Introduction

The joint report by Alphinity Investment Management and CSIRO outlines the implications of Artificial Intelligence (AI) for most sectors and evaluates the Environmental, Social, and Governance (ESG) considerations across these sectors. AI has shown great potential in reducing costs, increasing efficiency levels, and providing faster outcomes but also presents important risks and challenges that require careful management.

Opportunities and threats by sector

The report reviewed the opportunities and threats for users and developers of AI technology and identified the most material ESG considerations by sector. Cybersecurity, data privacy, and bias in its outcomes were identified as universal risks across all sectors. However, the report highlights specific ESG considerations for certain sectors, including trust and security for technology, consumer and healthcare sectors, and environmental concerns for the materials sector.

Materiality of ESG considerations

The report defines six core ESG considerations that are material for most sectors, including trust and security, data privacy, bias, equity and inclusion, human capital, sentience, and environment. The report evaluates these considerations by sector, highlighting the potential impact of these considerations on businesses operating within them.

Recommendations

The report suggests that businesses investing in AI technology should establish a clear framework for managing its risks and governance, including a policy specifically tailored to Responsible AI (R-AI). A set of questions is also provided to help companies evaluate their exposure levels to AI and to assess their governance structures and responsible AI practices. The report has also provided insights to assess the impact of AI across the ESG spectrum to better inform investors.