AINL#003 Augmented Intelligence in Investment Management Newsletter
Welcome to the 003 Edition of the Newsletter on Augmented Intelligence in Investment Management (AINL). Every two weeks, we deliver five unique insights tailored to empower investment decision-makers. Our insights are carefully curated by a seasoned team of market specialists. Unbiased, actionable and practical. They will help you navigate through the noise.
AINL#003 SYNTHESIS
What do these recent developments mean for investment decision-makers?
1. Embrace Rational Sustainability for Long-Term Value Creation
ESG is not just about compliance or avoiding criticism—it can be reframed as a strategic tool to create long-term value. This requires moving beyond checkbox approaches and focusing on sustainability practices that genuinely enhance profitability and resilience. Investors should prioritize businesses with evidence-based sustainability strategies that recognize trade-offs and focus on long-term impact. This involves evaluating firms for their ability to integrate sustainability into their profit-generating activities.
2. Timeliness Affects Reputation and Decision-Making
Missing deadlines can negatively impact how investors or analysts are perceived, independent of the quality of their analysis or recommendations. Professional investors must ensure timely delivery of reports, updates, or recommendations to maintain trust and credibility with stakeholders. This reinforces the importance of meeting deadlines to preserve competence-related trust among clients and peers.
3. Balance AI Efficiency with Ethical and Strategic Oversight
While AI can improve efficiency and decision-making, blind reliance on AI-driven recommendations, such as cost-cutting measures, can lead to ethical missteps and undermine human-centric values. Investors should adopt a “digital backbone” to critically assess AI-driven tools and strategies. This means integrating AI for efficiency (e.g., automating portfolio analysis or operational tasks) while ensuring human oversight to maintain ethical and strategic alignment.
TOP 5 ARTICLES
ARTICLE ONE
How Do We Fix ESG Without Losing Its Core Purpose?
SUSTAINABLE INVESTING | Journal of Applied Corporate Finance | 7_2024 | Paper
Important Development
As ESG faces mounting criticism from all sides, its future hangs in the balance. Some advocate for a rebranding of ESG, experiencing the term as a liability. Opponents push to dismantle ESG entirely. But what if the debate misses the bigger picture? Instead of scrapping or renaming ESG, why not transform it?
A thought-provoking paper by Alex Edmans introduces Rational Sustainability, a groundbreaking alternative that transcends political divides and business jargon. By focusing on the long-term value creation rather than a box-ticking compliance, Rational Sustainability addresses ESG’s critics.
Why Relevant to You?
Edmans’ approach reimagines sustainability as a profit center rather than a cost burden. It includes any practice that enhances long-term value, regardless of its label or where public acknowledgment isn’t feasible. Moreover, it uses a rational approach to sustainability, acknowledging there are trade-offs to be made in the real world. Moreover, by relying on evidence-based strategies, this approach also avoids the pitfalls of sustainability hype.
ARTICLE TWO
The Now, New and Next of Digital Leadership
HUMAN & ARTIFICIAL INTELLIGENCE | Journal of Leadership & Organizational Studies, Vol 30 | Paper
Important Findings
How could Artificial Intelligence (AI) take over and change leadership as we know it? True leadership, defined as motivating people to contribute to the growth of organizations, is still perceived as human prerogative. However AI has the potential to cater better to employee’s psychological needs. Hence leaders and organizations need to decide what role humans should play in the future of leadership.
Why Relevant to You?
Human leaders need to develop a digital backbone. This will help them to avoid ethically questionable advice from AI like e.g. firing low performing employees. It will also help to mitigate the risk of blind implementation of AI solutions driven by in-house engineers or external consultants.
ARTICLE THREE
What Happens When You Violate Deadlines?
HUMAN INTELLIGENCE | Journal of Organizational Behavior and Human Decision Processes | November 2024 | Paper
Important Findings
Deadlines are a common feature of the modern workplace. While previous research has focused on how deadlines shape the behavior of those completing tasks, little is known about how deadlines may influence the judgment of individuals evaluating the submitted work. Through eight lab and field experiments, complemented by 10 supplemental studies (N=6,982), this investigation examines whether completing work early, on time, or late––independent of the quality of the work itself––influences perceptions of the quality of the submitted work and of the worker who submitted it.
Why Relevant to You?
By involving finance teams early and often, companies can transform AI from an exciting possibility into a reliable growth engine — one that delivers both top-line expansion and operational excellence.no benefit.
ARTICLE FOUR
Being Intellectually Humble Facilitates Trust
HUMAN INTELLIGENCE | UPITT Intellectually Humble Science | November 2024 | Paper
Important Findings
Public trust in scientists is critical to our ability to face societal threats. Across five preregistered studies (N=2,034), the paper assessed whether perceptions of scientists’ intellectual humility affect perceived trustworthiness of scientists and their research. These studies reveal the benefits of seeing 13 scientists as intellectually humble across medical, psychological, and climate science topics.
Why Relevant to You?
What leads us to ignore experts isn’t their knowledge. It’s their arrogance.
Evidence: Scientists are more credible when they admit what they don’t know, acknowledge what they got wrong, and update their views. Trust is earned by expressing humility, not by asserting authority.
ARTICLE FIVE
Antropic’s Claude ‘Computer Use’ Is A Game Changer
ARTIFICIAL INTELLIGENCE | Y Combinator | December 2024 | Video
Important Findings
Claude (and other LLM models too like ChatGPT, Gemini) had the ability to understand images for a while, so the next step was to train it on how and when to perform specific actions, like clicking buttons or writing text based on what’s displayed on the screen. By now, it should be clear that computer use is a step forward for AI. Up until now, developers have had to make tools to fit the model coming up with custom environments where AI’s use specially designed tools to do different various tasks. Now we can make the model fit the tools.
Why Relevant to You?
“Computer Use” opens up many applications. Businesses can automate repetitive tasks and increase efficiency, while the average user can save time on routine things like booking flights, ordering food or analyzing stock charts. It’s easy to see a future where AI agents handle most of the drudge work for us.
