Investors are developing a set of expectations for portfolio companies when it comes to the deployment of artificial intelligence (AI).
The Lord Mayor of London is asking for feedback from the market on draft guidance published this week, with input from investors running around $22trn between them.
Speaking to IPE, the document’s lead author, Nicholas Beale, said the investors had not been publicly identified because of wariness about the current backlash against responsible investment in the US, and because they are awaiting the final guidelines before putting their names to it.
The initiative is part of a broader project from the Lord Mayor, which also includes running education courses on the deployment of ethical technology and creating standards that can be applied to the industry.
The objective of the investor work is to “develop a two-page consensus to help investors and investees coordinate around the responsible deployment of AI, thus increasing returns and reducing risks”.
Beale said the final document is likely to remain “informal and voluntary”, and that an investor council may be appointed to keep it updated and relevant as the issue evolves.
“The particular niche that we think this occupies is that it’s something which is short enough for CIOs and chairs, etc, to actually read and understand,” he explained, adding that it was consciously focused on the ethics of AI from a risk management perspective, rather than being framed as a societal benefit.
Responsible investors are increasingly concerned about the implications of AI and other technological advancements. Many ESG-labelled funds are skewed towards large tech stocks, but the sector has faced major questions about its contribution to sustainability objectives.
Giants such as Microsoft and Google have recently reported big leaps in their carbon emissions, for example, driven in part by the construction of carbon-intensive data centres.
The UK has just caved to pressure, driven partly by the tech sector, to update its listing rules to allow for the use of controversial dual-class share structures, which prevent many shareholders from having the right to vote on company issues.
In a sign that ethics could become a battleground for investors and tech companies, a shareholder proposal filed in February, asking Apple to prepare a report explaining how it used AI in its operations, along with any ethical guidelines it applied, gained nearly 38% backing despite being opposed by the company’s board.
The Dutch Pension Federation, Pensioenfederatie, has developed a Code of Conduct for AI and Ethics for the Pension Sector, which relates specifically to how the industry uses artificial intelligence responsibly in its own operations.
Last month, a draft of the code of conduct was put out for consultation. Feedback is being collected until October, and members of the Pension Federation will vote on the final version in December.
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