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The Essentials of AI and ESG: Opportunities, Risks, and Governance Insights for Institutional Investors

Year Published

2024

Contributing Organisations

Clarity AI

Type of Resource

Research/Insights Report

Languages

English

Relevant Topics

Core Topic
Core Climate Capabilities
Topic 2
Risks & Opportunities: The Business Case

Target Audience

Asset Managers
Asset Owners
MDBs/DFIs
Private Equity

Relevant Geography

Global

Resource Summary

The article explores the intersection of AI and ESG considerations, emphasizing the dual role of institutional investors in this evolving landscape. The article posits the following: firstly, investors can drive sustainable progress by investing in AI-driven innovations across various sectors; secondly, they can leverage AI to enhance their own decision-making processes. However, the article notes that the integration of AI presents ESG-related risks, including increased electricity and water consumption, data privacy concerns, and significant labour market impacts—with estimates suggesting that up to 30% of work hours in the U.S. economy could be automated by 2030. To navigate these challenges, the article recommends establishing robust governance frameworks, adhering to principles like those set by the OECD, aligning with emerging regulations, and striking a balance between risk management and innovation.

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