Artificial Intelligence in ESG investing: Enhancing portfolio management and performance

Artificial Intelligence in ESG investing: Enhancing portfolio management and performance

2024 | Omotayo Bukola Adeoye, Chinwe Chinazo Okoye, Onyeka Chrisantcus Ofodile, Olubusola Odeyemi, Wilhelmina Afua Addy and Adeola Olusola Ajayi-Nifise
Artificial Intelligence (AI) has become a transformative force in Environmental, Social, and Governance (ESG) investing, significantly enhancing portfolio management and performance. This review article explores the integration of AI technologies in ESG investment strategies, highlighting their impact on decision-making processes and financial outcomes. AI enables investors to analyze extensive ESG-related datasets, extract actionable insights, and identify investment opportunities aligned with sustainability objectives. By leveraging advanced data analytics and machine learning algorithms, AI empowers investors to construct well-structured portfolios that align with ethical and sustainable principles. AI-driven ESG analysis allows for systematic evaluation of environmental impact, social responsibility, and corporate governance practices, leading to more informed investment decisions. Furthermore, AI enables dynamic portfolio adjustments in response to changing market conditions and emerging sustainability trends. AI technologies also foster transparency, accountability, and stakeholder engagement within the investment ecosystem. AI-powered tools facilitate the dissemination of ESG-related information, enabling investors to make informed decisions that align with their values and sustainability goals. The integration of AI in ESG investing represents a paradigm shift in portfolio management, offering investors unprecedented opportunities to navigate complex ESG challenges and achieve sustainable financial success. Challenges such as data quality, ethical considerations, and regulatory compliance must be addressed to ensure the effective and responsible use of AI in ESG investing. The future of AI in ESG investing holds promise for further innovation, collaboration, and the development of AI-driven solutions that enhance sustainable finance practices. As AI technologies continue to evolve, they offer significant opportunities to drive positive environmental and social impact while achieving competitive financial returns.Artificial Intelligence (AI) has become a transformative force in Environmental, Social, and Governance (ESG) investing, significantly enhancing portfolio management and performance. This review article explores the integration of AI technologies in ESG investment strategies, highlighting their impact on decision-making processes and financial outcomes. AI enables investors to analyze extensive ESG-related datasets, extract actionable insights, and identify investment opportunities aligned with sustainability objectives. By leveraging advanced data analytics and machine learning algorithms, AI empowers investors to construct well-structured portfolios that align with ethical and sustainable principles. AI-driven ESG analysis allows for systematic evaluation of environmental impact, social responsibility, and corporate governance practices, leading to more informed investment decisions. Furthermore, AI enables dynamic portfolio adjustments in response to changing market conditions and emerging sustainability trends. AI technologies also foster transparency, accountability, and stakeholder engagement within the investment ecosystem. AI-powered tools facilitate the dissemination of ESG-related information, enabling investors to make informed decisions that align with their values and sustainability goals. The integration of AI in ESG investing represents a paradigm shift in portfolio management, offering investors unprecedented opportunities to navigate complex ESG challenges and achieve sustainable financial success. Challenges such as data quality, ethical considerations, and regulatory compliance must be addressed to ensure the effective and responsible use of AI in ESG investing. The future of AI in ESG investing holds promise for further innovation, collaboration, and the development of AI-driven solutions that enhance sustainable finance practices. As AI technologies continue to evolve, they offer significant opportunities to drive positive environmental and social impact while achieving competitive financial returns.
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