Legal Telescope: The AI-ESG nexus – redefining legal and regulatory strategies
With one presidential candidate more inclined toward robust regulation and the other more inclined to loosen regulatory requirements, the outcome of the 2024 US election will significantly influence the direction of AI governance and ESG disclosure requirements at the federal level, with profound implications both domestically and globally.
Shaping AI Regulation and Governance
As AI’s promise of revolutionary opportunities runs up against warnings of revolutionary risk, Congress has deadlocked on whether to foster a rapid and relatively unhindered pursuit of opportunity, especially in the face of competition from countries like China, or whether to move slower and break fewer things.
The current administration has met this legislative deadlock through both executive orders and sometimes aggressive interpretation of existing statutory authority, addressing key issues such as data privacy, algorithmic transparency and the ethical use of AI. If Vice President Harris becomes president, we can expect continued executive action prioritizing risk mitigation, as well as calls for Congress to enshrine a more cautious approach in law, including through measures to prevent bias in AI systems, enforce transparency in AI decision making processes and safeguard personal data.
If former President Trump returns to the Oval Office, we can expect executive action to minimize regulatory burdens and prioritize innovation, particularly in the name of global competition. That could include repeal of President Biden’s executive orders on AI and greater investment in military AI capabilities.
Regardless of the presidential election, states are likely to fill the void, leading to a disparate patchwork of laws - and perhaps even more piecemeal than in the data privacy context, as states seek to tackle particular uses of AI, such as algorithmic underwriting, or to protect specific populations, such as children.
Impact on ESG Policies
The election will also have a significant impact on ESG policies, which have gained increasing importance among investors and stakeholders. The direction of ESG policy and disclosure requirements will depend on the administration’s stance on sustainability and corporate responsibility.
An administration committed to sustainability and social equity may introduce stricter ESG reporting standards. This could involve mandating greater transparency on issues such as carbon emissions, labor practices and board diversity. Enhanced disclosure requirements would push companies to adopt more sustainable and socially responsible practices, aligning with global ESG trends.
Conversely, an administration focused on economic growth and deregulation might relax ESG disclosure requirements. This could slow the momentum of ESG initiatives, potentially reducing the emphasis on sustainability and social responsibility in corporate strategies. The divergence in policy direction will influence how companies approach ESG issues and shape their long-term strategies.
Energy policies will also be a critical factor, as they directly impact ESG developments. The election outcome could determine the level of commitment to renewable energy, climate change mitigation, and clean energy transition. An administration prioritizing clean energy initiatives could accelerate the shift towards sustainable energy sources, influencing global energy markets and encouraging other nations to follow suit, but doing so may impose costs in the energy sector and beyond.
The 2024 US presidential election is poised to shape the future of both AI regulation and ESG policies. The direction of AI governance will depend on the administration’s approach to balancing innovation and regulation, while ESG policies will reflect the government’s commitment to sustainability and corporate responsibility. On both fronts, the election’s outcome will also set the tone for international standards and cooperation, underscoring the interconnectedness of these critical issues.
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