AI (Artificial intelligence) – a modern technology – enables intelligent and reactive machines, computers, and robots to perform tasks more quickly and precisely, compared to humans. It has strong potential to boost sustainability in diverse sectors including the economic levels of a nation. AI makes the sustainable growth of industries possible by facilitating the management of climate change and environmental effects across various applications including the use of AI-integrated green energy distribution networks, green procurement processes, and monitoring and application of environmental laws. In addition, AI aids in analysing the weather, addressing precise agricultural needs, helping predict natural disasters and building resiliency to keep businesses up and running amid natural calamities.
The private sector is also showing a positive shift towards the adoption of AI in improving the efficiency of their operations and building machine-based capabilities in business processes. According to International Business Machines, last year, more than 33% of global businesses improved their operational capabilities by implementing AI, while more than 40% of global businesses were considering new opportunities AI can usher in. These numbers reflect corporates’ realisation of the need for technological advancements through every possible channel.
The sectors that have adopted AI at the quickest pace are industrial manufacturing, banking and financial services, health services, retailing and insurance. These sectors leverage AI systems and instruments to streamline their processes, optimise jobs and develop innovative goods and services. In industries that rely heavily on information and data and are subject to strict regulations, AI seems to have a significant effect on their market shares. AI provides an advantage over industrial competition and helps industry participants better comply with regulations.
In terms of market and economic growth, AI in environmental applications is expected to increase global GDP by $5.2 trillion and contribute more than $14.5 trillion to international markets in the coming decade. The global AI market size is expected to grow at a staggering 37.7% annually, on average, from 2023 to 2030. This exponential growth underscores the increasing importance of AI across all industries.
AI investments are growing rapidly, led by the United States and China, suggesting that the two countries’ ecosystem is mature, and they have sufficient finances readily accessible for the advancement of AI. Concentrating on these nations can provide advantageous opportunities to companies planning to start investing in AI initiatives. Most employment possibilities, connected to AI, in education, invention or implementation, will likely primarily be found in these countries.
In 2022, $92 billion was invested globally by the private sector in AI – a little less than the $93.5 billion in 2021. It is expected that by end-2023, these funds will likely top $150 billion. As of 2018, there was a brief slowdown in annual spending on AI, but in every marketplace, AI spending has grown over six times since 2016. This shows the criticality of AI.
This surge in funding is driving the growth of the worldwide AI industry, which is projected to reach hundreds of billions of dollars by 2024. In the coming years, this fast-expanding sector is expected to touch trillions of dollars. The money invested in ventures worldwide, specifically in AI businesses, surged $5 billion in the last three years – nearly twice as much as the investment before 2020. The funding was led by US corporations. With an emphasis on human-machine design, system intelligence and automated messaging tool start-ups, among others, are leading the way in AI investment.
Responsible investors intending to take advantage of AI in sustainable investing are expected to explore opportunities related to the identification of ESG disclosure gaps (using predictive models) and environmental shifts (using AI-powered satellite imaging). With some learning, AI tools can present powerful results, but the data privacy and reliability risks associated with the use of AI tools for ESG investing need careful consideration.
In conclusion, the private sector can be seen as the front-runner in the innovation of AI, with use cases and adoption extending beyond large corporations to smaller businesses that see it as a tool to automate tasks and cut expenses. Making smart policy decisions in the AI space is a key factor that drives continued growth and keeps the competition among the global industries at a high level. However, there is still work to be done in this area. Addressing unintended biases is just one of many steps to be taken to establish a reliable and responsible AI system and global AI infrastructure. Additionally, besides addressing specific issues, AI is used by more and more organisations to solve broader problems connected with their business. One crucial area where AI is set to play a pivotal role soon is investment decisions.
