At a glance
- Up to 60% of global jobs could be affected by AI integration over the years, some in positive ways and others in negative ways. Can we learn from other large-scale transitions?
- Given that the energy transition also has a significant impact on workers in particular sectors, we look at how relevant Just Transition principles are for an impending AI transformation.
- We share what responsible practices look like for corporate developers and adopters of AI technologies and provide recommendations to other investors.
Although public panic about a potential artificial intelligence (AI)-induced doomsday has died down a bit, experts agree that AI will change many aspects of our lives. This includes positive opportunities for growth, productivity and innovation. For example, Goldman Sachs predicts that AI adoption will lead to productivity growth of 1.5% a year and increase the value goods and services globally by 7%.1 Productivity growth also means shifts in the way we work. Businesses predict that in 2027 almost half (44%) of workers’ core skills will be disrupted.2 As such, one of the key messages at the 2024 World Economic Forum in Davos related to the AI transformation was: upskilling and development are crucial to ensure an equitable future of work.
New research 3 by Deloitte, which surveyed corporate leaders on AI, reported that close to 80% said they expect generative AI to significantly transform their company and industry over the next three years. They indicated both excitement and concern and other sources seem to agree. The International Monetary Fund in early 2024 found that 40% of employment globally is exposed to AI. This is even higher at 60% in advanced economies because of a higher prevalence of cognitive jobs. 4 Of that 60%, about half of jobs are predicted to be negatively affected, whereas the other half stand to benefit from AI enhancements.
Where have we heard this before?
What is a Just Transition?
Transitions need to bring people along, rather than push people out.
In 2021, BMO GAM signed on to an investor statement communicating investor expectations around Principles for Job Standards and Community Impacts. The five basic tenants were these:
- Provide a foundation for decent work, job benefits, and working conditions;
- Offer equitable opportunities for quality jobs;
- Invest in impacted communities;
- Facilitate transparency and accountability;
- Support just transition public policies at all levels.
Climate advocacy organization Ceres has also developed a 2030 roadmap to a just and inclusive future with echoes the spirit of these tenants. Just transition advocates often note that transitions involving workers often are most successful when workers themselves are actively part of the decision-making process, and that those affected get a chance to co-develop transition-related strategies.
Applying Just Transition to the AI Transformation
As such, an AI transformation needs to be grounded in respect for human rights, decent work and bring people along through adequate investments by governments and companies in reskilling, support programs and ensuring equitable opportunities.
Several of the key principles in their AI guidelines and tools share similarities with just transition principles, such as:
- Engage workers affected by AI transformations and bring them into development processes to represent collective worker interests;
- Seek shared prosperity and generate profits in a responsible manner; and
- Improve job quality or satisfaction.
Investors can engage with companies developing AI technology as well as companies using and adopting AI technology to ask about their strategy and encourage investee companies to adopt a “just AI transformation” mindset and come to co-developed strategies with workers.
Responsible investor action
At BMO GAM our stewardship work on responsible AI has mostly centered around facial recognition technology and its potential impacts on discrimination, surveillance and data privacy. For anyone interested in learning more about this work, reports on the engagement results can be found here. A main learning was, unsurprisingly, that because regulation is far behind, companies need to make voluntary commitments to uphold ethical principles and demonstrate human rights alignment, including by adopting the UN Guiding Principles for Business and Human Rights (UNGPs). We systematically encourage companies to adopt human rights due diligence practices aligned with the UNGPs, which positions companies to better understand adverse impacts their business conduct is having on people, including their workforce.
Going forward, we will be active in engaging companies on responsible AI creation and adoption through a just transformation lens, making use of sources such as the World Benchmarking Alliance’s data on digital inclusion and joining future relevant investor collaborations on the topic.
For more information on the potential positive and negative sustainability impacts of AI, please tune in to the BMO Sustainability Leaders podcast: Understanding the Inner Workings of AI | BMO Capital Markets
Footnotes
1 AI may start to boost US GDP in 2027 (goldmansachs.com)↩
2 6 work and workplace trends to watch in 2024 | World Economic Forum (weforum.org)↩
3 us-state-of-gen-ai-report.pdf (deloitte.com)↩
4 Gen-AI: Artificial Intelligence and the Future of Work (imf.org)↩
5 Gen-AI: Artificial Intelligence and the Future of Work (imf.org)↩
6 Jobs at Risk That AI Will Replace, Change the Most by 2030: McKinsey (businessinsider.com)↩
7 France protests: Farmers block major roads around Paris over falling incomes – BBC News↩
8 European farmers protests show the need for a just transition to Net Zero | Chatham House – International Affairs Think Tank↩
9 Just-transition-Approach-Report-February-2021.pdf (worldbenchmarkingalliance.org)↩
10 What We Need for a Just AI Transition (newamerica.org)↩
11 OpenAI Used Kenyan Workers on Less Than $2 Per Hour: Exclusive | TIME↩
12 Precarious conditions of AI ‘ghost workers’ revealed by Google termination of Appen contract, union says | Business | The Guardian↩
13 Millions of Workers Are Training AI Models for Pennies | WIRED UK↩
14 Guidelines for AI and Shared Prosperity – Partnership on AI↩
15 La Moncloa. 14/07/2021. Sánchez presents the Digital Rights Charter with which “Spain is at the international forefront in protecting citizens’ rights” [President/News]↩
16 Blueprint for an AI Bill of Rights | OSTP | The White House↩
17 FACT SHEET: President Biden Issues Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence | The White House↩
18 Empowered workers are key for AI to reach its full potential | World Economic Forum (weforum.org)↩
19 Deutsche Telekom commits to AI ethics | Deutsche Telekom↩
20 EU AI Act: first regulation on artificial intelligence | Topics | European Parliament (europa.eu)↩
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