Individual

Society

Environment

Markets

Geopolitics

Considerations for Investors

As algorithms increasingly impact all areas of society, responsible AI practices that address bias, transparency, and accountability become pivotal. Similarly, as emerging technologies like VR, blockchain, and machine learning scale, proactive impact assessments identify concerns early when interventions are most effective for responsible innovation. Ethics are increasingly in the spotlight: investors can support the sector in maintaining trust, preserving the social license to operate, getting ahead of regulations, attracting talent, and upholding corporate values for enduring returns.

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

Information Technology - Individual

The key individual impacts of concern for investors are: 

 

Accessibility: Optimizing usability interfaces on devices for users with disabilities supports universal access to IT.

 

Labor conditions: Audits of electronics manufacturing facilities and component suppliers in the hardware supply chain can help counter risks of exploitation, unsafe conditions or child labor.

 

Privacy risks: The collection of immense quantities of user data across services and devices warrants stringent consent protocols, anonymization procedures, purpose limitations, and access controls to prevent abuse or unauthorized surveillance.

 

Unless the above are proactively addressed, potential ramifications include:

 

  • Lawsuits, fines, and loss of consumer trust if technologies enable discrimination, privacy violations, or other direct harms.
  • Remediation costs from data breaches exposing sensitive user information.

 

Loss of customer trust (and sales) if products are felt to be exploitative, unhealthy, or unsafe.

Information Technology - Society

The key societal impacts of concern for investors are: 

 

Surveillance: The vast aggregation of sensitive user data such as documents, photos, location history, messages and biometrics on centralized cloud platforms could enable large scale unspecified surveillance activities by providers themselves or governments unless sufficient technical controls, or regulation is lacking.

 

Algorithmic bias: Discriminatory impacts arise due to skewed datasets, proxy variables, and inadequate training data. Proactive audits, ethical design practices, and external oversight help catch issues early.

 

Device safety: Defective or vulnerable IoT devices, industrial control systems, medical wearables, autonomous vehicles or other connected tech pose risks of serious or fatal accidents, particularly if oversight lags.

 

Counterfeit hardware: Advanced scanning and 3D printing can be used to replicate branded electronic components, compromising safety.

 

Responsible AI: Extensive testing is required before deploying unproven AI, particularly where errors could impact human safety if inadequately supervised.

 

Unless the above are proactively addressed, potential ramifications include:

 

  • Lawsuits, fines, and loss of consumer trust if technologies are shown to violate privacy (including data breaches), enable discrimination, undermine wellbeing.
  • Difficulty attracting and retaining top talent if employees view companies’ technologies as ethically negligent.
  • The cost of capital may increase as more patient, responsible investors steer clear of companies with opaque tech ethics.
  • Revenues from advertisers may decrease due to the reputational damage of being associated with companies seen to be causing societal harm.

Information Technology - Environment

The key environmental impacts of concern for investors are: 

 

E-waste: The short lifecycles of devices such as laptops, servers, and networking gear can lead to massive e-waste volumes, particularly due to the rapid upgrade cycle among many users. Improving recyclability, durability, and reuse can lessen this impact.

 

Climate impact: The immense energy required for manufacturing components, powering data centers, and embedded in IT infrastructure represents the main environmental impact of the sector. This warrants sourcing renewables, optimizing efficiency through virtualization and smart power management, converting waste heat into energy, and holistic lifecycle assessment to reduce emissions.

 

Unless the above are proactively addressed, potential ramifications include:

 

  • Electronic waste liabilities from discarded hardware containing hazardous materials.
  • Supply chain disruptions if rare earth minerals sourced unethically without traceability.
  • Reputational risks if companies are seen to be obstructing sustainability policies and environmental regulations.

Information Technology - Markets

The key market impacts of concern for investors are: 

 

Transparency: The abstract infrastructure of the sector obscures technology supply chains and global data flows, undermining accountability.

 

Legal compliance: Navigating data privacy regulations across global network infrastructure and traffic flows is inherently complex. Staying compliant with regulations is difficult but fundamental.

 

Cyber resilience: Systemic concentration risks mean breaches could expose millions of sensitive records.

 

Unless the above are proactively addressed, potential ramifications include:

 

  • Noncompliance costs as regulations tighten around safety, AI, privacy, and data security.
  • Severe disruptions and remediation costs from cybersecurity incidents exploiting vulnerabilities.

Information Technology - Geopolitics

The key geopolitical impacts of concern for investors are: 

 

Geopolitical exposure: The overreliance on singular cloud or data providers poses business continuity risks, particularly during conflicts. Redundancy across vendors and regions improves resilience.

 

Unless the above are proactively addressed, potential ramifications include:

 

  • Reputational damage or trade restrictions if technologies are transferred to rogue regimes.
  • Economic espionage and intellectual property theft enabled by poor cybersecurity practices.

 

State-sponsored hacking ransoming critical digital infrastructure.