Environmental fund managers are increasingly expressing concerns about their firms’ exploration of artificial intelligence following a shift towards big tech as a low-carbon, high-return investment. Marcel Stotzel, a portfolio manager at Fidelity International based in London, highlighted that the exposure to AI now presents a “short-term risk to investors.”
Stotzel warned about the potential of an “AI blowback,” referring to a scenario where an unexpected event leads to a significant business downturn. He emphasized that a single incident could have far-reaching consequences.
One example cited by Stotzel involves fighter jets equipped with self-learning AI systems, raising concerns among fund managers. Discussions are underway with companies developing such technology to address security measures like a “kill switch” that could be activated if AI systems were to malfunction severely.
The ESG investing sector, having embraced technology significantly, may be particularly susceptible to such risks. Bloomberg Intelligence reports that funds with a focus on environmental, social, and governance objectives hold more digital assets than any other industry. Notably, technology giants like Apple, Microsoft, Amazon.com, and Nvidia Corp. dominate the largest ESG exchange-traded fund globally.
These leading companies are at the forefront of AI advancement. Recent tensions within the industry have shed light on differing opinions regarding the direction and pace of AI development. The case of Sam Altman, CEO of OpenAI, who was dismissed and swiftly rehired, sparked public debate on the company’s trajectory.
Internal conflicts at OpenAI centered on the balance between idealism and practicality in AI development. With Altman’s reinstatement, the company aims to pursue its growth strategies, including accelerating AI commercialization.
Tim Cook, Apple’s CEO, acknowledged the need to address various issues surrounding AI cautiously. Similarly, Microsoft, Amazon, Alphabet Inc., and Meta Platforms Inc. have implemented measures to prevent AI misuse and discrimination.
Stotzel expressed greater apprehension about the risks posed by tech giants compared to smaller AI startups, noting that larger corporations could have a more significant impact.
Investors, including the New York City Employees’ Retirement System and Generation Investment Management, are actively monitoring how portfolio companies utilize AI. The sovereign wealth fund of Norway has also emphasized the importance of addressing the substantial and unprecedented risks associated with AI.
Despite the rapid growth of AI technologies like OpenAI’s ChatGPT, concerns persist regarding the lack of regulatory frameworks and long-term performance data for artificial assets. Experts like Crystal Geng from BNP Paribas Asset Management stress the need for more transparency and risk assessment tools in evaluating the societal implications of AI.
Advocates, such as Jonas Kron from Trillium Asset Management, push for increased accountability and regulation in AI development to mitigate potential biases and privacy infringements. The escalating number of AI-related incidents underscores the urgency for clearer guidelines and reporting standards across tech companies.
In response to mounting concerns, shareholders are demanding greater transparency and accountability from companies like Microsoft, Apple, and Google. The AFL-CIO Equity Index Fund has called for safeguards against AI-related harms, including protection for employees and customers.
The evolving discourse surrounding AI’s ethical implications and societal impact underscores the need for proactive measures and regulatory oversight. Stakeholders across various industries are urged to address the multifaceted challenges posed by AI responsibly to ensure a fair and equitable technological landscape.
