Today, sustainable investing is a core expectation for financial institutions. Clients, shareholders, and regulators are all demanding more rigor—less greenwashing, more credible data, and stronger ESG performance. Banks, insurers, and asset managers are expected to divest from high-risk sectors, offer ESG-positive financial products, and back up every sustainability claim with defensible evidence.
But making sense of environmental, social, and governance (ESG) data is hard work. There’s too much information, not enough standardization, and high pressure to act fast. At the same time, disclosure regulations—from the European Union’s Corporate Sustainability Reporting Directive (CSRD) to California’s new climate laws—are tightening rapidly, and the benchmark for what counts as comprehensive ESG reporting and performance seems to shift constantly. Financial institutions need tools that can keep up with this pace of change. AI isn’t a “nice to have”—it’s becoming essential infrastructure for modern investment strategy.
For many institutions, the real challenge goes beyond accessing ESG data. The true difficulty lies in turning that information into useful, timely insights. Manual research takes time, which is one reason why so many institutions still struggle to keep up with climate risk management. At the same time, data from different sources tends to be contradictory (what to believe?). And by the time you’ve made some sense of it, the opportunity to make a meaningful decision may have passed.
What’s holding firms back from AI adoption?
Despite growing urgency, many firms are still hesitant to implement AI in their sustainability workflows. Some lack internal expertise or worry about data privacy. Others feel locked into legacy systems that weren’t built to handle ESG data. By choosing tools that integrate easily with existing processes, firms can get started quickly and scale their efforts over time. The key is to find a platform that delivers actionable insights without adding complexity.
Another common concern is the perceived lack of transparency in how AI works. Many teams worry that AI-generated insights may be difficult to explain to internal stakeholders or regulators. That’s why it’s essential to choose tools that not only generate insights but also show their work, offering audit trails, source links, and customizable outputs that compliance and reporting teams can understand and trust.
But the best tools offer this and more. With these tools at their disposal, financial institutions can leverage the true power of AI to transform their ESG strategies: in particular, how they collect, analyze, and act on sustainability information. The result: faster, smarter, and more strategic investment decisions.
1. Aggregate ESG information and automate analysis
The problem with fragmented ESG data
One of the biggest pain points in sustainable investing is how fragmented ESG data can be. Firms rely on different kinds of data (third-party scores or ratings, company disclosures, and sometimes, privately supplied information) to understand a company or even industry’s unique sustainability risks and opportunities. This manual approach is slow and complicated. Should you trust a third-party score, or a company’s own report? How much weight should you give to one over the other? Individuals may find themselves making these calls ad-hoc and alone, which creates another problem for firm-wide standardization.
How AI improves ESG analysis
AI tools like Manifest Climate are transforming how sustainable investing and stewardship teams work. By using large language models (LLMs), these platforms can analyze thousands of documents, disclosures, and data sources—including PDFs, web pages, filings, and internal records—in seconds. This eliminates the need for manual review of sustainability reports or time-consuming cross-referencing of regulatory guidance.
For example, Manifest Climate’s expert-trained AI can detect ESG-related language in corporate disclosures, classify it by topic (like emissions targets or board diversity), and assess alignment to frameworks—giving analysts faster, clearer insights.
From research to real insight
Instead, well-built AI models can automatically surface relevant ESG insights, spot inconsistencies, and uncover trends across entire portfolios, presenting insights in standardized and comparable ways. This frees up investment teams to focus on strategy rather than research.
Learn more about how Manifest Climate helps aggregate and analyze ESG data →
2. Improve portfolio screening and sustainable allocation
The limits of traditional screening
Investment firms are under pressure to manage ESG risks while still hitting financial targets. But many of the tools they rely on have a major lag. ESG data is often outdated, incomplete, or locked into rigid categories that don’t reflect real-world complexity.
Real-time insights matter
AI can change this reality by providing firms with up-to-date, company-level ESG insights, allowing investors to assess climate and sustainability performance in real-time. This enables better screening of high-risk assets and more strategic capital allocation to companies that align with climate targets and demonstrate strong ESG performance.
For firms managing multi-asset portfolios, this unlocks a key competitive advantage. They can shift faster, engage more effectively, and ensure their portfolios reflect both fiduciary duties and long-term sustainability goals.
Staying aligned with global regulations
Beyond financial performance, AI also helps align portfolios with regulatory frameworks like the EU Taxonomy and Sustainable Finance Disclosure Regulation (SFDR). By mapping company disclosures to these standards, investment teams can better understand where their capital is exposed to regulatory risk and take proactive steps to mitigate it.
| Leading firms trust Manifest Climate Financial institutions like DWS, Capital One, and National Bank trust Manifest Climate to assess risks and opportunities across investment portfolios, financing activities, and underwriting decisions. These organizations use the platform to support responsible investing, sustainable finance, and robust risk management, while ensuring they stay aligned with global sustainability reporting standards. |
3. Unlock actionable insights for strategic engagement
Moving from screening to stewardship
Sustainable investing requires more than screening out poor performers. It also demands active stewardship, engaging with companies to influence climate and ESG outcomes.
Deeper data for meaningful conversations
But to have meaningful conversations, stewardship teams need more than high-level ESG scores. They need insight into what a company is disclosing, what’s missing, how that compares to peers, and whether they’re making real progress.
AI-powered tools can identify red flags, track changes in disclosures over time, and flag where a company’s commitments aren’t backed by concrete action. This helps investors engage more strategically, support proxy voting decisions, and hold companies accountable.
With these insights in hand, stewardship teams are better positioned to influence change and drive both ESG improvements and long-term value.
| KingSett Capital: AI-powered engagement in action KingSett Capital, a private equity real estate investment firm managing $18 billion in assets, leverages the power of AI to go deeper on their ESG impact. As part of their ESG stewardship, KingSett uses Manifest Climate to benchmark their disclosures against peers and evolving regulatory expectations. “Before Manifest Climate, we just didn’t have an easy way of finding out whether we were leading or lagging,” says Kit Milnes, VP of Sustainability & Resilience. Now, the team can quickly identify which peers are setting which targets—and why—and tailor their engagement strategy accordingly. This has helped KingSett become more proactive in how they allocate capital and influence positive change across their portfolio. Read more → |
Smarter investment decisions start with AI
To stay competitive, meet regulatory expectations, and deliver long-term returns, financial institutions need better ways to turn ESG data into action. AI is no longer optional. It’s essential for cutting through the noise and making faster, more informed decisions.
Manifest Climate helps financial institutions of all sizes make sense of climate and sustainability data. Whether you’re managing a portfolio, conducting due diligence, or preparing for new regulations, our AI-powered platform gives you the insights you need, without the research backlog.
As sustainability reporting evolves, AI will also play a growing role in scenario analysis, climate stress testing, and forecasting regulatory impacts. Institutions that build these capabilities today will be better positioned not only to manage risk but also to find opportunity in the transition to a low-carbon economy.
Ready to see how AI can transform your ESG strategy?
Book a demo to explore how Manifest Climate can help you identify disclosure gaps, benchmark your portfolios, and uncover risks and opportunities, without the manual lift.
