When we think about the risks of artificial intelligence (AI), many picture a dystopian future where machines take over the Earth – a scenario straight out of a sci-fi film.
While this dramatic vision grabs our attention, it distracts us from a host of other important ethical issues surrounding AI.
AI has the potential to be a powerful tool that enhances our lives by automating tasks, personalising things like education and healthcare, and increasing our understanding of the world around us.
However, it could also make privacy a thing of the past, threaten international relations and reinforce discrimination.
Here’s what AI investors need to know about the potential risks.
The unintended impacts of AI
Deepfakes and fake news
Deepfakes use AI to create realistic but fake audio or video recordings, often altering existing footage to misrepresent someone’s words or actions. These clips can be used to spread misinformation, create fake news, or damage reputations.
As deepfakes become easier to create and more convincing, they could undermine public trust in genuine media, causing people to doubt real news and information.
This growing scepticism could help misinformation flourish, making it harder for society to have productive discussions.
Worse still, if a deepfake misrepresents political leaders or events, it could incite tensions and undermine trust between nations, potentially even leading to conflict.
Mass unemployment
AI systems and robotics can carry out increasingly complex tasks more quickly and cost effectively than human workers.
AI-powered robots are already transforming factories worldwide.
Tools that can monitor and analyse production line processes in real-time, predict equipment failures and use historical data to suggest solutions, are becoming common on factory floors.
Many other jobs could face being displaced by AI in the not-too-distant future as well, including customer service representatives, computer programmers, graphic designers and journalists.
As AI develops, it’s likely to claim more and more jobs over time.
A report released earlier this year suggested that in a worst-case scenario, almost eight million jobs could be lost to AI in the UK alone.
Privacy and surveillance
AI can process data at extraordinary speeds, accomplishing in seconds what would take human analysts years.
In the wrong hands, AI could be used to collect personal data without consent, leading to serious privacy violations and misuse of information.
Governments and companies could also use AI-powered tools to monitor people, suppress personal expression and influence the way they make purchasing decisions, or even the way they vote.
Discrimination
AI systems learn by being fed vast amounts of data, and if that data reflects existing society-wide race, gender or socioeconomic biases, the algorithm will carry those biases too.
If an AI system is used in hiring, for instance, it could discriminate against particular groups by favouring CV’s that resemble those of historically successful candidates.
Accountability
When AI systems make decisions independently, it can be difficult to work out who’s responsible when they malfunction, or produce unexpected results – whether it’s the developers, the users, or the company that deployed the system.
At the same time, AI is advancing at a pace that outstrips most people's understanding, and global regulators are scrambling to keep up. That means that issues of AI liability are complex, and often not covered by an existing legal framework.
Balancing innovation and responsibility
Without comprehensive government regulation, it’s crucial that companies regulate themselves.
Investors have an important part to play, both by pushing AI companies to adopt rigorous ethical standards. But also by advocating for policymakers to establish a regulatory framework that promotes responsible AI development.
Alternatively, you can invest in a fund with a manager that thinks similarly to you.
Fund managers often have big stakes in companies. It means they can make their voices heard on a range of issues that could benefit investors – including AI ethics.
2 fund ideas
Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
For more details on each fund and its risks, use the links to their factsheets and key investor information.
This article isn’t advice. All investments can rise and fall in value, so you could get back less than you invest. If you’re not sure if an investment is right for you, ask for financial advice.
Ninety One UK Sustainable Equity
The Ninety One UK Sustainable Equity fund invests in companies making a positive impact on society or the environment.
Manager Matthew Evans believes that AI has the potential to make knowledge easily available to everyone on an unprecedented scale. He also thinks that companies addressing the digital divide will become more important in society.
When he’s investing in companies involved with AI, he makes sure they’re aligned with the UN General Assembly’s March 2024 resolution promoting safe, secure and trustworthy AI systems.
Current investments involved in AI include analytics company RELX Group.
The company, through its subsidiary LexisNexis, has developed a cutting-edge legal research and drafting tool. It combines generative AI with proprietary search technology to provide reliable, concise legal answers, draft documents, and case summaries.
The manager can invest in derivatives and smaller companies, which adds risk.
BNY Mellon Sustainable Real Return
The managers behind the BNY Mellon Sustainable Real Return fund believe advanced AI could represent a deep change in the history of life on Earth and should be planned for and managed carefully.
They’re monitoring the evolution of both the positives and the negatives of AI as the technology develops. They then factor-in how this will impact investments in the Sustainable Real Return portfolio.
The fund aims to make money in a variety of market conditions. Its 'return-seeking core' invests mainly in the shares and bonds of well-run, financially secure companies. They think these companies have a unique set of advantages over their competitors.
They also consider how well those companies manage their impact on the environment and society.
The rest of the portfolio is invested in government bonds, commodities and cash, with the aim to dampen market ups and downs.
The managers also have the flexibility to invest in emerging markets, high-yield bonds and derivatives which, if used, adds risk.
The fund's sustainable 'red lines' make sure companies that violate the UN Global Compact Principles and those incompatible with the aim of limiting global warming to 2°C aren’t considered. It also won't invest in any company that makes more than 10% of its revenues from tobacco.
Want to learn more?
This week is Good Money Week, a national campaign promoting responsible investing.
It’s an ideal time to look at your investments through an ESG lens and identify any vulnerabilities that could make your portfolio more risky.
To learn more about how to invest with ESG in mind, along with more investment ideas, visit our responsible investment hub.
