Norway’s $1.4 trillion sovereign wealth fund urged boards and companies to get serious about how they handle the threats and opportunities provided by the rapid advances in artificial intelligence.
(Bloomberg) — Norway’s $1.4 trillion sovereign wealth fund urged boards and companies to get serious about how they handle the threats and opportunities provided by the rapid advances in artificial intelligence.
“As AI becomes ubiquitous across the economy, it is likely to bring great opportunities, but also severe and uncharted risks,” the Oslo-based fund said in a paper on AI published Tuesday. Companies will need to develop AI expertise at the board level and should be able to explain how systems are designed and trained, the fund said.
Norges Bank Investment Management — as the fund is known — is the world’s biggest single owner of publicly traded stocks and holds over 9,000 companies in its portfolio. That includes tech giants investing heavily in AI such as Microsoft Co., Nvidia Corp. and Alphabet Inc.
The fund returned 10%, or $143 billion, in the first half, it said in a report published Tuesday, ahead of the planned release time.
Read More: Norway’s $1.4 Trillion Wealth Fund Returns 10% on Tech Surge
Global regulation will be key to protecting against the risks of AI and for “long-term value creation,” the fund said, and the creation of an international oversight body may provide a “suitable solution.” But companies have to be proactive in managing the risks, while “systems that can pose particularly severe risks to people, society or business outcomes should be subject to additional controls.”
Developers of artificial intelligence should focus on creating systems that “align with human values and intent” and AI governance systems should underpin company innovation and adoption of the technology, NBIM said.
When it comes to its use within the fund, NBIM’s co-head of equity investments Pedro Furtado Reis said in April that advances in the technology have the potential to bolster efficiency, reduce costs and help portfolio managers better prepare for the thousands of meetings they undertake every year.
The US Securities and Exchange Commission is weighing whether to adopt new regulations to oversee the burgeoning technology, while the European Union became one of the first in the world to take wide-reaching action to regulate AI when it passed a draft law in June. While financial firms worldwide already use machines to speed up how they invest and train employees, the scope of companies using AI is widening, Jan Szilagyi, chief executive officer of Stan Druckenmiller-backed Toggle AI, said in July.
Read More: Druckenmiller-Backed AI Fintech Sees Demand Soar on Wall Street
“Every tool can become a weapon,” Microsoft Vice Chair and President Brad Smith said during a podcast interview with NBIM Chief Executive Officer Nicolai Tangen on Aug. 9. “Almost every tool is, unfortunately, turned by somebody into a weapon. It will take, not just responsible companies, but law and regulation to manage this properly.”
Read More: Norway’s $1.4 Trillion Fund Sees AI Promise Amid Inflation Gloom
The wealth fund’s paper on AI is part of its strategy of active engagement that includes a series of expectation documents that form a “starting point” for discussions with management.
A document on consumer interests also published Tuesday, the 10th such report released by the fund, highlighted the long-term health problems associated with sugar consumption and also flagged the rise of digital addiction.
Previous papers have focused on subjects such as climate change, children’s rights and tax transparency.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.