Alphinity & CSIRO launch Responsible AI framework for investing

Alphinity Investment Management has joined forces with Australia's national science agency CSIRO, releasing a Responsible AI (RAI) framework. The toolkit, which is the product of a year of extensive research, is designed to assist investors as they seek to capitalise on the burgeoning AI sector.

The RAI framework and toolkit aim to bridge the gap between emerging RAI considerations and traditional Environmental, Social, and Corporate Governance (ESG) principles such as climate change, modern slavery, and governance. The report, titled "Intersection of Responsible AI and ESG: A Framework for Investors", constitutes an open-source, adaptable three-part toolkit that can aid investors in assessing the impact of AI across their portfolio.

The first part of the toolkit is dedicated to determining materiality risks and considers 27 AI use cases across nine key sectors. The second offers insight into governance via ten RAI key indicators to assess accountability, commitment, and measurement of RAI. The final step encourages a thorough scrutiny of the firm's AI and RAI practices with over 40 filterable questions designed to stimulate an in-depth analysis.

According to Jessica Cairns, Alphinity's Head of ESG and Sustainability, understanding risks and opportunities is crucial given AI's rapid expansion. "What we are most excited by is the second and third wave, where we see AI creating opportunities for a breadth of traditional sectors, like banking and mining, through improved efficiencies, expanded revenue streams, and boosted productivity," She said. Cairns underscored the significance of taking inventory of risks and ethical concerns inevitable with any technological revolution.

The development of the framework came after a year of comprehensive research involving 28 global and domestic listed companies from various sectors. Professor Liming Zhu, CSIRO Research Director, emphasised the necessity of taking a measured approach to the safe and ethical use of AI. He further commented that not until the public sharing of RAI policies and indicators becomes commonplace will investors know where to look for signs of responsible AI usage.

According to Professor Zhu, our research showed RAI governance is best embedded within existing systems, and a strong track record of ESG performance is an indicator of confidence for investors. "With global AI adoption expected to accelerate significantly between now and 2030, it is imperative to embed best practice and robust risk mitigation from the early stages," he noted.

Both Alphinity and CSIRO expect that the RAI toolkit will become an industry-standard as Alphinity incorporates the RAI framework, tools, and templates into its ESG analysis processes. Cairns concludes that the firm aims to advocate for the uptake of publicly disclosed RAI practices and hopes that all investors, from super funds to boutique fund managers, will integrate responsible AI frameworks into ESG considerations and responsible investment.