Enhancing the governance necessitates technological advancement
In a bid to streamline public engagement activity across the investment ecosystem, Impactive Tech has launched its Stewardship Intelligence tool. The tool aims to centralize and structure engagement efforts, addressing concerns of stretching resources thin due to the growing volume of engagements.
The need for informed dialogue and credible, data-driven preparation is increasingly emphasized to underpin 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.
The UK listed corporate IR has expressed frustration about sending answers into the void with no idea of what happens next. The industry is drowning in unstructured data and starving for synthesis, making it difficult for investors to consistently answer basic questions like who else has engaged a company on a specific issue, if the company has responded or made a public commitment, what additional value can their engagement bring, if there's a collaborative effort they can join, and what's the company's track record on responsiveness.
Nearly half of investment firms feel under-resourced for effective engagement, despite obligations expanding. Depth is being sacrificed for breadth in stewardship, leading to less time per engagement, limited preparation, and weak follow-up. Over 1,400 separate and overlapping initiatives, coalitions, working groups, taskforces, or standards are being pursued by investors for responsible investment engagement.
AI can improve the efficiency and effectiveness of responsible investment engagement in governance and sustainability. Specifically, AI can:
- Enhance Data Collection and Analysis: AI-powered tools enable real-time, high-quality data collection on resource use and ESG metrics, improving accuracy and timeliness for sustainability assessments.
- Support Predictive Analytics and Risk Management: AI algorithms can analyze complex datasets to forecast systemic and company-specific risks such as reputational damage, regulatory compliance failures, and environmental liabilities.
- Foster Responsible Governance of AI: Initiatives like the Intentional Endowments Network’s Responsible Tech & AI Initiative emphasize creating governance frameworks and ethical guardrails to oversee AI’s application in investments.
- Optimize Resource Allocation and Engagement Strategies: AI-driven investment management tools optimize asset allocation toward sustainable companies, while robo-advisory services enable personalized, scalable engagement strategies focused on sustainability impact.
- Detect and Mitigate Risks Related to AI Usage: AI can help identify new forms of risk related to AI misuse that may affect portfolio companies’ governance and reputational profiles.
Key to leveraging AI effectively is defining clear sustainability goals, selecting compatible AI technologies aligned with these goals, ensuring data integrity, and implementing comprehensive AI governance frameworks that balance innovation with ethical considerations.
Engagements can drive real progress, particularly when strong coordination is involved, as shown by companies engaged by Climate Action 100+ being more likely to set verified emissions targets. However, much engagement remains frustratingly opaque, with reports getting written but rarely read, and outcomes seldom verified. The future of stewardship lies in smarter workflows, better feedback loops, and systems that turn intention into intelligence.
A call for rethinking how stewardship is resourced, prioritized, and delivered includes pooling intelligence, leveraging AI, clarifying accountability, and coordinating campaigns. The industry is moving towards a future where stewardship evolves into a genuine two-way conversation built on trust, shared knowledge, and accountability.
Within the context of technology-driven advancements, businesses in the finance sector can greatly benefit from the use of AI in responsible investment engagement, particularly in areas such as data collection, predictive analytics, governance, and resource allocation.
To streamline stewardship efforts and enhance transparency, it is essential to adopt intelligence tools like Impactive Tech's Stewardship Intelligence, which can centralize and structure engagement activities, addressing resource management concerns in the growing volume of engagements.
