Companies need to do more to build boardroom expertise in AI, govern how it is used and minimize risks, a senior official at Norway’s $1.7 trillion sovereign wealth fund, one of the world’s biggest investors, told Reuters.
Norges Bank Investment Fund holds stakes in nearly 9,000 companies globally, representing 1.5% of all publicly traded stocks, and has led the way on many environmental, social and corporate governance (ESG) issues.
Last August, it published a guide for the companies it invests in, urging them to engage with AI as a way to boost profits, but to do so responsibly.
A year on, companies generally need to do more, said Carine Smith Ihenacho, the fund’s chief governance and compliance officer.
“In general, you need to build a lot of capacity at the board level,” he said in an interview this week.
“It doesn’t mean we need a person who is an AI expert… We need the board to understand, as a group, how AI is being used… to have a board-level policy and to know whether it is being used responsibly or not.”
“They should know: ‘What is our policy on AI? Are we high risk or low risk? Where does AI meet customers? Are we transparent about that?’ That’s a broad question that they should be able to answer,” he added.
It did not name specific companies, but the fund has “shared its views (on AI) with the boards of 60 of the fund’s largest portfolio companies,” it said in a 2023 responsible investing report.
Last August, the fund said it was focusing on the use of AI in healthcare because the technology will have a particularly strong impact on consumers.
The fund is also paying close attention to Big Tech companies as they develop AI-based products.
In these conversations, Smith Ihenacho said the fund is pushing for technology companies to have adequate regimes in place to understand the risks posed by AI products.
“Let’s spend more time on the governance structure,” he said. “Is the board involved? Do you have a proper AI policy?”
Nine of the fund’s top 10 stock holdings are technology companies, including Microsoft, Apple, Amazon and Meta Platforms. These companies helped drive a 12.5% return on the fund’s equity portfolio in the first half of this year.
Overall, about 26% of the fund’s equity investments are in the technology sector — up from 21% in the same period last year — so sector performance has a direct impact on the fund’s overall return.
While the fund does not want to “discourage the use of AI,” companies must develop the technology responsibly, Smith Ihenacho said.
“It’s amazing what AI can do to support innovation, efficiency and productivity… we support it,” he said.