Norway’s Sovereign Wealth Fund Urges Companies to Address Risks and Opportunities of AI
Norway’s sovereign wealth fund, known as Norges Bank Investment Management (NBIM), is calling on boards and companies to take the threats and opportunities presented by artificial intelligence (AI) seriously. In a paper published on Tuesday, the fund emphasized the need for companies to develop expertise in AI at the board level and to be able to explain how their systems are designed and trained.
With a portfolio that includes over 9,000 companies, NBIM is the world’s largest single owner of publicly traded stocks. This includes tech giants such as Microsoft, Nvidia, and Alphabet, all of which are heavily investing in AI. The fund reported a return of 10% in the first half, amounting to $143 billion.
While AI presents great opportunities across various sectors, NBIM warns that it also brings severe and uncharted risks. The fund believes that global regulation is crucial in protecting against these risks and supporting long-term value creation. It suggests that the establishment of an international oversight body may provide a suitable solution.
NBIM emphasizes the proactive role that companies need to play in managing AI risks. It suggests implementing additional controls for systems that can pose severe risks to people, society, or business outcomes. Furthermore, developers should focus on creating AI systems that align with human values and intent, and AI governance systems should underpin company innovation and adoption of the technology.
Commenting on the use of AI within the wealth fund itself, Pedro Furtado Reis, co-head of equity investments at NBIM, highlighted the potential benefits of AI in terms of efficiency and cost reduction. However, he also acknowledged the need for responsible companies and appropriate laws and regulations to manage the technology effectively.
The regulation of AI is currently under consideration in various jurisdictions. While the US Securities and Exchange Commission is contemplating new regulations, the European Union has already taken significant action by passing a draft law in June. This law aims to regulate AI comprehensively.
It is crucial to strike a balance between embracing the potential of AI and addressing the inherent risks associated with its widespread adoption. As Microsoft’s Brad Smith noted, almost every tool can become a weapon, emphasizing the need for responsible companies and effective regulation. The paper released by NBIM contributes to the ongoing discussion and serves as a starting point for engaging with company management on this issue.
In addition to AI, NBIM also published a document on consumer interests, highlighting concerns related to sugar consumption and the rise of digital addiction. These reports form part of the wealth fund’s strategy of active engagement, which covers a range of topics such as climate change, children’s rights, and tax transparency.
In summary, Norway’s sovereign wealth fund, NBIM, is urging companies to address the risks and opportunities of AI. The fund emphasizes the need for AI expertise at the board level and stresses the importance of global regulation in protecting against risks and supporting long-term value creation. The responsible use of AI, aligned with human values, is essential, and AI governance systems should guide innovation and adoption. While the regulation of AI is being considered worldwide, NBIM’s paper serves as a catalyst for discussions with company management.
