The rapid rise of artificial intelligence is opening exciting possibilities for workforce productivity—and value creation. But are boards and management ready for the talent transition AI will demand? Integrating AI and Human Capital, a new report from CPP Investments Insights Institute, explores how investors can help companies navigate this challenge. It examines the strategies of three leading firms—CPP Investments, Standard Chartered and General Atlantic.
The following excerpt outlines CPP Investments’ approach.
CPP Investments strives to be on the forefront of identifying how regulatory, political, social, and other changes can affect both its own operations and those of the companies in which it invests. It seeks to apply this thinking to advances in AI through its approaches to:
Governance
CPP Investments endeavours to ensure portcos are leveraging AI to the greatest extent possible while avoiding risk. Given its extensive portfolio, it is also exploring the opportunities to disseminate its learnings from these efforts across the organization.
- CPP Investments redrafted its policy on sustainable investing to identify the deployment of artificial intelligence as a material sustainability factor, spelling out the expectation of boards to provide oversight of this emerging business risk and opportunity.11
- This put CPP Investments among the first institutional investors globally to make this identification.
- CPP Investments has a specific approach related to how it constitutes boards, recruits directors and sets expectations for portco boards. As an identified sustainability factor, AI is now among the priorities identified for those boards.
Portfolio companies
CPP Investments’ Portfolio Value Creation (PVC) team seeks to drive value as it relates to AI across our global portfolio of material direct equity investments by:
- Identifying where the AI-talent nexus is material to individual business strategy.
- Actively evaluating how to incorporate responsible AI considerations into its ongoing approach to governance. This approach includes addressing relevant social, environmental and governance matters in a disciplined way and includes how it provides support to management teams navigating risks and opportunities.
- Leveraging the expertise of its in-house data science and engineering team to support portcos as they develop and execute AI strategies aligned to business value. This includes offering guidance on the enabling technologies and talent capabilities required for success.
- Partnering with investors and other subject matter experts to ensure the implications and risks associated with AI inform investment cases and help shape asset management priorities, which can include talent priorities at the senior executive level.
- Maintaining a robust process for reviewing and approving the appointment of directors to portco boards. This includes understanding board requirements as they relate to AI and conducting board composition matrixing for each of its portco on the private side to identify and remedy skills gaps.
- Prioritizing ongoing investor education, CPP Investments hosts an annual Directors Day, bringing together non-executive directors from across its portfolio. This event encourages them to share insights and learn about the latest trends and topics, helping them to become more effective directors.
Internal education and skill development
CPP Investments’ seeks to build awareness and responsible adoption of AI tools inside its own operations by:
- Employing strategic talent planning at every level of the organization. This includes mapping future talent needs, based on individual department strategy, and shaping talent initiatives and strategies based on the outcome of that mapping exercise.
- Making generative AI technology broadly available within its organization and encouraging literacy and use. More than 2,100 licenses for Microsoft CoPilot were obtained and made available to all employees. In July 2024, 73% of licensed users were active.
- Developing bespoke AI research agents and prompt libraries that provide rapid information to our investors and analysts on critical sectors, companies and macro-economic forces. For example, our Analytical Workbench AI Assistant, powered by OpenAI’s GPT-4, parses internal data via natural language for coding assistance and data queries. A separate Knowledge Initiative Platform under development will use generative AI to help users unlock insights from external and internal data.
- These agents will be part of a zero-hallucination environment where every artifact of data is attributable and where users can evaluate its efficacy by upvoting/downvoting.
- Prioritizing a “fail fast” environment where people can test and learn with AI including through company-wide hackathon events.
- Studying the AI ecosystem and how partners are leveraging AI to win as investors. For instance, CPP Investments’ Growth Equity team leveraged a generative AI tool to extract trends from 100+ general partner reports, studied Pitchbook data on AI deal activity over time, and conducted deep dive discussions with partners to better understand the space.
For more on how investors can help guide boards and management through the AI transition, read Integrating AI and Human Capital: Guiding Boards and Management Through a 21st Century Business Risk and Opportunity.
Integrating AI and Human Capital
This report provides suggestions for how institutional investors might engage with boards and leadership teams to support their efforts to
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