Leveraging Artificial Intelligence for ESG Reporting: A Case Study in the European Fashion Industry

ABSTRACT The fashion industry in Europe has increasingly recognized the importance of Environmental, Social, and Governance (ESG) reporting as a key driver for sustainable development and transparency. As consumer awareness grows and regulatory frameworks evolve, companies are pressured to disclose their sustainability practices, ethical labor standards, and governance policies. Artificial intelligence (AI) is emerging as a powerful tool in this transformation, providing innovative solutions for data collection, analysis, and reporting. AI‐driven systems support fashion companies in monitoring environmental impacts, optimizing supply chains, and improving labor conditions while ensuring ESG compliance. Their predictive capabilities also enable early detection of ESG risks, supporting proactive sustainability strategies. However, the adoption of AI into ESG monitoring and reporting is still underdeveloped, particularly in sector‐specific contexts. This paper examines the intersection of ESG reporting and the role of AI in enhancing transparency and accountability, in the European fashion industry. Drawing on seven in‐depth interviews with sustainability managers from Italian companies, the study employs thematic analysis to identify key patterns in ESG reporting and AI adoption. The findings reveal heterogeneous ESG maturity levels, limited but growing AI integration, and strong managerial awareness of digital transformation needs in sustainability reporting. This study contributes to the growing body of research on sustainable business practices. Theoretically, it offers an empirical foundation to explore AI–ESG integration across industries. Practically, it drives both corporate responsibility and competitive advantage, emphasizing the need for digital transformation to meet the evolving demands of stakeholders in the European fashion sector.