The intersection of Responsible AI and ESG: A framework for investors
This report provides actionable insights for investors exploring the integration of Responsible AI (RAI) in their investment decisions. It offers a framework to assess the environmental, social, and governance (ESG) implications of Artificial Intelligence (AI) usage by companies. The report includes case studies of globally listed companies and a set of templates to support investors in implementing the framework.
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OVERVIEW
This report provides a comprehensive framework to assist investors in assessing the social, environmental, and governance implications of incorporating Responsible Artificial Intelligence (RAI). Developed through a partnership between CSIRO and Alphinity Investment Management, it aims to guide listed companies and investors in integrating RAI into their strategies.
Methodology
The report presents an analysis of the current corporate landscape through desktop research and interviews with 28 listed companies. Mechanisms for implementing RAI in companies are outlined, along with ways to assess the ethical implications of AI.
Defining AI
The report notes that AI is an evolving technology with the potential to provide new frontiers in market creation, customer engagement, and productivity. However, investors must be aware of the risks pertaining to AI misuse.
The intersection between Responsible AI and ESG
The environmental, social, and governance implications of AI usage are explored in this section. The report maps the 12 ESG topics against the eight AI ethics principles, which provide guidance on the ethical considerations of AI. Key takeaways from this section include the need to balance opportunities and threats for ESG when assessing the impact of AI.
AI investment landscape
This section analyses the AI investment landscape and market trends. It describes three waves of investment opportunities in AI and highlights that investment in new and emerging AI opportunities comes with significant risks.
Company insights
The report provides a detailed analysis of company case studies, highlighting key ESG risks associated with AI engagement. The companies with robust ESG performance standards, values, and a commitment to sustainable practices are viewed positively by investors.
The ESG-AI Investor Framework
The report proposes a three-component framework for investors to assess the ESG implications of AI. It is underpinned by eight ethics principles and 12 ESG topics, enabling investors to evaluate a company’s governance practices, environmental and social impact, as well as determining the overall strength of a company’s management approach.
Recommendations
Investors should consider adopting the ESG-AI Framework to assess company investments and portfolio workflows effectively. Companies could use this framework to incorporate responsibilities in AI use cases and focus on building governance structures and strategies to mitigate risks.
