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Technology investments: towards a myth or a reality of responsible capitalism?

While ESG (Environmental, Social, and Corporate Governance) standards are becoming a major concern for investors, the societal and environmental impacts of technology area blind spot in ESG frameworks. With this in mind, the Human Technology Foundation, in partnership with Amundi, La Banque Postale, I.O.R., EY Canada, the Royal Bank of Canada and the Hilton Foundation, has designed a framework to address this blind spot for investors. The objective of this framework is to help evaluate the societal and environmental impacts of technologies via a methodology, KPIs and resources including a simple evaluation tool. 

On July 11, the Human Technology Foundation presented this report on responsible investment in technology to the Governor of the Banque de France, François Villeroy de Galhau. In this article, Jean-Baptiste de Franssu, President of the Istituto per le Opere di Religione (I.O.R), and president of the project steering committee, explains the objectives and next steps of this tool.

1. What is the context for your participation in the Foundation's work on responsible investment? 

A few years ago, the I.O.R launched a strict investment policy that respects the social doctrine of the Church. In view of this approach, we questioned ourselves about the place to be reserved for technology in our portfolios and those of our clients. This aspect became critical given the ever-increasing place that new technologies are taking in everyone's life, especially given the past stay-at-home requirements. How to judge the consequences of technologies on the well-being of society? The idea of analyzing these trends, which are largely ignored or poorly addressed in existing ESG frameworks, seemed to us to be a necessity. 

2. What needs does this tool meet?

"Today, there are no existing tools adapted to technology investments”. 

There are very generic tools that treat the technology sector in a global way, in other words in a macro way, but no tool offers an analysis at a micro level. 

The tool proposed by the Foundation is an innovation compared to the frameworks currently available. The advantage of the report is that it offers a theoretical analysis, while at the same time providing a practical solution for integrating ethical rules into technology investments. 

The digitalization of companies in many sectors has blurred the line between "Tech" companies and others. For example, Amazon will not fit into the technology criteria of traditional indicators. Does Amazon belong to the distribution sector ("Retail")? To the consumer goods sector? Or to the tech sector?

The pre-existing impact analyses neglect the impacts on the final user whereas this component is at the core of the Foundation’s analysis  This is consistent with the activities of the Human Technology Foundation, its objective being to put people at the center of technological innovations. 

The provisions of the report and the accompanying tool are fully applicable to all companies involved in digital sectors. 

3. What are the challenges for scaling up responsible investment ? What are the next steps?

In the end, "the rate of use of this tool will be the mark of the success of this initiative." 

The full ownership of this framework depends on the sensitivity of each individual in its application. Its use is flexible and varies depending on who you are, how you use it, and the guidelines your company sets. 

This is a very promising first step. We are now waiting for this tool to become a market reference and, potentially, for a UCITS (Undertaking for Collective Investment in Transferable Securities) specialized in the technology sector and using this tool to be created. This would be the best proof of the quality of the work we have done. 

In any case, this project will have contributed to strengthening the tools available to investors to reinforce and deepen their ethical ESG management. In particular, it reminds us to control our destiny and channel these new technologies. Technical progress must not be a human regression and people must always be at the center of our concerns, especially the most fragile.

Articles on the same theme :

When AI and ESG collide - Heather Clancy, Greenbiz, 2021

Responsible Investing in Tech and Venture Capital - Harvard Kennedy School of Government, 2020

What does the ESG reckoning mean for VC? - Freya Pratty, Sifted, 2022

How Venture Capital Can Join the ESG Revolution -  Johannes Lenhard&Susan Winterberg, SSIR, 2021

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