The ESG of technology

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Green leaf on computer circuit board © Weerapat Kiatdumrong /123RF Stock PhotosWith technology disrupting various industries, the opportunities are clear. But how can companies ensure they’re adopting new technology responsibly, while minimizing risks?

A  paper published by MFS Investment Management outlines a framework for how to review the ethics of technology when looking at companies as investments. “We don’t really look at any company as being a good or a bad company, all we’re trying to do is understand which of these ESG topics could be financially material and then really try to get a sense for which companies are managing certain risks or certain opportunities well or poorly,” says Rob Wilson, research analyst at MFS.

The paper highlights the importance of looking at various considerations including corporate culture governance, ethics-related disclosure and practices, how a company has responded to historical controversies and its countries of operation and business lines.

As well, the ethics of technology relates to environmental, social and governance factors, says Wilson. “I think the idea of technology and ethics fits most firmly into the social side of the ESG equation, but governance is absolutely critical. Frankly, I think one of the reasons that a lot of companies in this space haven’t managed these ethical issues very well is that typically their governance and the boards are not very independent, they are often founder-dominated. And that can create an organization that can move forward very efficiently and effectively, but it doesn’t necessarily ensure that there are those checks and balances in place that a more independent board can bring.”

Technological ethics can relate to environmental factors as well, he adds, pointing to planned obsolesce as an example.

Looking at ethics in tech is still in its early stages, which is evident from the amount of regulatory developments in this space, says Wilson.

“I think you’re really at the beginning of what is a fairly substantial regulatory wave as it relates to tech ethics, so its probably one of those topics that we’re going to be talking about more over the next few years and hearing about a lot more over the next few years.”

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