Norway’s wealth fund encourages responsible AI engagement for enhanced profits

Norway’s $1.4 trillion wealth fund, the world’s single largest stock market investor, is urging firms it invests in to engage with artificial intelligence as a way to drive profits, but to do so responsibly, top officials told Reuters.

Fund CEO Nicolai Tangen said it was crucial for all firms in its portfolio to engage with AI, as it is “potentially a massive driver for productivity and efficiency” that is becoming an everyday business tool like power, computers or the internet.

“We of course expect them to use AI for the best possible benefit of the business,” Tangen said in an interview. “AI is a huge opportunity for companies and for society, but we need to make sure that it is used in the right way.”

Tangen said a company that would not engage with AI “would disqualify themselves as being complete morons”.

The fund invests in 9,200 firms worldwide, for which it sets expectations on a range of issues, from children’s rights to climate change.

Its latest document, to be published Wednesday, is on consumers’ interests, with a heavy focus on AI.

When talking to firms about responsible AI, the fund will concentrate particularly on the healthcare, finance and large tech sectors, because their use of the technology will have an especially strong impact on consumers.

Companies must be able to explain why they are developing particular AI systems and how they have been designed, trained and tested, according to the document. There should also be effective human oversight and control.

That is so “people (who) are affected by the outcomes can actually go back to the company and ask ‘how does your algorithm work? Why did I not get the loan?’”, said Carine Smith Ihenacho, the fund’s chief governance and compliance officer.

Among other expectations set in the document, the fund said companies must be proactive in their management of AI-related risks, and have systems in place if or when things go wrong.

Special responsibility lies with the top tech companies that develop AI technology since they are driving the change, said the fund, a top ten investor in Microsoft, Amazon , Alphabet and Nvidia.

“They have to take responsibility for their development and use of AI,” said Smith Ihenacho, adding the fund had already discussed AI with the large US tech companies in its portfolio.

“We have done it and we will continue to do it,” she said.

She welcomed recent self-regulation moves by US tech giants as “a good start”, but noted that there were “no proper regulations in place yet” and that more was needed.

In July, US AI companies made voluntary commitments to the White House to implement measures such as watermarking AI-generated content to make the technology safer.

“That is where there is room for investors like us to come in and fill the gap,” said Smith Ihenacho.

Tech is the largest sector in the fund’s equity investments, representing 11.9 percent of the its total value at end-2022, its data showed.

Dialogue with companies and voting at annual general meetings is the focus of its environment, social and governance (ESG) approach, but the fund can, and does, divest from companies that do not comply with its requirements. Last year it divested from 74 firms on those grounds.