ESG Fund Managers Wary of Big Tech’s AI Bet’s Carbon, High-Return Perspective
At Bloomberg, ESG fund managers who turned to big tech as a low-carbon, high-return bet are growing increasingly concerned about the sector’s experimentation with artificial intelligence.
“Exposure to AI now represents a short-term risk to investors,” says Marcel Stotzel, a London-based portfolio manager at Fidelity International. He claims that “we’ll get an AI blowback,” in a situation where something unexpected triggers a significant market decline.
Stotzel also worries about the implications of companies developing AI technologies. In particular, he’s been engaged in conversations on potential safety features like a ‘kill switch’ in the event of AI systems going rogue in a dramatic way.
Funds with an environmental, social and good governance objective hold more tech assets than any other sector. The world’s biggest ESG exchange-traded fund is dominated by tech, led by companies like Apple Inc., Microsoft Corp., Amazon.com Inc. and Nvidia Corp.
Tensions have arisen over the direction of the AI industry and the pace of its advancement. This month, OpenAI, known for its launch of ChatGPT, fired and then rehired its chief executive, Sam Altman, prompting speculation over its intentions.
While some tech giants have agreed to enact safeguards to minimize the misuse and bias within AI, concerns about the risks posed by AI are increasing among investors in the industry.
The growing presence of AI in large tech companies has raised concerns about how it could reinforce discrimination, enable the misuse of personal data, and result in mass layoffs.
There has been a substantial increase in AI-related incidents and controversies since 2012. Investors are now demanding greater transparency and reporting on how companies are protecting workers, customers, and the public from potential AI harms.
Moving forward, the ESG investing industry will need to carefully navigate the potential risks of AI while fully weighing its opportunities in the sector.
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