**Australian Investors Get Toolkit for Assessing ESG Implications of AI**
**Introduction:**
Australian investors now have a toolkit for assessing the environmental, social, and governance (ESG) implications of artificial intelligence as they prepare for a second wave of the technology.
**Development of the Framework:**
The new framework was developed by the CSIRO and fund manager Alphinity over the past year. It has been positioned as a guide for listed companies dealing with responsible AI and risk management, based on Australia’s eight AI Ethics Principles.
**Challenges Faced by Investors:**
While the Australian AI ethics principles have been in place since 2019, there has been a lack of information flow between businesses, making it difficult for investors to assess performance and understand best practices related to responsible AI.
**The Intersection of Responsible AI and ESG Framework:**
Alphinity and the CSIRO collaborated to create the Intersection of Responsible AI and ESG: A Framework for Investors Report. The framework consists of a three-step process to help investors assess the materiality risk, governance insight, and provide a deep dive guide for detailed analysis and engagement with company management on AI implementation and RAI practices.
**Opportunities and Risks in the Second and Third Wave of AI:**
Alphinity’s head of ESG and sustainability, Jessica Cairns, highlights the opportunities AI presents for traditional sectors like banking and mining through improved efficiencies and expanded revenue streams. However, she also emphasizes the need for investors to understand, measure, and manage the risks and ethical concerns associated with AI.
**Embedding RAI Governance within Existing ESG Analysis:**
CSIRO research director, Professor Liming Zhu, explains that the framework is designed for investors to incorporate elements with existing ESG analysis. He suggests that embedding RAI governance within existing systems and processes, along with a strong track record of ESG performance, can provide confidence for investors.
**Conclusion:**
The new framework developed by the CSIRO and Alphinity aims to provide Australian investors with a practical guide for assessing the ESG implications of artificial intelligence. As the second wave of AI approaches, it is crucial for investors to understand and manage the risks and opportunities associated with this technology.