Upgrading the necessity of enhanced management systems
In the realm of responsible investment, a significant challenge has emerged: an industry drowning in unstructured data and starving for synthesis. This makes it difficult for investors to answer fundamental questions about company engagements and their impact.
According to Redington's 2024 Sustainable Investment Survey, half of investment managers report having no dedicated stewardship or engagement staff, indicating a need for more efficient and effective strategies. Enter technology-driven solutions, such as artificial intelligence (AI) and shared infrastructure, which can streamline and enhance the effectiveness of corporate governance and sustainability engagement.
These technologies offer several advantages. AI tools automate routine tasks, enhancing decision-making and efficiency in governance. For instance, AI-assisted platforms like JLL-GPT help directors prepare materials and manage board communications, leading to operational efficiencies and higher quality governance outputs.
AI also enables real-time risk monitoring and transparency, improving governance quality by detecting issues early and enhancing decision transparency. This proactive approach allows firms to address compliance and ethical concerns more effectively.
Autonomous AI systems can embed compliance directly into operations for real-time identification and prevention of policy violations, raising the bar for responsible governance in complex regulatory environments.
AI analytics provide deeper insights into stakeholder needs and measure social and environmental impacts more accurately, supporting robust corporate social responsibility initiatives and sustainability engagement aligned with responsible investment objectives.
Moreover, AI optimises sustainable infrastructure and investment by leveraging big data, machine learning, and IoT to reduce emissions and promote eco-friendly infrastructure. This technology helps investors identify projects with strong sustainability credentials and climate resilience quickly and effectively.
Shared digital platforms and infrastructure, powered by AI, consolidate data from multiple stakeholders, enabling coordinated sustainability efforts and governance transparency on a broader scale. This reduces duplicated efforts and fosters collaboration across investors and portfolio companies towards common sustainability goals.
The future of stewardship lies in smarter workflows, better feedback loops, and systems that turn intention into intelligence. Collaboration can scale influence without scaling cost, but it requires strategic and well-managed coordination among investors.
However, the stewardship process is currently hampered by outdated tools and siloed information. The pressure is mounting as investment firms feel under-resourced for effective engagement, even as their obligations expand. With over 5,000 PRI signatories representing more than $120 trillion in assets, companies can receive hundreds of similar requests each year.
Achieving a genuine two-way conversation built on trust, shared knowledge, and accountability is crucial for effective stewardship. Without better infrastructure, companies tune out, investors duplicate efforts, and regulators respond with requirements for more standardized reporting that may miss the real issues.
AI can help identify high-impact engagement opportunities, flag overlapping requests, and synthesize complex reporting across firms and markets. Engagement on governance and sustainability issues has become a cornerstone of responsible investment. Despite billions of dollars in funds aligned with sustainability and long-term investment horizons, and thousands of companies fielding investor queries, engagement remains fragmented, duplicative, and difficult to measure in terms of real-world outcomes.
Investors often respond to companies without receiving meaningful feedback or closure on their engagements. AI can bridge this gap by providing a more transparent and accountable stewardship process, ultimately leading to more effective and impactful engagement on governance and sustainability issues.
Technology-driven solutions, such as artificial intelligence (AI) and shared infrastructure, are essential in the business of finance and sustainability, aiming to streamline and enhance the effectiveness of corporate governance and sustainability engagement. AI tools like JLL-GPT automate routine tasks, enhancing decision-making and efficiency in governance, offering real-time risk monitoring and transparency, as well as AI analytics that provide insights into stakeholder needs and impacts more accurately. These advancements can help investors identify projects with strong sustainability credentials, coordinate sustainability efforts across stakeholders, and ultimately, bridge the gap in meaningful feedback and closure on engagement outcomes.
