The Robert Toigo Foundation

Artificial intelligence is transforming a $22.9 trillion market for do-good funds – but there are plenty of reasons to be cautious

Finance has developed a conscience – or at least a red-hot investing opportunity set with a conscience.

The market for doing well financially and doing good for the world at the same time continues to grow. Strategies that include environmental, social, and governance factors hit $22.9 trillion last year, up 25% year-over-year, according to the Global Sustainable Investment Alliance.

As ESG looks hotter than ever, the formerly sleepy strategy has seen a rush of funds launching products to address all corners of a portfolio. To stand out, they’re turning to advanced technology, including artificial intelligence and machine learning, into their investment processes.

But as some managers are starting to find, artificial intelligence is no cure-all for the problems plaguing ESG. Data sets often don’t line up, and without careful human management, computers’ seemingly best investments omit huge swaths of the world.

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