Data is the number one challenge to ESG adoption. The rapid development of AI has given investors hope that this emerging technology might help solve the ESG data puzzle.
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More than three-quarters of respondents view data protection and privacy as posing the most material AI-related ESG risks for investment. More than half of respondents are concerned about the risk stemming from AI’s high power consumption.
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Investors are attracted to multi-thematic exposures for the perceived benefits of diversification, potential for better risk-adjusted returns and broader ESG impact. Though environmental themes have consistently been the most important when selecting ESG funds, investors are also targeting other themes.
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Analysis of material ESG issues, alongside other considerations, helps us identify investment risks and opportunities. They can be, but are not necessarily, determinative to an investment decision.