Lessons for a New Generation of Economists
By Gavin Holt
On May 13 2020, in conjunction with Fitch Learning and the CQF Institute, Irithmics CEO and co-founder, Grant Fuller presented a live webinar titled ‘AI Impact on ESG Investing’.
Sustainable, responsible, and impact investing (SRI) is an investment discipline which incorporates environmental, social, and corporate governance (ESG) criteria to enhance long-term risk management, competitive financial returns and positive societal impact.
The first part of this talk looks at some recent academic research which investigated the impact AI is likely to have on organisations ability to meet Sustainability Development Goals adopted by all 193 United Nations member states.
The second part of the talk moves away from more traditional applications of machine learning in the domain, and discusses how AI is being used to measure and monitor the dynamics and evolution of views and expectations of institutional investors. The nature of SRI and ESG increases the risk of ignominy for asset owners, asset managers and corporate issuers, having a tangible effect on capital flows, income and reputation. The talk shows some case studies highlighting how AI is leveraging natural biases in institutional views and expectations, allowing shareholder and non-shareholder stakeholders to “gain leverage over valuable resources (the market capital of the firm)” (King, B. G., & Soule, S. A. (2007). Social Movements as Extra-Institutional Entrepreneurs: The Effect of Protests on Stock Price Returns. Administrative Science Quarterly, 52(3), 413–442).
AI technologies are used to enhance corporate insight of investor appetite, behaviour and vulnerabilities, and are increasingly becoming part of activist and defensive campaigns.
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