The Impact of AI on Environmental, Social and Governance (ESG) Investing

Summary

There is a great potential for Artificial Intelligence (AI) to contribute towards global economic activity, especially towards Environmental, Social and Governance (ESG) investing. Several organizations are transitioning towards incorporating a broad range of AI‐backed applications across their operations. Ignoring the importance of tech and AI might impact the corporation's reputation negatively ultimately leading to a higher cost to capital and a potential possibility of losing further shareholder value. The internet and the explosion of big data is reshaping the debate about complex financial and extra non‐financial data analysis. By implementing Machine Learning and AI can enable investment value chain decision‐makers and service providers to process vast volumes of information efficiently. Investors have also become aware that implementation of AI technology is creating a range of (human) governance and ethical challenges. The investor community has started to look at AI favourably, to leverage its benefits for ESG research, screening and analysis of various factors.