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Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1. 

Esther Whieldon: And I'm Esther Whieldon, a senior writer on the Sustainable1 Thought Leadership Team.

Lindsey Hall: Welcome to ESG Insider, an S&P Global podcast where Esther and I take you inside the environmental, social and governance issues that are shaping the rapidly evolving sustainability landscape.

That was the sound of boots crunching through snow. And I’ve been doing a lot of that this past week since I traveled to a tiny ski town called Davos in the Swiss Alps. This is where the World Economic Forum, or WEF, holds its annual meeting- usually in January.  

For one week each year, Davos is taken over by the WEF gathering as leaders from business, government and civil society plus the media convene to discuss solutions to some of the biggest challenges facing the world. Attendees traipse through the ice and snow between panels, roundtables and private meetings that start at 7am and run throughout the day. That’s followed by cocktails hours, dinners and receptions followed by drinks that run into the late hours of the night. It’s networking to the nth degree. 

Now, unlike most of the events we cover on this podcast, this is not strictly a sustainability-focused gathering. But it’s notable that the WEF agenda is increasingly focused on topics that fall under the broad sustainability umbrella, or things that we would consider as environmental, social and governance issues.  

Esther Whieldon: To give you a sense of what that means: right before Davos, WEF released its annual Global Risks Report. This explores some of the most severe risks facing the world. The new report found that over the next two years, the top risk is misinformation and disinformation, followed by extreme weather events.  

And over the next 10 years, all four of the top risks are environmental. They are extreme weather events, critical change to earth systems, biodiversity loss plus ecosystem collapse. And the fourth is natural resource shortages.  

Lindsey Hall: This report really sets the tone for the Davos gathering, which ran January 15th through today, January 19th. The theme of the meeting this year “rebuilding trust” and the agenda was scheduled around 4 main themes: One, achieving Security and Cooperation in a Fractured World. Two, creating Growth and Jobs for a New Era. Three, a Long-Term Strategy for Climate, Nature and Energy — more on that next week. And finally, Artificial Intelligence as a Driving Force for the Economy and Society.  

In today’s episode, we’re going to focus on that last one, because Esther, artificial intelligence or AI, was the buzzword. We’ll be back next week with a broader episode that covers all the big highlights from the week.  

At Davos, there’s a main promenade that runs through the center of town and companies take over all the storefronts and host events there throughout the week. And as you’ll hear today’s guest mention, AI was plastered everywhere.  

It became kind of a running joke among attendees how in your face AI was. I spoke at an event that S&P Global Sustainable1 hosted on Monday about sustainability trends to watch in 2024, and everyone kind of laughed knowingly when I mentioned how prominent AI was at Davos this year. 

I was talking about AI in that session because this is one of the trends S&P Global identified to focus on for the year ahead is AI governance. We found that as reliance on newer technologies like AI grows, so will pressure to ensure robust AI governance. We’ll include a link to that trends research in our show notes. 

I sat down on the sidelines of Davos to speak with someone very focused on the risks and opportunities that AI presents: Rebeca Minguela, Founder and CEO of Clarity AI. This is a tech company that uses AI to help investors, organizations and consumers understand their environmental, climate and social impact. I started by asking Rebeca about her Davos experience.  

Rebeca Minguela: Yes. So AI is a very fancy term these days. So basically, we started using AI actually back in 2018 at Clarity. So we have been meeting in previous years here at as a lot of the leaders on AI. It's good that finally they make it one of the main topics at the conference. And our goals are to meet various partners and clients and try to catalyze the scalability of our platform and our solutions because one of the most important goals for sustainability is, of course, reaching scale as fast as possible, right? So bringing tools for sustainability assessment at the scale as fast as possible. And gladly, now with AI solutions being more broadly accepted and adopted, I guess, we are at an inflection point.

Lindsey Hall: For our listeners are trying to wrap their heads around the role of AI and sustainability. Can you give us some examples?

Rebeca Minguela: There are thousands and thousands of applications of AI that could help make the world more sustainable. But just focusing, of course, on the ones that I know the best, which are the ways that we use it at Clarity. We use it for data collection at scale, right? So bringing that much data as possible in as a reliable and fast way as possible. [When] estimated data that is not available, we use machine algorithms for that as well. We also use models to, to manage all the data that we capture and we gather to aggregate that, and build insights with our solutions and bring that to investors, to companies, to consumers, so it's easy to understand.

Lindsey Hall: You also mentioned that AI is more firmly on the agenda now at Davos. Can you say a little bit more about what that means?

Rebeca Minguela: Well, first of all, of course, the program includes different panels specialized on AI topics. At the same time, when you walk through the promenade and for the ones who have not been at Davos it's basically one of the main streets where all the companies basically have different stands, different houses. 

You see AI everywhere, like all the different houses at the promenade and all the different stands of all the companies emphasize AI now. And that's what they put at the forefront of all the conversations. 

So it's good to see, but at the same time it's a bit be scary because it's now a bit difficult to differentiate what is just trendy and to what extent they are really serious about the topic, right? There was a time, for example, in which the U.N. Sustainable Development Goals were also a very fancy topic of discussion that you would find everywhere at the COP, at the UN General Assembly, at Davos, and it kind of lost, in my opinion, a bit of traction over time.

Lindsey Hall: Okay. So as more people pile into the AI space, you're saying there's a little bit of risk?

Rebeca Minguela: Well, I mean there is a risk of maybe too much hype and maybe not so much essence in the background. At the same time, of course, there are a lot of concerns around the use of AI, and more and more calls for regulation and slowing down the development of AI. But I believe that we can definitely mitigate our risk, and we should move as fast as we can, of course with the necessary controls. You cannot be growing uncontrollably. But we should definitely keep moving in this direction because it's going to help. 

We are going to be at an inflection point. We are already now, but [expect] a more important one within the next few years. 

Of course, the European Union has been pioneering the regulation around artificial intelligence. And I think that's important. So it should happen. I'm an advocate for keeping models as open as possible, but of course, with the right governance and regulation in place. So we can move as fast as possible while making sure that we do it in a way that is not risky or threatening. 

But of course, there are trade-offs to remain, and it cannot be, as I said, it cannot be growing uncontrollably. and in some cases, it's difficult to anticipate, let's call it, the objectives of the models. So what kind of objects are, is that intelligence following? And how is that going to evolve? And are all those open models going to be able to somehow connect the dots and index in a way that might do some harm? I mean I think we are still far from that. But given the exponential growth of, and the speed at which things are progressing, it might happen sooner than we believe. So we need to watch for it as well. 

Lindsey Hall: We just heard Rebeca talking about the role of regulation and the need to balance risks and opportunities in AI.  At Davos there was a lot of discussion on this topic.

For example: Back in June 2023, the World Economic Forum launched the AI Governance Alliance. This is a collaboration that brings together industry leaders, governments, academic institutions, and civil society organizations to advance thoughtful solutions and approaches to AI governance. 

The Alliance released its first publication during Davos, in the format of three briefing papers, focused on ensuring safe systems and technologies, promoting sustainable applications and transformation, and contributing to resilient governance and regulation. 

Microsoft is a steering member of the alliance. And Microsoft CEO Satya Nadella also spoke at Davos. He talked about managing risks associated with new technologies like AI — including the role of regulation. 

He said, "regulation that allows us to ensure that the broad societal benefits are amplified, and the unintended consequences are dampened, is going to be the way forward." 

Another speaker at Davos was OpenAI CEO Sam Altman was another big names at Davos; he spoke on a panel about ‘Technology in a Turbulent World,’ alongside CEOs of big companies Salesforce, Accenture, and Pfizer and the UK’s Chancellor of the Exchequer.   

OpenAI is known for creating ChatGPT, that's a large language model-based chatbot that introduced a wider audience to a new type of technology known as generative AI. We heard Rebeca mention ChatGPT earlier in the interview.  

Rebeca also talked to me about how attitudes toward AI have changed over time. Here she is again.

Rebeca Minguela: When we started the company in 2017, it was mainly focused on the financial services segment. And it's funny because back then 2017-2018, we were already developing models with AI, but there was a lot of resistance because it was believed to be too opaque, too much of a black box. The clients were very reluctant to adopt any, for example, estimation models done with AI. They would prefer models done by an analyst. 

So gladly that is now changing, but we have to make sure that is actual adoption of those solutions, not just talking about AI and how AI might or might not change and developing plan or goals or objectives, but actually walking the talk, and adopting and integrating those solutions our day to day -- now our day-to-day processes.

Lindsey Hall: And I guess my last question for you is just about what you've heard so far. If you had to pinpoint the most interesting thing you've heard, so what would you say that is?

Rebeca Minguela: There are a lot of interesting things on how the experts in AI have different views on the future with AI and how they take positive or negative use around it. This topic of the future of the world, right, how it's going to be, job displacements, or the more catastrophic end of it versus the more encouraging ones on how can we end poverty and how it's going to impact health sector education, bringing education to larger populations in a more scalable way more efficiently. So it's interesting to see the 2 extremes. 

So it's interesting that there is a lot of excitement, so very encouraging. I'm a bit concerned though, about hearing more and more voices raising concerns and risk and how that is going to really impact the speed at which this is going to develop.

Lindsey Hall: So as you can hear, there's a lot to unpack in the AI space, and there are a wide range of views about the future of this technology. On the one end, there are potential benefits that could help drive sustainability solutions. And on the other end, there's a lot of fear and uncertainty about the potential for misuse and negative outcomes for society.

Esther Whieldon: There's so much more to cover on this topic as it relates to environmental, social and governance standards. So please stay tuned for more.

Lindsey Hall: Also, as the full disclosure, that snow crunching you heard at the beginning of today's episode that was Virginia now. And that's because I only had the genius idea to record this once I was traded in the Frankfurt Airport on my way home from Davos working on the episode. So my husband recorded that for me back home.

Thanks so much for listening to this episode of ESG Insider. If you like what you heard today, please subscribe, share and leave us or review wherever you get your podcast. 

Esther Whieldon: And a special thanks to our agency partner, The 199. See you next time.

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