In the realm of economic possibilities, artificial intelligence (AI) stands as a formidable force, presenting avenues for process automation, novel business ventures, and heightened efficiency. Delving into the expansive landscape of opportunities, GAM Investments carefully examines the myriad ways in which AI could revolutionise the arena of sustainable investing.

“AI can be an effective driver of change towards more sustainable business models. Quantitative and qualitative investment data are a key challenge for responsible investors…,” writes Stephanie Maier, Global Chief Sustainability Officer at GAM. 

“…and by analysing diverse data sets – from employee satisfaction to supply chain emissions numbers – AI algorithms can provide a more comprehensive understanding of a company’s environmental impact, labour practices and business conduct,” she adds. 

As per Maier, artificial intelligence has the potential to enhance climate models, optimise the design and materials for renewable infrastructure, and detect and predict methane leaks from pipelines.

“There is convincing evidence that AI will help businesses become more profitable, transparent, and green – all important factors for sustainable investment. However, investors should also consider the risks of relying on artificial intelligence,” opines Maier. 

She notes that individuals interested in sustainable investing should be mindful of the fact that AI poses challenges such as job displacement and labour disputes. Along with that, she says that the “black box” nature of AI models makes their workings opaque.

Besides, GAM informs that bias in AI systems, derived from the data they are trained on, raises concerns about discrimination, accountability, and privacy infringement. Additionally, Maier cautions that the significant carbon footprint of AI, highlighted by the environmental impact of creating and deploying AI models, requires attention.

According to GAM, transparency in AI models, their applicability to tasks, and the establishment of safeguards and privacy standards are crucial considerations. As AI becomes more pervasive, its structural impact and associated risks are likely to lead to increased regulatory scrutiny, projects Maier. 

Read the full insight here.