Pa lidis, Geo gios
Book Pa — Published Ve sion
Empowe ing sus ainable inance wi h a i icial in elligence:
a amewo k o esponsible implemen a ion
Sugges ed Ci a ion: Pa lidis, Geo gios (2025) : Empowe ing sus ainable inance wi h a i icial
in elligence: a amewo k o esponsible implemen a ion, In: Lee, Joseph Da bellay, Aline (Ed.):
A Resea ch Agenda o Financial Law and Regula ion, ISBN 978-1-80392-999-6, Edwa d Elga ,
Chel enham, pp. 23-38,
h ps://doi.o g/10.4337/9781803929996.00009
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/318019
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23
I. In oduc ion
The global economy and socie ies a ound he wo ld a e acing a once-in-a-li e ime
si ua ion, as wo majo de elopmen s a e unde way and becoming collinea . On he
one hand, inancial ma ke s a e apidly en e ing he e a o en i onmen al, social, and
go e nance (ESG) in es ing. Ma ke pa icipan s p edic ha in es o s’ demand o
mo e di e se ins umen s, such as g een and ESG-linked loans, will inc ease in he
coming yea s.1 On he o he hand, he a i icial in elligence (AI) indus y is expe i-
encing close o exponen ial g ow h, and he impac o his new echnology on busi-
ness and socie y has al eady become isible. Indeed, he es ima ed alue o he global
AI ma ke was $387.45 billion in 2022, and i is p ojec ed o each $1,394.30 billion in
2029, wi h a compound annual g ow h a e o 20.1 pe cen in his pe iod.2
The aim o his chap e is o examine how hese wo p ocesses – he ise o ESG
in es ing (Sec ion II) and he ascendance o AI echnological inno a ion (Sec ion III)
– could be aligned and which isks and oppo uni ies would eme ge om his align-
men . We a gue ha AI can help ma ke s iden i y and p ice clima e isks as well as se
mo e ambi ious ESG goals, ye he e a e se ious isks in delega ing sus ainable inance
1 Uni ed Na ions En i onmen al P og am, ‘S a e o Finance o Na u e 2022’ (UNEP
Repo , 1 Decembe 2022) <h ps://www .unep .o g / esou ces / epo /s a e - inance
-na u e -2022> accessed 7 Feb ua y 2024.
2 Fo une Business Insigh s, ‘AI Ma ke Size o Reach USD 1394.30 Billion by 2029’
(Ma ke Resea ch Repo , Ap il 2023) <h ps://www . o une busi ness insigh s .com
/indus y - epo s /a i icial -in elligence -ma ke -100114> accessed 7 Feb ua y 2024.
Acco ding o o he es ima es, he ma ke size o he AI indus y was USD $93.5 billion
in 2021 and is p ojec ed o expand a a compound annual g ow h a e o 38.1 pe cen
om 2022 o 2030; see G and View Resea ch, ‘A i icial In elligence Ma ke Size, Sha e
& T ends Analysis Repo ’ (Ma ke Analysis Repo , Ap il 2022) <h ps://www .g and-
iew esea ch .com /indus y -analysis /a i icial -in elligence -ai -ma ke > accessed 7
Feb ua y 2024.
2 Empowe ing sus ainable inance
wi h a i icial in elligence: a
amewo k o esponsible
implemen a ion
Geo gios Pa lidis
Geo gios Pa lidis - 9781803929996
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A eseA ch AgendA o inAnciAl lAw And egulA ion 24
decisions o AI. We u he a gue ha de eloping new p inciples and ules o AI
and ESG in es ing is necessa y bu p one o ambigui ies and p ac ical obs acles ha
could unde mine no m-se ing ini ia i es (Sec ion IV). We conclude ha implemen -
ing changes such as he use o AI in non- inancial epo ing equi es a new sense o
esponsibili y and he ine- uning o he p inciples o legi imacy, o e sigh and e i i-
ca ion, anspa ency, and explainabili y, along wi h in e na ional coo dina ion in he
con ex o AI and ESG in es ing (Sec ion V).
II. Unlocking he po en ial o sus ainable inance and
na iga ing he pi alls o esponsible in es ing
The i s end wo h examining is he inc ease in global awa eness abou sus ain-
able in es ing – in pa icula , ESG, which ex ends he no ion o sus ainabili y beyond
he need o p o ec he en i onmen and mi iga e clima e change. The en i onmen al
componen o ESG may include clima e policies and policies go e ning ene gy use,
was e, pollu ion, g eenhouse gas (GHG) emissions, na u al esou ce conse a ion,
and so on.3 The social componen o ESG may include policies on di e si y, inclu-
sion, a communi y ocus, social jus ice, and co po a e e hics, such as e hical supply
chains and p e en ion o ques ionable labou p ac ices domes ically and o e seas.4
The go e nance componen may include he use o accu a e and anspa en accoun -
ing me hods, co po a e anspa ency, di e si y in leade ship, and accoun abili y o
sha eholde s.5 In he ESG con ex , bo h policymake s and he ma ke s shi om an
exclusi e ocus on inancial ac o s owa ds non- inancial aspec s when iden i ying
isks and g ow h oppo uni ies. Indeed, he impo ance o non- inancial in o ma ion
in es ablishing a company’s epu a ion and in luencing he decisions made by in es-
o s is g owing apidly.6
ESG in es ing has become a clea ly de ec able and inc easingly widesp ead end in
business, inance, and policymaking. Acco ding o Bloombe g, global ESG asse s su -
passed $35 illion in 2020, and hey may su pass $41 illion by 2022 and $50 illion
3 Sachini Supunsala Senadhee a e al., ‘Sco ing En i onmen Pilla in En i onmen al,
Social, and Go e nance (ESG) Assessmen ’ (2021) 7(1) Sus ainable En i onmen 1.
4 Elizabe h Pollman, ‘Co po a e Social Responsibili y, ESG, and Compliance’ in
Benjamin an Rooij and D Daniel Sokol (eds), The Camb idge Handbook o Compliance
(Camb idge Uni e si y P ess 2021) 662–672.
5 Julie Linn Teigland, ‘How can boa ds s eng hen go e nance o accele a e hei ESG
jou neys?’ (EY Long-Te m Value and Co po a e Go e nance Su ey, Feb ua y 2022)
<h ps://asse s .ey .com /con en /da m /ey -si es /ey -com /en _ g l / opics /a ac i eness /ey
-long - e m - alue -and -co po a e -go e nance -su ey - eb ua y -2022 .pd > accessed 7
Feb ua y 2024.
6 Muhammad Na eed e al., ‘Role o Financial and Non-Financial In o ma ion in
De e mining Indi idual in es o In es men Decision: A Signaling Pe spec i e’ (2020)
9 Sou h Asian Jou nal o Business S udies 261. Geo gios Pa lidis - 9781803929996
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empowe ing sus AinAble inAnce wi h A i iciAl in elligence 25
by 2025.7 This will ep esen one- hi d o he asse s unde managemen globally. Wi h
ega d o bond ma ke s, he e is al eady a sizeable $4 illion ESG global deb ma -
ke , which could swell o $15 illion by 2025. ESG deb ma ke s a e domina ed by
Eu opean p i a e and public issue s and in es o s, and his end will be s eng h-
ened by he implemen a ion o he colossal G een Deal o he Eu opean Union (EU).8
Wi h ega d o ESG exchange- aded unds (ETF), cumula i e asse s in his ca ego y
eached o e $360 billion in 2021. This ep esen s a small pa (4 pe cen ) o global
ETF asse s, bu he sha e o ESG in ETF annual lows is inc easing apidly, and in es-
o s expec ha his expansion will con inue in 2023 and beyond.9 Howe e , he end
in a ou o ESG in es men could be hal ed due o un o eseen e en s. Fo example,
amid he Co ona i us Disease 2019 (COVID-19) pandemic, en i onmen al p o ec ion
and he igh agains clima e change we e sidelined empo a ily, as is o en he case in
imes o c isis.10 Ne e heless, as policymake s se in mo ion he eco e y o na ional
economies, g een and sus ainable de elopmen became a key elemen o economic
eco e y plans, especially a he le el o he EU, wi h i s G een Deal.11
The end in a ou o ESG in es men is undoub edly a posi i e one and pa ed wi h
good in en ions. Howe e , he ansi ion owa ds e e -s onge ESG pe o mance
con ains some se ious pi alls. The h ee main ones a e he lack o de ini i e, uni e -
sal ESG me ics, he isk o so-called ‘g eenwashing’, and he labou -in ensi eness o
ESG epo ing.
7 Bloombe g, ‘ESG May Su pass $41 T illion Asse s in 2022, Bu No Wi hou Challenges,
Finds Bloombe g In elligence’ (Bloombe g P ess Announcemen , 24 Janua y 2022)
<h ps://w w w .bloombe g .com /compa ny /p ess /esg -may -su pass -41 - i l lion -asse s
-in -2022 -bu -no -wi hou -challenges - inds -bloombe g -in elligence/> accessed 7
Feb ua y 2024.
8 In summe 2020, he Eu opean Council adop ed he EU eco e y plan and mul ian-
nual inancial amewo k (MFF) o 2021–2027 wi h he objec i e o ensu ing ‘ ha
he nex MFF as a whole con ibu es o he implemen a ion o he Pa is Ag eemen ’;
Conclusions o he Special Mee ing o he Eu opean Council (17–21 July 2020) 14. The
EU in ends o bo ow €750 billion unde Nex Gene a ionEU, 30 pe cen o which will
be aised h ough g een bonds.
9 BNP Pa ibas Asse Managemen , ‘ESG ETF Ba ome e shows s ong shi in in es o
expec a ions’ (BNP P ess Release, Feb ua y 2023) <h ps://media oom -en .bnppa ibas
-am .com /news /bnp -pa ibas -asse -ma nagemen -eu opea n -esg -e -ba ome e -shows
-s ong -shi -in -in es o -expec a ions -26 5 -0 b7a .h ml> accessed 7 Feb ua y 2024.
10 Cha lo e Bu ns, Pe e Ecke sley, and Paul Tobin, ‘EU En i onmen al Policy in Times o
C isis’ (2020) 27(1) Jou nal o Eu opean Public Policy 1; Y es S einebach and Ch is oph
Knill, ‘S ill an En ep eneu ? The Changing Role o he Eu opean Commission in EU
En i onmen al Policymaking’ (2017) 24(3) Jou nal o Eu opean Public Policy 429.
11 O cou se, he e a e signi ican isks and sho comings. Fo example, he EU G een
Deal does no ocus on he social dimensions o sus ainable de elopmen , and i ails
o make su icien ly clea he cos -bene i e ec s o ci izens. See Sanja Filipo ić, Noam
Lio , and Mi jana Rado ano ić, ‘The G een Deal – Jus T ansi ion and Sus ainable
De elopmen Goals Nexus’ (2022) 168 (13) Renewable and Sus ainable Ene gy Re iews
112759. Geo gios Pa lidis - 9781803929996
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A eseA ch AgendA o inAnciAl lAw And egulA ion 26
Fi s , ESG in es ing equi es p ede e mined, commonly accep ed, and uni o mly
applied ESG me ics. Cu en ly, he e is no de ini i e, uni e sal se o ESG me ics,
al hough he e a e a ious dis inc amewo ks and ce i ica ions ha di e in scope,
me hodology, and accep ance by ma ke s, o ins ance he Global Repo ing Ini ia i e
(GRI), he Sus ainabili y Accoun ing S anda ds Boa d (SASB) S anda ds, he Ca bon
Disclosu e P ojec (CDP), and he In e na ional O ganiza ion o S anda diza ion’s
ISO 14001 o en i onmen al managemen sys ems. The a ie y o ESG business
p ojec s does no help, since di e en me ics will be ele an o nume ous ypes o
p ojec s, om enewable ene gy and g een in as uc u e p ojec s o paymen s o
ecosys em se ices, biodi e si y o se s, and p o-biodi e si y and adap a ion busi-
nesses. Depending on he p ojec , ESG me ics may include ca bon oo p in s, GHG
emissions, yea -o e -yea ene gy, was e a iance, communi y impac , and pay gap,
no all o which can be easily measu ed, and su ely no wi h he same me hodology.
The olume o da a and he complexi y o he me ics a e likely o inc ease, as will
he a ie y o g een p ojec s ha ecei e inancing. The e o e, ensu ing con e gence
will be a se ious challenge o ESG me ics,12 gi en he g owing demand o in es-
o s o ex a- inancial da a, including ‘sus ainable pe o mance’ and ‘g een pe o -
mance’ da a, which a e equi ed o mee he agmen ed in e na ional and egional
s anda ds.13
A second pi all is he isk o ‘g eenwashing’, ha is o say, misleading in o ma ion
ega ding how a p oduc o se ice is en i onmen ally sound.14 A cha ac e is ic exam-
ple o g eenwashing was he ‘Dieselga e’ scandal in which he ca gian Volkswagen
admi ed o chea ing emissions es s by using p op ie a y so wa e ( he ‘de ea de ice’)
and al e ing he pe o mance o engines unde going es ing.15 A he same ime, he
company was ad e ising he low-emissions ea u es o i s p oduc s h ough ma ke -
ing campaigns.16 In he speci ic con ex o ESG in es ing, g eenwashing is he use o
misin o ma ion o gain in es o con idence a ound a company’s ESG claims.17 Se e al
cases o g eenwashing ha e been epo ed in he inancial indus y, such as he ecen
12 Luluk Widyawa i, ‘A Sys ema ic Li e a u e Re iew o Socially Responsible In es men
and En i onmen al Social Go e nance Me ics’ (2020) 29(2) Business S a egy and
he En i onmen 619.
13 Uni ed Na ions En i onmen P og am, ‘D i ing Meaning ul Da a: Financial
Ma e iali y, Sus ainabili y Pe o mance and Sus ainabili y Ou comes’ (UNEP
Finance/Uni ed Na ions Global Compac , Sep embe 2020) 3.
14 Ma ia J Bachele , Leona do Becche i, and S e ano Man edonia, ‘The G een Bonds
P emium Puzzle: The Role o Issue Cha ac e is ics and Thi d-Pa y Ve i ica ion’
(2019) 11(4) Sus ainabili y 1098.
15 Edin Mujkic and Donald Klingne , ‘Dieselga e: How Hub is and Bad Leade ship
Caused he Bigges Scandal in Au omo i e His o y’ (2019) 21(4) Public In eg i y 365.
16 Regula o s in mul iple coun ies eac ed and began in es iga ing Volkswagen. As a
esul , he s ock p ice o he company ell in alue, and key execu i es we e suspended.
17 This e m is a he b oad, and he e is a lack o sha ed unde s anding abou i s de ini-
ion and axonomy; see Soh Young In and Kim Schumache , ‘Ca bonwashing: ESG
Da a G eenwashing in a Pos -Pa is Wo ld’ in Thomas Helle and Alicia Seige (eds),
Se ling Clima e Accoun s (Palg a e Macmillan 2021) 39–58. Geo gios Pa lidis - 9781803929996
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empowe ing sus AinAble inAnce wi h A i iciAl in elligence 27
ad e ising campaign o HSBC, which was banned by he Uni ed Kingdom (UK)’s
ad e ising egula o o being ‘misleading’ abou he company’s con ibu ion o he
igh agains clima e change; he campaign in ques ion ou lined he bank’s e o s o
help i s cus ome s achie e ‘ne ze o’ emissions, bu i omi ed signi ican in o ma-
ion abou i s ole in inancing ossil uel i ms and new oil and gas p oduc ion.18 In
a oubling s udy conduc ed in 2021, he Economis examined he holdings o he
wo ld’s 20 bigges ESG unds19 and ound ha each o hem held in es men s in os-
sil uel p oduce s, while o he s held s akes in oil p oduce s, coal mining, gambling,
alcohol, and obacco.20 The ex ensi e ange o ESG epo ing enables co po a ions o
p io i ise one ESG me ic o e ano he , ocussing on imp o ing epo ed ESG me ics
while igno ing un epo ed ones, hus masking o hiding he nega i e impac s o hei
ac ions.21 To p e en g eenwashing in ESG in es ing, educe in o ma ional asym-
me ies, and ensu e he accu acy and quali y o ex a- inancial epo ing, in es o s
need o demand and ma ke s need o de elop eliable labels, ce i ica ions, and e i-
ica ions o be ca ied ou by independen hi d pa ies. The adop ion o egula ions
imposing anspa ency and high s anda ds in non- inancial epo ing can accele a e
his de elopmen , as we will examine in Sec ion IV o his s udy.
A hi d challenge o ESG in es ing is he ac ha ex a- inancial epo ing is labou
in ensi e.22 Repo ing on ESG p ojec s equi es collec ing, analysing, and publishing
in o ma ion on ESG impac s, leading o complex and echnical me ics. The cos s o
ex a- inancial epo ing a e ecu ing and, unde cu en ma ke p ac ices, ex end
o he en i e li ecycle o he p ojec , as epo ing akes place pe iodically, usually
18 Annabelle Liang, ‘HSBC clima e change ad e s banned by UK wa chdog’ BBC (19
Oc obe 2022) <h ps://www .bbc .com /news /business -63309878> accessed 7 Feb ua y
2024.
19 The Economis , ‘Sus ainable inance is i e wi h g eenwash. Time o mo e disclosu e’
(22 May 2021) <h ps://www .economis .com /leade s /2021 /05 /22 /sus ainable - inance
-is - i e -wi h -g eenwash - ime - o -mo e -disclosu e> accessed 7 Feb ua y 2024.
20 See also Tim Espine , ‘Big banks und new oil and gas despi e ne ze o pledges’ BBC
(14 Feb ua y 2022) <h ps://www .bbc .com /news /business -60366054> accessed 7
Feb ua y 2024. Acco ding o his a icle, big banks con inue o und oil and gas p o-
jec s despi e hei ne ze o pledges and being pa o he Uni ed Na ions-led Ne Ze o
Banking Alliance.
21 Robe S Kaplan and Ka hik Ramanna, ‘How o Fix ESG Repo ing’ (2021) Ha a d
Business School Accoun ing & Managemen Uni Wo king Pape No. 22–005,
<h ps://w ww .hbs .edu / is /Publica ion %20Files /22 -005 e ised _ ed6ac430 -c3ca -4ba6
-b0be -ca48c549aa 2 .pd > accessed 7 Feb ua y 2024. An in e es ing example gi en
by hese au ho s is a company ha epo s a dec ease in GHG emissions om i s
uck lee , which is an ESG me ic ha is measu ed and epo ed on; howe e , he
same company does no epo on ano he ESG me ic, namely he use o inden u ed
labou in mining mine als o elec ic ehicles’ ba e ies, which may ha e wo sened
as a esul o i s ac ions.
22 EU Technical Expe G oup on Sus ainable Finance, ‘Repo on EU g een bond s and-
a d’ (TEG Repo P oposal o an EU G een Bond S anda d, June 2019) 22.
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A eseA ch AgendA o inAnciAl lAw And egulA ion 28
annually, p io o he ull alloca ion o p oceeds.23 Mo eo e , se e al ju isdic ions
ha e enhanced epo ing equi emen s, u he inc easing he cos s. The inc eased
wo kload and cos s associa ed wi h ESG in es ing may de e in es o s, bu new and
p omising me hods and echnologies, such as AI, ha e he po en ial o alle ia e mos
o hese cons ain s and e en allow o he use o al e na i e da a as an objec i e and
eliable da a sou ce.
The ise o ESG in es ing is associa ed wi h isks, like all new ends in he wo lds
o business and inance. No su p isingly, he e ha e been se e al p oposals and
no m-se ing ini ia i es, bu mos a e s ill unde de elopmen , and hey ha e s ill no
ma u ed in o a comp ehensi e, cohe en , and uni e sally applied amewo k o ules
and p inciples. Cu en ly, p inciples and ules o ESG in es ing can be ound a h ee
le els: a) global goals, such as he Uni ed Na ions (UN) Sus ainable De elopmen
Goals, P inciples o Responsible In es men , G eenhouse Gas P o ocol, and Pa is
Clima e Ag eemen ; b) olun a y epo ing amewo ks, as in he con ex o he
GRI, he ISO, he Science Based Ta ge s Ini ia i e (SBTI), he Clima e Disclosu e
S anda ds Boa d (CDSB), he SASB, and he CDP; c) manda o y egula ions a he
na ional and EU le els, such as he EU Co po a e Sus ainabili y Repo ing Di ec i e
(CSRD), Sus ainable Finance Disclosu e Regula ion (SFDR), and EU Taxonomy.24 The
challenge o policymake s and s anda d-se ing bodies will be o p omo e he global
consolida ion o ESG epo ing go e nance by o e coming he di e ences be ween
hei espec i e epo ing philosophies.25 Un il his happens, he challenge o issue s
and in es o s will be na iga ing he complex landscape and inding he swee spo s
be ween ESG epo ing ini ia i es ha a e ele an o hei p ojec s.
23 Deloi e, ‘Thinking Allowed: The u u e o co po a e epo ing’ (Deloi e, July 2016) 8
<h ps://www2 .deloi e .com /con en /dam /Deloi e /ch /Documen s /audi /ch -en -audi
- hinking -allowed - u u e -co po a e - epo ing .pd > accessed 7 Feb ua y 2024.
24 Di ec i e (EU) 2022/2464 o he Eu opean Pa liamen and o he Council o 14
Decembe 2022 amending Regula ion (EU) No 537/2014, Di ec i e 2004/109/EC,
Di ec i e 2006/43/EC and Di ec i e 2013/34/EU, as ega ds co po a e sus ainabili y
epo ing [2022] OJ L 322/15 o 16.12.2022; Regula ion (EU) 2019/2088 o he Eu opean
Pa liamen and o he Council o 27 No embe 2019 on sus ainabili y‐ ela ed dis-
closu es in he inancial se ices sec o [2019] OJ L 317/1 o 09.12.2019; Regula ion
(EU) 2020/852 o he Eu opean Pa liamen and o he Council o 18 June 2020 on
he es ablishmen o a amewo k o acili a e sus ainable in es men , and amending
Regula ion (EU) 2019/2088 [2020] OJ L 198/13 o 22.06.2020.
25 Adam Sulkowski and Ru h Jebe, ‘E ol ing ESG Repo ing Go e nance, Regime
Theo y, and P oac i e Law: P edic ions and S a egies’ (2022) 59(3) Ame ican Business
Law Jou nal 449. Geo gios Pa lidis - 9781803929996
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empowe ing sus AinAble inAnce wi h A i iciAl in elligence 29
III. The ise o a i icial in elligence, i s impac on inance, and
he isks o hype in he absence o egula ion
Acco ding o he O ganisa ion o Economic Co-ope a ion and De elopmen
(OECD), ‘an AI sys em is a machine-based sys em ha can, o a gi en se o human-
de ined objec i es, make p edic ions, ecommenda ions, o decisions in luencing eal
o i ual en i onmen s … wi h a ying le els o au onomy’.26 Almos iden ically, he
EU de ines an AI sys em as ‘so wa e ha … can, o a gi en se o human-de ined
objec i es, gene a e ou pu s such as con en , p edic ions, ecommenda ions, o deci-
sions in luencing he en i onmen s hey in e ac wi h’.27 AI e e s o he abili y o a
compu e o accomplish asks ha equi e human in elligence and disce nmen and,
o his eason, a e usually execu ed by humans. AI encompasses sub ields, such as
machine lea ning and deep lea ning, in which he algo i hms use inpu da a o lea n,
d aw in e ences, and adap wi hou explici ins uc ions.28 Nume ous AI applica ions
ha e al eady been de eloped and many o he s a e unde way, om manu ac u ing
obo s, sel -d i ing ca s, sma assis an s, and ma ke ing cha bo s o AI applica ions
in heal hca e, ag icul u e, and inance.29
These exci ing p ospec s ha e a ac ed he e en in e es o in es o s wo ldwide,
and as a esul , global spending on AI sys ems eached $118 billion in 2022 and is
expec ed o su pass $300 billion in 2026, which will ep esen a massi e compound
annual g ow h a e o 26.5% o e his pe iod.30 The banking and e ail indus ies a e
expec ed o make he mos signi ican in es men s in AI, collec i ely comp ising
a ound 25 pe cen o all AI expendi u e globally.31 I is also p ojec ed ha by 2030, AI
will ha e he po en ial o add app oxima ely $15.7 illion o he global economy (a 14
26 OECD, ‘Recommenda ion o he Council on A i icial In elligence’ (OECD
Recommenda ion o he Council on A i icial In elligence OECD/LEGAL/0449,
2019); See also IBM, ‘Wha is A i icial In elligence?’ (3 June 2020) <h ps://www .ibm
.com / opics /a i icial -in elligence #ancho -1174800854> accessed 7 Feb ua y 2024,
acco ding o which ‘a i icial in elligence is a ield ha combines compu e science
and obus da ase s o enable p oblem-sol ing’.
27 A icle 3 pa . 1, P oposal o a Regula ion laying down ha monised ules on a i icial
in elligence (A i icial In elligence Ac ), COM(2021) 206 inal.
28 Se e al classi ica ions ha e been p oposed: AI can be eac i e, ha e limi ed memo y,
ha e a heo y o mind, and be sel -awa e. Au ho s also dis inguish be ween a i icial
na ow in elligence, a i icial gene al in elligence, and a i icial supe in elligence.
Among nume ous in e es ing wo ks, see S ua Russell and Pe e No ig, A i icial
In elligence: A Mode n App oach (4 h edn, Pea son Educa ion 2021).
29 Nicole Radziwill, Connec ed, In elligen , Au oma ed: The De ini i e Guide o Digi al
T ans o ma ion and Quali y 4.0 (Quali y P ess 2020) 49.
30 In e na ional Da a Co po a ion, ‘Wo ldwide A i icial In elligence Spending Guide’
(IDC Spending Guide, Sep embe 2022). Acco ding o he IDC, 27 pe cen o he
g ow h in AI by 2023 will be in ha dwa e, which includes de ices such as AI-powe ed
sma speake s; 38 pe cen o he g ow h in AI will be in se ices, such as in o ma ion
echnology; and 35 pe cen will be in so wa e.
31 Ibid. Geo gios Pa lidis - 9781803929996
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A eseA ch AgendA o inAnciAl lAw And egulA ion 30
pe cen inc ease in global GDP), which is mo e han he combined ou pu o China
and India a p esen . Ou o his o al amoun , an es ima ed $6.6 illion is expec ed
o esul om a boos in p oduc i i y, while app oxima ely $9.1 illion is expec ed o
esul om he consump ion side.32
In he ield o inance, AI can be used bo h o po olio managemen and clien ena-
blemen , as well as o imp o ing on -, middle-, and back-o ice e iciency. Fo exam-
ple, AI applica ions can help e alua e managemen sen imen by eading ea nings
ansc ip s and gene a ing au oma ed insigh s. AI can also help iden i y non-in ui-
i e ela ionships be ween asse s, ma ke indica o s, and al e na i e da ase s, such as
social media, wea he o ecas s, and con aine ship mo emen s. Fu he mo e, AI can
au oma e unc ions in inancial ope a ions in elligence, moni o suspicious ansac-
ions, gene a e epo s, and espond o employee o in es o que ies using machine
lea ning and cha bo s.33
Mo eo e , applica ions can combine all elemen s o he so-called ‘BIA T ini y’, ha is,
blockchain, he In e ne o Things (IoT), and AI, o e olu ionise nume ous aspec s
o ou li es, including he wo ld o sus ainable inance.34 This will allow da a om
he eal economy (e.g., da a om senso s) in a sus ainable p ojec o be uploaded o
he blockchain di ec ly and in eal ime.35 Impac epo s could hen be compiled
wi h he use o AI o analyse complex da a o be ul ima ely deli e ed o he digi al
walle o he in es o , an independen ce i ica ion agency, o he o e sigh au ho i-
ies. This will cons i u e a shi om manual o au oma ed epo ing by ha es ing
ecognised me ics om asse s, codi ying hem as da a okens, and communica ing
hem o mul iple s akeholde s. Au oma ic epo ing will inc ease he eliabili y and
aceabili y o p ojec s’ pe o mance. Mo eo e , i has been es ima ed ha such digi-
alisa ion could educe he a e age cos o da a ga he ing (including he cos o IoT
32 PwC, ‘Sizing he p ize: Wha ’s he eal alue o AI o you business and how can you
capi alise?’ (PWC Global A i icial In elligence S udy, 2017) <h ps://www .pwc .com /
gx /en /issues /analy ics /asse s /pwc -ai -analysis -sizing - he -p ize - epo .pd > accessed 7
Feb ua y 2024.
33 Deloi e, ‘A i icial In elligence: The nex on ie o in es men managemen i ms’
(Deloi e, 2022) <h ps://www .deloi e .com /global /en /Indus ies / inancial -se ices /
pe spec i es /ai -nex - on ie -in -in es men -managemen .h ml> accessed 7 Feb ua y
2024.
34 Da ius Nassi y, ‘The Role o Fin ech in Unlocking G een Finance: Policy Insigh s
o De eloping Coun ies’ (2018) Asian De elopmen Bank Ins i u e, ADBI Wo king
Pape Se ies No. 88310 <h ps://www .adb .o g /si es /de aul / iles /publica ion /464821 /
adbi -wp883 .pd > accessed 7 Feb ua y 2024.
35 Wanli Chen and Qianxia Wang, ‘The Role o Blockchain o he Eu opean Bond
Ma ke ’ (2020) F ank u School Blockchain Cen e , FSBC Wo king Pape , 11 <h p://
explo e -ip .com /20 20 _The -Role -o -Block chain - o - he -E u opean -Bond -Ma ke .pd >
accessed 7 Feb ua y 2024. Geo gios Pa lidis - 9781803929996
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empowe ing sus AinAble inAnce wi h A i iciAl in elligence 37
socie y) in he de elopmen o new p inciples and ules. By wo king collabo a i ely o
es ablish clea p inciples and s anda ds o AI in he con ex o ESG in es ing, we can
ensu e ha hese echnologies a e used o c ea e posi i e social and en i onmen al
ou comes, mi iga e po en ial isks, and os e a new e a o esponsible and sus ainable
inance powe ed by AI.
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