ESG audits aren’t easy. For many teams, this means weeks of manual work: gathering disclosures from dozens of documents, aligning data with evolving frameworks, and checking for gaps manually. It’s a time-consuming, error-prone process that leaves little room for strategic thinking.
But regulators are tightening the screws. New disclosure rules like the Corporate Sustainability Reporting Directive (CSRD), California’s SB 261, and the International Financial Reporting Standards (IFRS) S1 and S2 demand accurate, comparable, and audit-ready data. If your audits fall short, you’re risking reputational damage and even legal exposure.
The risk is widespread. A global KPMG survey found that 75% of companies are not yet prepared for ESG assessments, even though 29 countries now mandate ESG disclosures and institutional investors remain committed to ESG.
Yet the new wave of ESG disclosure requirements is unfolding as AI tools become embedded in day-to-day business operations. AI-powered tools are helping sustainability and audit teams streamline the ESG audit process, spot inconsistencies early, and improve the quality of disclosures. Here’s how it works, and how to get started.
What is an ESG audit?
An environmental, social, and governance (ESG) audit is a structured assessment of how well an organization’s disclosures align with regulatory expectations, voluntary frameworks, and internal commitments. Some audits are internal; they’re run by sustainability or risk teams to evaluate performance and reporting gaps. Others are conducted by external firms or assurance providers to validate data before publication. A typical audit involves reviewing everything from emissions data and climate risk disclosures to governance policies, DEI metrics, and supply chain practices.
The growing role of artificial intelligence in ESG auditing
AI is rapidly becoming a must-have in ESG audits because it solves a major pain point: data overload and fragmented disclosures.
When you’re working with hundreds (or thousands) of pages of public sustainability reports, internal policies, and supplier documentation, finding the right information is like searching for a needle in a haystack.
AI helps by:
- Scanning large volumes of unstructured and fragmented data
- Automatically extracting relevant climate, sustainability, and governance information
- Standardizing disclosures to align with frameworks like the Task Force on Climate-related Financial Disclosures (TCFD), IFRS, and CSRD
- Validating data against reporting requirements, flagging gaps or inconsistencies
It’s not just about generative AI (like ChatGPT). Tools purpose-built for ESG auditing use natural language processing (NLP) to extract insights from documents, and machine learning to benchmark disclosures and spot anomalies.
Here’s a simple comparison:
| Traditional audits | AI-enhanced audits |
| Manual PDF reviews | Automated scanning and tagging |
| Prone to human error | Consistent validation and flagging |
| Limited scope due to time | Comprehensive, portfolio-wide coverage |
| Time-consuming reporting | Auto-generated insights and reports |
AI doesn’t replace human auditors, but it frees them up to focus on strategy, not spreadsheets.
How to use AI for ESG audits: 4 practical steps
Here’s how to bring AI into your ESG audit workflow, step by step.
1. Identify your ESG data sources
Start by mapping out where your ESG-related information lives. This typically includes:
- Public sustainability and annual reports
- Internal documentation on policies, risks, and procedures
- Vendor or portfolio company data
- Regulatory filings and past audit materials
Some of this information might be structured, like emissions spreadsheets or governance KPIs, but much of it lives in static PDFs, Word docs, and board minutes. AI tools can help by pulling these scattered sources into one place for analysis.
Without this step, critical details like how climate risks are embedded into governance or whether supplier commitments are backed by data can easily be missed.
2. Choose the right AI-powered tools
Look for platforms that can handle the variety and complexity of ESG data. The best AI tools ingest and analyze unstructured information, turning it into clear, comparable insights.
Ask questions like:
- Can this tool analyze custom frameworks, not just standard ones?
- Does it update regularly to stay aligned with evolving regulations?
- Can it flag disclosure gaps across both qualitative and quantitative data?
Manifest Climate, for example, pulls data from multiple sources—public disclosures and or internal, private documents—and turns them into audit-ready assessments. Our ESG Audit solution helps teams surface gaps, assess risks, and align with the latest standards and custom frameworks. Learn more about our ESG audit solution.
3. Analyze ESG disclosures
Once your data is uploaded, AI helps assess how your disclosures measure up, whether against regulatory frameworks like IFRS and CSRD, or custom internal frameworks.
Manifest Climate’s platform compares your disclosures against hundreds of sustainability datapoints and best practices, flagging where key details are missing, inconsistent, or non-compliant. It also highlights anomalies that human reviewers might miss, like different Scope 3 emissions figures reported in two places, or a governance policy that contradicts a stated board oversight claim.
Research supports this: AI improves ESG assurance quality by analyzing vast, complex datasets far faster than humans, helping teams deliver more accurate and efficient audit outcomes. You can also use AI to generate standardized disclosure summaries across business units or regions, making it easier to compare performance and ensure consistency.
4. Review and find opportunities for improvement
AI doesn’t just identify gaps. It can also suggest where to focus next by showing you which disclosure areas are strong, which need work, and which are trending in the right direction.
These insights help audit teams prioritize high-impact actions, build a stronger narrative for investors and regulators, and support long-term ESG strategy. As more climate teams embrace AI tools, AI-enabled audits allow teams to use audits for a higher purpose: a chance to improve their ESG strategy, implementation, and disclosure.
What AI can’t do (and why human judgment still matters)
As we’ve explored in our guide to AI for sustainability reporting, AI is a powerful tool, but it’s not a silver bullet.
It can’t:
- Decide what’s material to your stakeholders
- Weigh trade-offs between different ESG risks
- Evaluate strategic context or future-facing commitments
AI doesn’t understand nuance the way your sustainability, finance, or legal teams do. That’s why the best audit outcomes come from combining AI-driven insights with expert judgment. Let the tech handle the heavy lifting, and let your people can focus on moving the company forward.
| Case study: streamlining ESG audits at KingSett Capital KingSett Capital, a Canadian real estate investment firm, needed to improve how it tracked and validated ESG disclosures across a growing portfolio. Using Manifest Climate, KingSett’s team automated the review of their annual disclosures and aligned them with leading frameworks. The platform flagged missing data, mapped climate risks to board oversight, and helped identify opportunities for stronger reporting.The result? A clearer understanding of their climate exposure—and a faster path to confident, audit-ready reporting. Read the full case study → |
Why use AI for ESG audits
For many organizations, ESG audits still rely on spreadsheets, PDFs, and onerous manual workflows. That means every audit cycle starts from scratch—manually locating data, checking disclosures against evolving standards, and trying to ensure consistency across dozens of documents.
Before AI: A typical internal ESG audit might take several weeks (or even months) depending on the project size and complexity. Teams comb through past reports, extract key disclosures by hand, cross-reference against frameworks, and manually log gaps in Excel. This is slow, but it’s also risky. Inconsistencies between team members or gaps can damage credibility with investors, regulators, and internal stakeholders.
With AI tools: That same process can be streamlined dramatically. AI-powered platforms like Manifest Climate scan all relevant documents in minutes, map disclosures to sustainability reporting or custom frameworks, flag inconsistencies, and generate standardized, audit-ready insights. This cuts review time from weeks to hours and frees up teams to focus on interpreting results, addressing gaps, and planning next steps.
This shift is already well underway. 72% of companies are piloting or using AI in financial audit and reporting processes, and that number is expected to reach 99% in the next three years.
Here’s why more audit and sustainability teams are integrating AI into their workflows:
- Save time and reduce costs: AI automates manual work that once took days or weeks
- Improve accuracy: Fewer manual errors, more consistent data
- Boost confidence: Ensure disclosures meet stakeholder and regulatory expectations
- Unlock insights: Surface patterns, risks, and opportunities across documents and business units
- Free up experts: Let your team focus on strategy, not administration
In short, AI helps ESG audits go from reactive to proactive.
Streamline your next ESG audit with Manifest Climate
Manifest Climate makes it easier to manage ESG audits at scale. Our platform uses AI to streamline data collection, map disclosures to evolving frameworks, and deliver audit-quality insights, fast.
With features like automated document scanning, gap analysis, and custom audit alignment, you can go from data chaos to confident compliance in less time.
Book a demo to see how Manifest Climate helps you move faster, reduce audit risk, and make your disclosures count.
