Artificial intelligence: Do your charity’s investments reflect the risks?
Imagine this: you have spent many hours working on your charity’s AI strategy. You now know the difference between ChatGPT and Claude. You understand how AI can be used in your charity’s daily work and when it might be better not to use it. You may have even started tackling some of the risks of AI, such as social inequality and environmental pollution, through your grant-making or the services you provide.
But there may be a problem hidden in your investments. Some of your charity’s money is likely invested in AI. This means your investments could be working against your charity’s mission in ways you have not yet considered.
It might seem impossible to solve this problem, but charities can use the rights they have as investors to help make AI companies act more responsibly.
The risks of AI to charities’ missions
Companies that develop, support, or use AI have grown rapidly in recent years. AI is clearly changing many things, from how we plan meals to how scientists and academics carry out research. But it is also creating new risks for people and the environment.
People are increasingly speaking out about the environmental harm caused by AI data centres, and these concerns are real. Reports warn that 100 new data centres in the UK will burn gas to produce electricity, putting the country’s climate goals at risk. Meanwhile, the UK Government is struggling to meet the amount of water data centres need.
After a summer of heatwaves, concerns about climate change have reached record levels. It is therefore no surprise that communities are opposing the construction of more data centres for AI. Many AI companies say their technology will bring environmental benefits that are greater than the harm it causes to the climate. However, the evidence does not support this claim.
AI also creates worrying risks for the people who use it. The National Crime Agency has issued advice warning parents not to share pictures of their children online because of the growing threat of AI-generated videos showing child sexual abuse. UN Women has also warned that AI repeats gender stereotypes and racial bias.
What does it mean to align your investments and mission?
As investors, charities need to know which companies they invest in and how those companies affect people around the world.
If you run an environmental charity that cleans up waterways damaged by pollution and extreme heat, do the companies driving the growth of data centres share your values? Or, if your charity protects children’s rights, does investing in the technology that produced sexual images of children fit with your mission?
This does not mean charities and foundations should immediately sell all their investments. These organisations have an important role to play as investors who make decisions based on their values. By using the rights they have as company shareholders, charities can challenge AI companies and hold them responsible for risks that could harm their missions.
Where would I even start?
A good first step is to learn about the risks AI creates and think about how they relate to your charity’s mission. You can then include these concerns in your investment policy, as pension funds such as Nest have started to do.
Find out what your asset manager is doing to reduce the risks of AI. How do they plan to vote on shareholder resolutions and whether company directors should be re-elected when those companies continue to harm the people and places your charity is working to protect? The Charities Responsible Investment Network’s secretariat has produced a guide for charities about the climate effects of AI investments. It includes questions you can ask your asset manager.
You may face some resistance. But charities have a special kind of power as investors: people respect their values, and their voices carry moral authority. You can use this influence to push for change. If your asset manager does not respond to your concerns, make it clear that you are prepared to move your investment management to another provider.
You can have a bigger impact by working with other investors. Organisations such as the World Benchmarking Alliance and the Thomson Reuters Foundation are already bringing investors together to discuss AI and climate concerns.
What investors are already doing to speak up on AI
Large pension funds such as RailPen, CalPERS and Nest are already leading efforts to improve how AI is managed. They show how investors can decide whether to keep or sell AI-related investments in ways that match their values and goals.
Majority Action, a non-profit organisation that helps investors hold companies accountable, has published advice on reducing AI risks. This includes voting against the re-election of company directors to show that investors are unhappy with their performance. Investors who want to get started can find a range of guides containing practical examples and ideas.
Investors have already helped bring about changes on climate issues by using their shareholder rights. In 2023, the French bank BNP Paribas strengthened its policy on oil and gas twice in three months after discussions with ShareAction and other investors.
Aligning investments and missions – a case for shareholder engagement
Charities are organisations that aim to do good, act boldly, and have a public voice. They need to understand how their AI investments might create risks that work against their missions. By learning about these risks and speaking up as active shareholders, charities can use their investments to support their goals instead.
At ShareAction, we work to set high standards for responsible investment and encourage organisations around the world to adopt them. Our goal is to use the financial system to help solve the biggest environmental and social problems we face.
ShareAction runs the secretariat for the Charities Responsible Investment Network (CRIN). Through CRIN, we help charities and foundations deal with issues like these. Find out more below about our group of investors working together to make sure their investments support their missions.