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

Open Resource

Year Published

2024

Contributing Organizations

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

North America

Open Resource

Resource Description

This resource explores how institutional investors can engage with artificial intelligence (AI) in the context of environmental, social, and governance (ESG) considerations. It highlights AI as both a tool for enhancing investor decision-making and a target for responsible investment.

Why This Matters

As AI adoption accelerates, investors must navigate its ESG impacts. This resource supports responsible engagement with AI to ensure both sustainable outcomes and sound investment practices.

Key Insights

Identifies a dual role for investors: funding AI-driven sustainability solutions and using AI to improve internal ESG analysis
Highlights ESG risks linked to AI, including high energy and water use, data privacy issues, and labor market disruption, with up to 30% of US work hours potentially automated by 2030
Recommends robust governance, alignment with OECD principles and regulations, and balanced strategies that manage risks while fostering innovation

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