When ChatGPT first hit universities, two academics at the University of Auckland’s Business School decided they might as well incorporate it into coursework. Why not get students to experiment with generating a corporate report?
Ruth Dimes, who led the business master’s programme at the time, and Charl de Villiers, a professor of accounting, instructed postgraduate students to produce a typical corporate sustainability report using generative AI. Then, they mixed up the AI reports with real ones and had students blindly assess them.
Dimes and de Villiers found that ChatGPT glossed over sustainability issues and produced language ranked high in metrics for greenwashing. Moreover, students preferred the fake reports over real ones. “They were very persuaded by the language in in ChatGPT,” says Dimes.
These students weren’t rookies, either. “This was a really informed group of students,” says Dimes. “They were studying accounting, they were studying sustainability reporting, they’d been through all of the things around what companies try to do and what greenwashing is.”
Still, they preferred reports that made a company’s social and environmental disclosures sound great, even if the company’s performance on those fronts was average.
Where greenwashing seeps in
Most companies include information about their own environmental and social impact in their reporting – as well as how environmental and societal factors might affect them. “So, how the changes in the natural environment might influence the company’s ability to make money in the future,” says de Villiers. “And then the influence of the company on the fabric of society and on the natural environment.”
In some jurisdictions, it’s compulsory to make these disclosures – the European Union, for instance, requires both these perspectives to be included in corporate reporting.
Disclosing this information can lead to greater trust from investors, making it easier for a company to raise money, but research finds that companies don’t always tell the full story about their environmental impacts. “The critics of these companies say, ‘You’re greenwashing – you’re emphasising the best points and you’re ignoring the bad points,’” says de Villiers.
Sustainability is increasingly important in investors’ decision-making, write Dimes and de Villiers in their research. Environmentally focused investments are big money – Bloomberg estimated they will exceed $40 trillion by 2030. Deception introduced by greenwashing is concerning from both an economic and environmental perspective.
How the researchers tested greenwashing
Dimes designed an assignment where students used ChatGPT to create a CEO statement to shareholders – a summary that would normally sit alongside a sustainability report – for a fictional company.
Dimes and de Villiers decided to use a hypothetical Hawkes Bay forestry company as the setting. Forestry was interesting, says de Villiers, because of its connection to climate change, and because it has upsides and downsides on environmental and social impacts.
“We prompted the students to write this report using AI and then to re-prompt and re-prompt to improve it – and to show us what they did,” says de Villiers. “But they took the first output they got. They didn’t do much more … maybe they read it and they went, ‘Well, this is much better than I would have done’.”
Dimes took the reports, randomised them, added three real corporate reports, and gave them to other students to rate on which they found most believable.
“When we asked students to rank them in terms of a bunch of different things like ‘credibility’ and ‘would you invest in this firm’, et cetera, they liked the ones that ChatGPT came up with better,” says de Villiers.
Of course, the students didn’t carry any real-world responsibility for the results of their choices, says Dimes – a factor which can affect a study’s results. “If students make a decision like, ‘I trust this company’ or ‘I don’t trust this company’, there’s no consequences to what they were doing, whereas someone in a real job who’s investing, it’s different.”
But these students are about to enter the workforce, likely going into roles where they will do just that, says Dimes. “I mean, that’s exactly the job. So, there’s not that much difference between a master’s student specialising in sustainability reporting and a sustainability analyst who would have that background.”
Why greenwashing rises to the top
Next, Dimes and de Villiers put the ChatGPT reports through a greenwashing detection tool. “And yes, they were quite greenwashy,” says de Villiers.
In other words, they were too good to be true, especially compared to the real reports. “The real ones had real issues that they were not able to gloss over – they had to admit to certain issues, whereas the made-up ones didn’t have that problem.”
Notably, Dimes and de Villiers found that reports that had been edited by students weren’t any better than the ones straight out of ChatGPT. More prompts or more tinkering with the output text didn’t change the level of greenwashing.
This suggests it’s hard to mitigate the impact of AI use with human intervention. AI’s overly confident tone, people’s inability to detect AI use, and people’s willingness to believe it are “worrying factors”, according to Dimes and de Villiers.
It’s hard to regulate tone – to formulate standards around persuasiveness or confidence – but firmer regulations are exactly what’s needed in sustainability reporting, says Dimes.
“Auditing and assurance of it is still quite kind of nascent compared to financial reporting, which is subject to a lot of regulation,” she says. “There needs to be some kind of control or regulation or guidance because there’s still a lot of choice about what you say or what you choose to omit from a sustainability report – and a lot of language choice.”
Another solution? “Companies might find their investors want hard evidence to back up the sustainability stories they tell in their reports,” says de Villiers. Otherwise, the very real risk is shareholders and future investors viewing sustainability reporting as mere AI fabrication.
The world is facing unprecedented environmental challenges. Planetary Solutions, an initiative of the Sustainability Hub at Waipapa Taumata Rau, University of Auckland, and Newsroom, explores these issues – and the practical ways we can all be part of the solution.
