Major growth in the robotics and AI market could change the world of ESG investing in the coming years, according to a leading robo investment firm.
ROBO Global, an index and advisory company that focuses on the robotics, automation and artificial intelligence (RAAI) sector, said the benefits and efficiencies from technologies such as machine vision, motion sensors, and navigation algorithms will increasingly be used to tackle ESG issues including dangerous pollution levels, over-demand for scarce resources, increasing wage inflation and general health and safety concerns.
According to Richard Lightbound, chief executive officer, EMEA and Asia, at ROBO Global, the use of RAAI in reducing environmental and social dangers will make RAAI investments an appealing option for investors.
“ESG is just beginning. There isn’t going to be just one approach to ESG, this is going to develop and evolve over time to reflect further enhancements being made in every industry.
“RAAI is already in use across society and is driving great improvements in efficiency, safety, quality of life and sustainability at reduce costs – such as caring for the elderly, improved productivity of farmland, the education of children through home companion robots, and inspection of bridges and deep-ocean facilities and pipeline with drones,” Lightbound said.
As such, the sector will likely play a crucial role in advancing impact ESG investing and industry standards, Lightbound said.
For ROBO Global, Lightbound said the firm has a strict ESG policy.
The policy dictates companies can be excluded if the firm contributes to or is responsible for serious human rights violations, severe environmental damage, or the production of weapons that violate fundamental humanitarian principles.
Since 2013, the company has launched a number of indices, including the ROBO Global Index which comprises more than 80 stocks across 12 subsectors including 3D printing, consumer products, food and agriculture, and healthcare.
Lightbound said the firm assesses each of the companies in its index on a quarterly basis – a policy he insists more investment management firms should undertake.
“ESG-related investment decisions shouldn’t only be assessed on their inclusion into a portfolio, there should be a continual assessment of whether these companies still comply with your ESG policy.
“Adoption of an ESG policy is just the first step in a long journey ahead. It will be a continuous and long-term process that will need to be incorporated by all companies worldwide and it will evolve over time to reflect further enhancements,” Lightbound added.
Global revenue for the RAAI market is projected to grow to £722.5bn by 2015, representing a compound annual growth rate of 25%, according to ROBO Global.