The Canada Pension Plan Investment Board is asking fellow institutional investors to consider the impact of artificial intelligence in investees’ labour patterns beyond a productivity improvement perspective, says Jon Webster, senior managing director and chief operating officer at the CPPIB.

In a new report, the investment organization said institutional investors stand at the forefront of a technological revolution that can significantly impact their portfolio. The emerging and rapidly evolving structure of AI adoption across industries means it’s difficult to create specific metrics for institutional investors to adopt when it comes to the use of the technology by investees.

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The ongoing dialogue around AI implementation — both its risks and opportunities — has centred on the changes in productivity for the workforce but the complexity of AI needs a systematic and holistic consideration from investment organizations, says Webster.

He admits his peers already contend with increasingly complicated risks around cybersecurity, geopolitics and climate change but argues it’s crucial for these organizations to comprehend the effect AI has on any portfolio, particularly in regards to human capital.

“I describe [the intersection of AI and talent] as . . . one of the 21st century’s business risks and opportunities that investors, boards and management need to get their head around.”

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As part of effective risk management, he notes, investment teams ideally will challenge the management teams and boards at companies that are promising the use of AI, to find if there’s enough material knowledge of the cutting-edge technology.

The report said generative AI has the potential to free up as much as 70 per cent of employees’ time. For investors to truly capture the value of AI integration, management teams need to look for the appropriate integration of talent alongside AI strategy. However, the methods available to measure AI adoption aren’t very uniform just yet, says Webster.

“It’s still early stages of measuring [the] long-term impact from AI overall for most organizations . . . . I think it’s too early, ultimately, to say what specific key performance indicators every organization is going to need to have in place.”

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An absence of universal success metrics for the AI integration process means investors have to go back to basics, he adds, and rely on very clear diligent planning, an understanding of the potential unintended consequences and savvy leadership.

According to the report, the use of AI by companies will be impacted by factors like capital costs, evolving regulations and environmental costs related to emissions and water consumption.

Webster expects to see shifts in talent adoption strategies when it comes to the use of AI at various firms. In the report, the CPPIB asks investors to consider how companies balance their pursuit of external candidates to address skill gaps related to AI deployment against internal talent development for their business needs.

“Investors must assess how boards and management are evaluating automation and AI’s transformational impact on staffing levels, skill sets, and worker retention,” the report said. “Hiring strategies may need to adapt while opportunities and risks related to retraining/reskilling will need a greater degree of attention — particularly when it comes to preparing workers to deploy AI productively and responsibly.”

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