Going beyond: Multimodal AI for sustainable finance

CONTRIBUTORS

David Zahn, CFA, FRM

Head of European Fixed Income,
Franklin Templeton Fixed Income

Justyna Tasic, Ph.D.

Senior Sustainability Manager
Franklin Templeton Fixed Income

Ania Cwojdzinska, Ph.D.

Impact Analyst
Sustainability & Europe Fixed Income

Vadym Hornyi

Intern

Introduction

In this report, we explore the convergence of artificial intelligence (AI) and sustainable analysis, which represents one of the most significant opportunities in contemporary finance. A PwC study found that 85% of investment professionals believe that faster adoption of AI is important for value creation¹. The vast majority of asset managers globally use AI in their investment strategies or research (54%) or plan to do so in the future (37%)². The European Securities and Markets Authority (ESMA) report highlights that over the last 4 years the number of investment funds domiciled in the European Union (EU) and using AI or machine learning (ML) nearly doubled. ³

As European markets lead global sustainable finance initiatives, multimodal AI technologies are emerging as critical tools for enhancing sustainability analyses and their implications on investment decision-making and portfolio management⁴. The integration of multiple data modalities—combining text, images, video, satellite imagery, and numerical data—enables investors to perform more contextualized and nuanced analysis at scale.

The European Union's Green Deal initiatives have positioned the region at the forefront of sustainable finance innovation. This transformation is particularly pronounced through regulatory frameworks that create both opportunities and challenges for sustainability-focused investment strategies. The Corporate Sustainability Reporting Directive (CSRD)⁵ mandates detailed sustainability disclosures, accompanied by European Sustainability Reporting Standards (ESRS)⁶ to standardize data formats, facilitating AI-driven analysis. In February 2025, the European Commission introduced the Omnibus package⁷, streamlining sustainability reporting by reducing data burdens—enhancing efficiency for AI-powered systems. Additionally, the EU AI Act⁸, in force since August 2024, sets strict rules for high-risk AI systems, emphasizing transparency, accountability, and bias mitigation, and provides a regulatory framework for responsible AI use in sustainable finance.

Our conclusion

As we work toward a more sustainable future, leveraging advanced technologies will play a crucial role in reshaping the financial landscape. The convergence of regulatory support, technological capability, and market opportunity creates a compelling case for accelerated adoption of multimodal AI in sustainable finance. At FTFI, we see multimodal AI as a transformative tool—enabling more sophisticated, comprehensive, and efficient sustainability analyses than traditional methodologies. Technology’s ability to process diverse data sources provides investors with unprecedented data insights for better decision-making and continuous improvement.

Source: PwC 2023 Global Investor.
Source: Mercer Investments (2024), ‘AI integration in investment management: 2024 global manager survey’.
Source: European Securities ad Markets Authority, Artificial intelligence in EU investment funds: adoption, strategies and portfolio exposures, February 2025.
Source: Sung Une Lee, Harsha Perera, Yue Liu, Boming Xia, Qinghua Lu, Liming Zhu, Jessica Cairns, Moana Nottage (2024) Integrating ESG and AI: A Comprehensive Responsible AI Assessment Framework, Arxiv https://doi.org/10.48550/arXiv.2408.00965
Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting (Text with EEA relevance)
ANNEX I to Commission Delegated Regulation (EU) 2023/2772 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards, published in the Official Journal of the European Union on 22 December 2023 and including the corrigendum published on 18 April 2024.
Directorate-General for Financial Stability, Financial Services and Capital Markets Union (2025) Omnibus package
EU AI Act (2023) EU AI Act: first regulation on artificial intelligence

IMPORTANT LEGAL INFORMATION

This material is provided for general informational purposes only and should not be considered individualized investment advice, a recommendation or a solicitation to adopt any investment strategy. It does not constitute legal or tax advice. Franklin Templeton accepts no liability for losses arising from use of this material.

The views expressed are those of the investment manager as of the publication date and may change without notice. These opinions and analyses are based on certain assumptions, including market conditions that may change. They may differ from those of other portfolio managers or from the firm as a whole.

This material is not intended to provide a complete analysis of all material facts regarding any country, region or market. No assurance can be given that any forecast, projection or prediction regarding economies or financial markets will be realized. References to specific securities are for illustrative purposes only and should not be interpreted as recommendations or a solicitation to buy, sell, or hold any security.

Any research or analysis in this material has been prepared by Franklin Templeton for its own purposes and is provided incidentally. While the information included is believed to be reliable, its accuracy and completeness cannot be guaranteed, and it is subject to change without notice.

Past performance does not guarantee future results, or any profit or gain. All investments involve risks, including possible loss of principal.

Franklin Templeton offers environmental, social and governance (ESG) capabilities, though not all strategies or products incorporate ESG as part of the investment process.

Investment strategies and services may not be available in all jurisdictions. Please consult your financial professional or Franklin Templeton contact for further information.

Brazil: Issued by Franklin Templeton Brasil Ltda. Canada: Issued by Franklin Templeton Investments Corp. Franklin Templeton and Franklin Templeton Canada are business names used by Franklin Templeton Investments Corp. Offshore Americas: In the United States, this publication is made available by Franklin Templeton. United States: Issued by Franklin Templeton. Investments are not FDIC insured; may lose value; and are not bank guaranteed.

Europe: Issued by Franklin Templeton International Services S.à r.l., 8A, rue Albert Borschette, L-1246 Luxembourg. Poland: Issued by Templeton Asset Management (Poland) TFI S.A.; Rondo ONZ 1; 00-124 Warsaw. Saudi Arabia: Issued by Franklin Templeton Financial Company, KAFD, Building 3.09, Office No. 8018, Level 8, Saudi Arabia. Regulated by CMA. License no. 23265-22. South Africa: Issued by Franklin Templeton Investments SA (PTY) Limited, which is authorised by the FSCA as a Financial Service Provider (No.44475). Switzerland: Issued by Franklin Templeton Switzerland Ltd, Talstrasse 41, CH-8001 Zurich. Middle East & Africa (ex South Africa): Issued by Franklin Templeton Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority. Address: Franklin Templeton, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box 506613, Dubai, U.A.E. Tel: +971(04) 428 4100. United Kingdom: Issued by Franklin Templeton Investment Management Limited (FTIML), registered office: Cannon Place, 78 Cannon Street, London EC4N 6HL.

Australia: Issued by Franklin Templeton Australia Limited (ABN 76 004 835 849) (Australian Financial Services License Holder No. 240827), Level 47, 120 Collins Street, Melbourne, Victoria 3000. Hong Kong: Issued by Franklin Templeton Investments (Asia) Limited. Japan: Issued by Franklin Templeton Japan Co., Ltd. South Korea: Issued by Franklin Templeton Investment Advisors Korea Co., Ltd. Malaysia: Issued by Franklin Templeton Asset Management (Malaysia) Sdn. Bhd. & Franklin Templeton GSC Asset Management Sdn. Bhd. Singapore: Issued by Templeton Asset Management Ltd. (UEN) 199205211E.

Access your local website at https://www.franklintempleton.com/corporate/all-sites.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

프랭클린템플턴 사칭 유의안내