Environmental, Social, and Governance (ESG) reporting has become a pivotal mechanism for promoting transparency and accountability in the pursuit of sustainable development within the global corporate sector. Recent legislative reforms within the European Union, particularly the implementation of mandatory ESG disclosures under the Corporate Sustainability Reporting Directive (CSRD), have significantly transformed corporate reporting expectations and practices. These developments prompt a critical examination of the role of artificial intelligence (AI) in ESG disclosure systems. This article investigates the dual nature of AI as both a facilitator and potential disruptor of transparency in ESG reporting, a phenomenon conceptualized herein as the “transparency paradox.” While AI has the potential to enhance data accuracy, automate reporting processes, and enable more comprehensive sustainability assessments, it also introduces challenges related to algorithmic bias, interpretability, and unintended opacity in decision-making. The study critically evaluates how AI systems may both mitigate and exacerbate issues such as greenwashing and unreliable disclosures.