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Jul 14, 2023

The week in IR: AI’s cyber-crime risk, Canada’s biggest pension fund bets on green hydrogen and Indian firms step up ESG disclosures

Our pick of stories from around the web that you might have missed this week

– The threat posed by new technologies such as artificial intelligence (AI), which had been consistently falling since 2021, is now predicted to be a growing threat for the next 12 months, with key areas such as ransomware and other cyber-attacks highlighted as potential threats, Reinsurance News reported. The economic impact of cyber-crime on business across the globe continues to hit new levels, with the cost predicted to reach $10.5 tn by 2025, according to research by Cybersecurity Ventures. But boardroom focus on cyber-risk appears to be diminishing. The perceived threat of cyber-risk to global business leaders peaked in 2021 at 34 percent and, over the past two years, has dropped to 27 percent. In 2024, it is predicted to remain at 27 percent while business preparedness for this risk continues to decline.

Reuters (paywall) reported that Canada’s biggest pension fund, CPP Investments (CPPI), made its first bet on green hydrogen playing a growing role in cutting emissions, with a €130 mn ($143 mn) investment and the purchase of a majority stake in a three-year-old Dutch firm. CPPI’s investment is mostly in the form of capital that Amsterdam-based Power2X can use to develop new projects in Europe that seek to decarbonize hard-to-abate industrial assets by adopting green hydrogen.

– India’s top companies will have to step up ESG reporting and show credibility of such disclosures as a slew of regulations take effect, according to Bloomberg (paywall). The biggest 1,000 firms by market value must start publishing a business responsibility and sustainability report from the year ended March 2023. The Securities and Exchange Board of India (SEBI) will also require a ‘reasonable’ audit for a select set of indicators – known as core BRSR – for 150 of the largest on the list, effective in the current financial year, according to a circular this week. The move makes SEBI the first among global regulators to impose tighter norms. Globally, most ESG information is subject to a limited assurance, which means assurance of no negative observations, while ‘reasonable’ assurance is more comprehensive and robust, said Sumit Seth, partner at PwC.

The audit requirement will expand to all 1,000 companies over four years and, gradually, will also cover vendors and partners, SEBI said.

– Hedge fund manager Alpesh Patel discussed the use of AI for trading and investment strategies with Yahoo Finance. He emphasized the transformative power of AI in investment decisions and spoke about the ability of ChatGPT to analyze more data than any individual could do alone. He discussed how investors can outsource extensive reading and comprehension to ChatGPT, resulting in more informed decision-making. ‘ChatGPT can look at much more financial information than you could ever take in on your own,’ Patel said, adding that financial data can be added into ChatGPT via plug-ins that will allow the app to read and comprehend spreadsheets of financial data and stock charts.

– Retail investors bought roughly $7 bn of equities last week, showing a near record appetite for shares since 2016, while US hedge funds trimmed their exposure to global equities, Morgan Stanley said in a note to institutional investors seen by Reuters. The Wall Street bank said retail investors bought mainly ETFs, although individuals also added shares across sectors except for communications, consumer staples and utilities.

– Manufacturers face increasing pressure from governments, investors, employees and customers to lower their carbon emissions, EMS Now reported. In a recent Optera survey, more than half of manufacturing respondents named emissions-reduction project implementation as the most pressing task this year. Reducing emissions from a company’s own operations (Scope 1 and Scope 2) alone will not be sufficient. For companies to exist in the low-carbon future, leaders must make an ongoing and dedicated investment to address emissions generated by their value chain (Scope 3), which accounts for an average of 75 percent of an organization’s greenhouse gas output. A third of Optera survey respondents ranked Scope 3 analysis and management as one of their top reduction program priorities.

To begin the journey to Scope 3 decarbonization, start simple: leverage the data you already have.

Staff Writers

The staff writers on IR magazine are from our team of highly experienced journalists.