI-powered recommendations for tackling emissions.
Speaking to Verdict, Sweep’s co-founder and CEO Rachel Delacour explains the need for the technology in the current sustainability report climate, delving into how the product functions and how it will continue to keep pace as reporting standards evolve further.
Why is there a need for GenAI to help with compliance with sustainability regulations?
Delacour: New sustainability regulations like the EU’s CSRD and SEC’s climate disclosure rules are putting immense pressure on organisations to understand, gather and disclose their data accurately – this can involve millions of sustainability data points to measure and keep track of.
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By GlobalDataAI can drastically reduce the time it takes to ingest this data, making reporting more efficient and accurate, as well as being able to analyse this data to make initial recommendations for improvement. Ultimately, it’s about freeing up time for sustainability teams to focus on acting on tasks where they can deliver maximum value while having peace of mind that their data is accurate, up-to-date and easily accessible.
What is the current status of sustainability reporting frameworks?
Sustainability reporting frameworks have evolved significantly in recent years, with a growing emphasis on standardisation, transparency, and accountability.
One of the most notable developments is the introduction of the CSRD in the European Union and EEA (which also impacts many non-EU-based companies).
The CSRD, which will take effect in stages starting from this year, requires a wide range of companies to report on their environmental, social, and governance (ESG) impacts using a common set of standards. This marks a significant step forward in terms of the scope and consistency of sustainability reporting in Europe.
In the United States, the SEC has also taken steps to enhance climate-related disclosures. While the rules are in the last stages of being finalised, it signals a growing recognition of the importance of climate-related rules stateside. Meanwhile, the US State of California has introduced its own, wider-reaching “climate laws”, which require thousands of companies to report on their ESG data.
We can expect to see a more robust and consistent approach to sustainability reporting in the years ahead. This will be critical for enabling businesses to effectively manage their ESG impacts and for empowering stakeholders to make informed decisions based on reliable and comparable sustainability data.
How specifically does Sweep’s AI assistance aid compliance?
Sweep’s AI assistance is a multifaceted solution designed to aid companies in complying with sustainability regulations.
At the heart of this solution is ‘Sweepy’, an AI assistant that streamlines the data ingestion process. By suggesting mappings of financial and impact materiality based on industry benchmarks, Sweepy helps businesses understand and report their sustainability data with clarity.
Sweepy also automates many aspects of non-financial data reporting and disclosures, again, leading to time-savings and greater efficiency.
In addition to Sweepy, Sweep’s AI provides tailored recommendations for emissions factors based on the specific activities of each business. This level of customisation ensures that companies are using the most accurate and relevant data when calculating their environmental impact. The AI also offers suggestions to resolve data input anomalies, which could otherwise compromise compliance and audit processes. By identifying and addressing these issues early on, businesses can avoid potential penalties and reputational damage.
Perhaps most importantly, Sweep’s AI dramatically reduces the time required to ingest the millions of sustainability data points necessary for compliance. This efficiency allows sustainability professionals to focus their efforts on analysing insights and implementing strategies to improve their company’s environmental performance. With Sweep’s AI assistance, businesses can navigate the complex landscape of sustainability regulations with greater ease and confidence.
What are the consequences for businesses that fail to comply with regulations properly?
The consequences can be severe and far-reaching. While specific penalties will depend on the jurisdiction and nature of non-compliance, companies can face significant financial repercussions.
But the consequences extend beyond financial penalties. Companies that fail to meet sustainability regulations can suffer serious reputational damage. In today’s world, consumers, investors and other stakeholders are increasingly prioritising environmental responsibility and transparency. Failure to comply can be seen as a breach of trust and lack of commitment to environmental stewardship, leading to a loss of customer loyalty, decreased investor confidence and difficulty in attracting top talent over the long term.
Non-compliance can also put a company at a competitive disadvantage. As sustainability regulations become more stringent and widespread, businesses that have already invested in compliance and sustainability initiatives will be better positioned to adapt to new requirements and capitalise on emerging opportunities. Companies that lag behind in compliance may find themselves struggling to catch up and losing ground to more proactive competitors.
How has the integration of startup Consequence helped to deliver this solution?
We’re always on the lookout for innovative ways to enhance our platform and provide the best possible solutions for our clients. The integration of Consequence has been a game changer in terms of advancing our AI capabilities as it has allowed us to focus on what matters most – helping our clients to take action to reduce their environmental impact and operate more sustainably.
But it’s not just about the technology. We’re thrilled to welcome the talented Consequence team to the Sweep family as part of the integration. By combining their skills with our existing team of developers, we’re confident that we can deliver the most comprehensive and effective sustainability data platform on the market.
How will the AI be trained to keep pace with the rapidly evolving regulatory landscape?
Our cross-functional teams of technology and ESG experts are maintaining the datasets that power these AI functionalities, whether that is the versioning and updating of a wide range of Emission Factor databases or adjusting the CSRD disclosure capabilities to the latest instructions from the European Financial Reporting Advisory Group.
Sweep AI stays current with regulatory changes through a structured process. As soon as regulation updates are published, they are fed into our algorithm, which parses and simplifies the content for customer understanding. This ensures our regulatory content is always up to date, offering reliable compliance guidance.
As with all AI functionalities, these models are ever-improving and can radically help any user ramp up on carbon and data, and achieve results faster. But they should best also be paired with strong governance and auditability. Sweep also offers deep functionality on this front, with features like transparency on every calculation, activity logs on every single data point, or auditor access.
What are some examples of AI suggestions to resolve data input anomalies?
Sweep uses various methods to check and fix any data irregularities for accuracy, namely: ‘irregular measurements’ to identify outliers, spot significant variation between similar measurements submitted across different time periods, ‘duplicate measurements’ to surface duplicates and catch multiple submissions of the same data points as well as ‘incorrect measurements’ which highlights inaccuracies and finds measurements with negative, invalid or missing data values.
What are some examples of AI-powered recommendations for emissions factors? How would this differ from a human advisor?
Our recommendations are trained on all the emission factor choices made across all our customers, and consultants across millions of rows of data. So, they are based on the shared knowledge of in-house experts and consultants working with companies across locations, industries and sizes.
The recommendations are dynamic, based on a lot of variables. This can for example include the factors already historically used by a company (you want to keep the same factors for consistency and comparability), what similar companies in your industry might have used (if this is a new type of activity where no factor has been selected before), all the way to the location where an activity took place.
Beyond choosing factors for activities, our AI also helps manage the used factors, for example, by automatically grouping different types of factors into folders that can be shared with different teams.
What differentiates your product from other similar ones on the market?
Sweep helps companies track carbon and ESG and is built from the ground up as a powerful and configurable data platform, allowing companies like L’Oreal or SSE to dynamically track and act on millions of data points. This is vital for companies with complex operations across many brands, branches, or geographies, and for those who comply with the increasingly comprehensive reporting frameworks required by regulators.
The data platform architecture also allows us to harness the capabilities of modern AI best, as these models benefit from large datasets.
Sweep’s key enterprise platform capabilities include:
- Collaborative platform: Sweep’s platform facilitates data governance collaboration across companies and their value chains with unique features like the ‘Sweep tree’.
- Processing data at scale: We ensure data security and can efficiently handle large amounts of data.
- Flexible data integration: Our platform can integrate data in various ways, from surveys to third-party systems.
- Advanced reports and dashboards: Sweep leads in providing the ability to create specific reports and dashboards for sustainability performance tracking and various regulatory requirements, like the CSRD.
- Sweepy, our AI Assistant: Sweepy facilitates data injection and ensures its reliability. It can contextually understand company information and generate detailed, sentence-based answers for compliance reports, improving reporting quality and saving time to our customers.
