Individual

Society

Environment

Markets

Geopolitics

Considerations for Investors

Investors in the sector face a number of rapidly evolving technologies, such as energy storage systems, as well as software innovations like advanced analytics and artificial intelligence, that are reshaping energy management and grid optimization. As energy companies adopt technologies like renewables, AI, and carbon capture as part of the transition toward low-carbon systems, investors can combine prudent investment while generating a positive environmental impact. Focusing on broader ethical implications can help mitigate reputational risks or legal liabilities. By proactively addressing issues like data privacy, chemical safety, and community engagement, forward-thinking companies can future-proof against impending regulations and societal expectations. Overall, integrating ethical considerations into governance, research, and product design serves as an opportunity for firms to distinguish themselves through responsible innovation.

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Creating Future Us is the Not-for-Profit arm of Paradigm Change Capital Partners LLP

Energy - Individual

The key individual impacts of concern for investors are:

 

Labor conditions: The potential for unsafe working conditions and labor rights suppression persists across the sector in mining, drilling, construction, and manufacturing operations. If auditing is insufficient, workers are vulnerable.

 

Unless the above are proactively addressed, potential ramifications include:

 

Reputational damage if automation and AI are implemented without retraining or transition support.

Energy - Society

The key societal impacts of concern for investors are:

 

Labor displacement:  Increasing data-driven automation and analytics promises to bring significant efficiencies to the sector. Transition planning, job training, and alternative employment are imperative, given workforce automation threatens jobs across solar, oil and gas, grid management, and customer service functions.

 

Responsible AI: Untested predictive algorithms and automation in sensitive operations could lead to catastrophic accidents.

 

Security risks: The growth in connectivity increases the possibility (and potential severity) of a cyberattack, threatening grid reliability and public safety. Robust software protections are required to mitigate this risk.

 

Unless the above are proactively addressed, potential ramifications include:

 

  • Loss of public trust if technologies are seen to exacerbate issues like inequality or the displacement of disadvantaged communities.
  • Reputation damage if renewable energy innovations fail to manage innovative new technologies appropriately.

Energy - Environment

The key environmental impacts of concern for investors are:

 

Climate risks: Short-term optimization algorithms that underweight sustainability factors reinforce path dependency on fossil fuels and undermine climate resilience.

 

Environmental sustainability: Innovation, including greater automation across the sector, promises to radically increase efficiency. However, energy infrastructure lifecycles, resource extraction, and emissions continue to represent major impacts.  

 

Environmental justice While technological innovation can improve efficiency, underlying infrastructure decisions on where the project sits may concentrate environmental costs on marginalized communities lacking a political voice.

 

Biofuels: GM techniques can enhance the performance of biofuel crops (such as corn or algae) by improving their yield, resilience to environmental stressors, and compatibility with existing agricultural practices. However, they also raise health, ecosystem, transparency, and animal welfare concerns.

 

Unless the above are proactively addressed, potential ramifications include:

 

  • Fines, lawsuits, and cleanup costs from pollution related to unvetted energy technologies.
  • Loss of access to green financing options or environmentally-focused funds.

Energy - Markets

The key market impacts of concern for investors are:

 

Transparency: A lack of visibility into data practices, automated decision systems, predictive models, and optimization algorithms reduces accountability around safety and ethics.

 

External vendor data ethics: Clear governance and audit requirements around external tech vendor data handling, security, bias testing, and responsible AI practices are advisable, given the increased outsourcing of analytics and systems management.

 

Synthetic biology: Energy companies funding or conducting internal synthetic biology research for hypothetical future applications would need to ensure adherence to bioethics guidelines and protocols.

 

Unless the above are proactively addressed, potential ramifications include:

 

  • Antitrust fines if utilities improperly exploit data or market power.
  • IP vulnerabilities if governance of sensitive operational data is inadequate.
  • Market instability if mix of variable renewable generation is mismanaged.

Energy - Geopolitics

The key geopolitical impacts of concern for investors are:

 

Cybersecurity: There are considerable risks of grid outages, infrastructure damage, and data theft. These necessitate robust data protections, particularly given the rising threats of state-sponsored cyber-attacks and network intrusions.

 

Resource conflicts: As competition intensifies over critical mineral reserves, supply chain risks intensify. 

 

Adverse use: General-purpose automation equipment, materials science advances, AI, and sensor networks could potentially enable unethical weapons or authoritarian practices. Digital design files and production techniques could facilitate the proliferation of unsanctioned nuclear, chemical, and biological materials.

 

Unless the above are proactively addressed, potential ramifications include:

 

  • Remediation costs related to cyberattacks by state-sponsored groups exploiting vulnerabilities in critical infrastructure.
  • Stranded assets if substantial investments are made in nations that later undergo political changes.