A guide to automating the ESG compliance auditing process
Federally regulated financial institutions in Canada are under increasing pressure to disclose their climate risk under a variety of standards — in particular, OSFI B-15. For most companies, assessing OSFI B-15 can be a painstaking manual process that consumes their sustainability or compliance teams, taking time away from higher-impact tasks like actual climate action and risk management.
Here, we explore why financial institutions are still relying on manual processes and how adding AI-driven tools to your workflow can automate your ESG compliance auditing work. This transforms a time-consuming task into one that is largely automated (and more consistent as a result).
OSFI B-15 compliance is no small feat
The Office of the Superintendent of Financial Institutions (OSFI) introduced B-15 guidelines as a framework for assessing climate-related financial risks. These regulations require institutions to disclose how they manage climate risks in their operations in alignment with IFRS S2.
OSFI B-15 mandates detailed reporting across multiple categories, from governance structures to risk management and scenario analysis. The problem for financial institutions is that the data required to support each of these categories and line items is almost always scattered across multiple sources and formats based on previous sustainability disclosures, annual reports, and other filings. Typically, many of the data points required for OSFI B-15 already exist: the challenge is finding them efficiently, analyzing them clearly, and understanding how much work is left to be done to ensure OSFI B-15 compliance.
It’s a time-consuming process, but with the right tools, it doesn’t have to be.
The limits of manual ESG auditing
When tasked with a new challenge such as OSFI B-15 compliance, many sustainability teams will choose the approach with the lowest barriers to entry. In practice, this looks like team members reviewing OSFI B-15 documentation to understand what’s required, and then poring over copious documents and past disclosures looking for any relevant information that can be recycled into a B15 disclosure.
It’s labor-intensive and not a particularly inspiring way to start the work week, but this manual approach also introduces a higher risk of error. For ESG disclosures — particularly those regulated by a federal agency — even small errors can lead to significant financial, legal, and reputational consequences.
How AI can automate OSFI B-15 compliance assessments
The good news is that financial institutions don’t need to rely solely on manual processes to assess OSFI B-15 compliance. In fact, we wonder why many of them still are.
With the right tools, institutions can automate compliance audits and analyze draft disclosures, allowing teams to focus on more strategic aspects of ESG compliance and risk management. Here are two major ways AI can step in to take the burden of manual compliance audits off your team’s shoulders.
Document parsing and data extraction
One of the most time-consuming tasks in the compliance process is locating and extracting relevant data from a wide range of source documents. AI tools like Manifest Climate can find and scrape a variety documents, pulling relevant information into a centralized database. There’s no need to manually enter or re-enter data and ensures that any necessary data points are surfaced with reference to their original sources.
First-pass assessments
Much like a rough draft, a first-pass assessment is crucial for identifying the most obvious areas of non-compliance. AI tools can conduct this initial review far more efficiently than a human team, analyzing hundreds of pages of documents in minutes. This allows reporting and compliance teams to get a quick, high-level view of their current gaps, getting them 90% of the way there. From there, human team members can refine, dive deeper, and produce a finalized assessment to present to higher-ups.
The benefits of automating OSFI B-15 compliance audits
Automating the compliance process doesn’t just free up valuable time. By doing the manual research work and ‘first pass’ compliance assessment for you, AI can help transform the compliance auditing process from a manually intensive task into a strategically valuable tool. With the insights of a first-pass assessment at their disposal, sustainability teams can quickly and easily move into execution mode, turning weaknesses into next steps to be addressed.
At the same time, automating the audit process can significantly improve the accuracy and consistency of compliance audits. Human error is an inevitable byproduct of manual processes, especially when different team members are involved in multiple stages of the assessment. AI tools provide a standardized approach, ensuring that every audit follows the same rigorous process.
In 2024, there’s no need to manually audit OSFI B-15 compliance
The technology to automate ESG compliance already exists — and some of your peers are already using it. Yet many financial institutions are still stuck in the dark ages, wasting valuable resources assessing OSFI B-15 compliance manually.
Disclosure compliance is a necessary element of any ESG strategy, but it shouldn’t be your team’s whole focus. By adopting AI-driven tools that can take care of 80% of the initial work, financial institutions can radically cut down on the time they spend auditing and assessing ESG compliance, and focus more time on climate action and risk management. Automation isn’t just about speeding up the compliance process; it’s about improving accuracy, reducing risk, and empowering institutions to make better strategic decisions.
Instantly assess OSFI B-15 compliance with Manifest Climate
Manifest Climate is the AI compliance review tool for sustainability teams, consultants, and audit professionals. It’s your secret advantage that offers a first-pass attempt at compliance reviews for voluntary and mandatory ESG regulations.
Put Manifest Climate to work to review and pull data from hundreds of documents in minutes, producing a first-pass compliance review with full completeness that pinpoints areas of potential noncompliance and shows you where to focus your efforts to make the biggest impact.
