Artificial Intelligence has the potential to help solve some of the world’s economic and social problems by boosting productivity and growth. However, it is important to consider the potential negative effects that could come from its increased use.
Artificial intelligence (AI) has hit the headlines this year, particularly the likes of ChatGPT – a chatbot that is trained to follow an instruction in a prompt and provide a detailed response.
AI refers to the development of computer systems that can perform tasks that would normally require human intelligence to accomplish. These systems are designed to learn and improve over time, making them capable of handling increasingly complex tasks with greater accuracy and efficiency.
Cause for concern?
The growing influence of AI in society raises ethical considerations. As AI systems make autonomous decisions and interact with humans, it is crucial to ensure that it aligns with ethical principles. Issues such as privacy, transparency, accountability, impact on employment, and bias can arise from the adoption of AI.
Balancing the benefits of data-driven AI with protecting individual privacy is essential, given AI’s ability to harness vast amounts of personal data. AI systems should provide explanations and justifications for their decisions, enabling users to understand the decision-making process and challenge outcomes. Accountability is another vital aspect, as AI must be designed so that those deploying it are responsible for its actions, particularly in cases where harm may occur.
Furthermore, the impact of AI on employment should be considered. While AI can add to human capabilities and create new job opportunities, it can also lead to displacement. Efforts should be made to reskill and upskill workers to mitigate these negative consequences. Bias is a prevalent ethical issue in AI, as algorithms can unintentionally perpetuate societal biases, resulting in discrimination.
The World Benchmarking Alliance (WBA) has highlighted the low levels of awareness concerning ethical approaches to AI in the digital economy and among tech companies. Given these challenges, and the expectation of AI permeating across sectors that our portfolios invest in, we joined a relevant investor engagement collaboration in early 2022, as part of our “digital inclusion” engagement theme.
As part of the group’s activities, EQ Investors (EQ) engaged with the company PayPal to ensure the formalisation of human rights respect in their AI-related processes through a public policy. PayPal utilises AI for several parts of its business, such as fraud detection, transaction processing, risk assessment and credit scoring amongst others.
AI systems can inadvertently perpetuate existing biases present in the data they are trained on. If PayPal’s AI algorithms exhibit bias based on factors such as race, gender, or socioeconomic status, it can lead to discriminatory outcomes in terms of access to financial services or credit decisions.
Initially, PayPal had not published a public commitment to ethical AI practices. Still, the coalition shared best practices from other digital companies, leading to improved disclosures in PayPal’s recent impact report. While this is a small success, the coalition is still closely monitoring PayPal’s disclosures surrounding the possible adverse effects of using AI.
AI drives impact solutions
While cautious about the potential adverse effects of AI, we also welcome its responsible implementation across various sectors. EQ’s portfolios are positively exposed to these solutions.
In healthcare, AI has promising applications, such as in drug development. AI can make the process safer, more cost-effective, efficient, and faster. For instance, Excientia, held in the EQ Positive Impact Portfolios, utilises AI in various aspects of the drug development process, addressing inefficiencies in small-molecule drugs. By applying AI to target identification and small molecule design, Excientia aims to overcome the high failure rate caused by a poor understanding of human biology and the inability to target the right biology effectively.
Another example is Intuitive Surgical, held across several EQ portfolios. This company has been ingesting hospital data for years, across robotic-assisted and non-robotic procedures. Its new pilot program “Robotic Copilot” aims to assist surgeons in forecasting positive outcomes for different procedures and identifies what areas surgeons need to work on to reduce errors and infection rates. Although currently in pilot program, it will provide real time feedback and further training programs, compressing learning curves for new surgeons.
AI has an important role to play in addressing environmental problems as well. AI’s impact on agriculture is exemplified by Deere and Co’s “See & Spray” technology, which utilises computer vision and machine learning to significantly reduce non-residual herbicide usage. Another company, Schneider Electric, incorporates AI in their energy management solutions to reduce carbon footprints. Their EcoStruxure platform leverages AI to optimize energy consumption, enhance renewable energy integration, and improve operational efficiency in buildings, data centres, and industrial settings.
The side effects of the AI boom
Nvidia, a notable company in the AI industry, has experienced remarkable growth, with demand for its chips soaring. This growth has positively impacted other companies in the AI ecosystem, such as semiconductor manufacturing giant TSMC, which produces chips utilised by Nvidia and other AI-focused companies. The increased demand for chips has also led to a greater need for semiconductor equipment from companies like ASML and Lam. AMD and Marvell also play crucial roles in chip development and design.
One other feedback loop from the rise in AI is the increased demand for renewable energy. Many of the largest AI innovators like Microsoft and Alphabet have strong, publicly disclosed, renewable energy targets in place. With big tech companies needing more data centres to match AI demand and product growth, their need for renewable energy will continue to grow. This may have a positive impact on renewable energy capacity build-out, as exemplified by Alphabet’s green bond proceed use for new renewables.
Balancing the potential for good with the risks
As AI becomes increasingly powerful and pervasive, addressing ethical considerations is vital. Issues like privacy, transparency, accountability, and bias must be taken into account. However, AI offers numerous benefits, such as improving healthcare processes, energy efficiencies and transforming agriculture practices.