Tag: AI-washing

Are boards overseeing AI?

Is there a hotter topic in the business world than AI? AI offers major opportunities for progress and productivity gains, but substantial risks as well.  According to FactSet, 179 companies in the S&P 500 used the term “AI” during their earnings call for the fourth quarter of 2023, well above the 5-year average of 73. Among these companies, “the average number of times ‘AI’ was mentioned on their earnings calls was 13, while the median number of times ‘AI’ was mentioned on their earnings calls was 5. The term ‘AI’ was mentioned more than 50 times on the earnings calls of nine S&P 500 companies.” Similarly, Bloomberg reports that “[a]t least 203, or 41%, of the S&P 500 companies mentioned AI in their most recent 10-K report, Bloomberg Law’s review found. That’s up from 35% in 2022 and 28% in 2021. A majority of the disclosures focused on the risks of the technology, while others focused on its benefit to their business.” One of the many challenges that AI presents is on the corporate governance front, in particular board oversight, a topic addressed in this recent paper from ISS, AI Governance Appears on Corporate Radar.  For the paper, ISS examined discussions of board oversight and director AI skills in proxy statements filed by S&P 500 companies from September 2022 through September 2023 to “assess how boards may evolve to manage and oversee this new area of potential risks and opportunities.”