There are calls for more upskilling, better governance and safeguarding customer data. 

    Three-quarters of the respondents in the Accenture Pulse of Change Global C-suite Survey believe they need some level of generative artificial intelligence training, with 15 per cent viewing extensive training as critical. The survey found the percentage of executives indicating AI use at least once per week has dropped from 61 per cent to 35 per cent in just six months.

    When considering organisational needs, over half see intermediate-level AI training as necessary, while 40 per cent advocate for advanced training to address the most pressing requirements.

    Jacqueline Chow GAICD, a non-executive director of Boral, Charter Hall, Coles Group and nib holdings, says governance of AI requires boards to ensure that economic value is being captured, beyond running novelty gen AI experiments.

    “Necessarily, this requires a strategy, investment in capability upskilling with adequate resourcing, and embedding a risk management structure in a cross-functional operating model,” she says. “Boards need to have oversight of the diligence taken in choosing AI technology partners. Scalability, interoperability and reusability is key — and ensuring that management is in control and not overly dependent on these tech partners. The organisation cannot abdicate responsibility for ensuring there is adequate internal capability to unlock value while managing risk.”

    Chow notes different AI use cases will surface different kinds of risk. For example, customer journeys must be risk-managed for fairness, data privacy and “explainability”, whereas automated coding has a higher risk of breaching IP and malicious use.

    Companies that embrace AI and data are likely to outperform those that don’t have a cohesive response to AI, notes Tim Trumper GAICD, chair of NRMA, adviser to Quantium and author of AI: Game On. “There is some real urgency here,” he says. “We’re seeing labour and capital as the asset class being dramatically outclassed by data, AI and AI deployment as the drivers of future economic growth and value. That is a pretty massive change.

    “For Australian companies, the risk is you can be attacked very easily from an offshore entity that is AI-enabled. We’re seeing that across all sectors. Our customers are one click away from something that will make their life easier, faster and make them feel more appreciated.

    “In the director space, there’s a lot of education about the risks. Knowing the risk is essential, but the temptation is to get lost in the risks and lose the opportunity. Buttoning down on the risks is more doable. Finding the opportunities is much harder. You have to quickly find your use case, aligned with your organisation’s purpose, put on your strategy hat and have a full customer lens.”

    Trumper is a strong advocate for an AI and data Hippocratic Oath. “Companies should have a commitment to do no harm and keep their customer data sacred.”

    Priorities are changing consumer behaviour

    Real wage growth, stage 3 tax cuts and expected interest rate cuts will spur consumer spending later this year and into 2025, but until then, it’s a “rocky road”, says Deloitte.

    According to David Rumbens, partner and principal author of the latest Deloitte Access Economics’ Retail Forecasts, “The immediate road ahead is looking rocky, particularly as unemployment rises further.”

    Persistently high levels of price growth seen in essential spending outside of retail, including rents, insurance and utilities, is causing consumers to cut back on spending on discretionary retail.

    “Throwing a spanner in the works is the slowdown in population growth working through — mostly as the post-COVID catch-up runs its course,” says Rumbens. “With per capita spending stagnating or contracting for the past seven consecutive quarters, more moderate population growth risks dampening the retail recovery.”

    He adds that the Fair Work Commission’s decision in June to increase the minimum and award wages by 3.75 per cent “are something of a double-edged sword” for the retail sector.

    “On the one hand, this will provide a modest further boost to real wage growth for consumers, supporting the economy’s capacity to spend. On the other hand, the increase is higher than the retail sector wanted and will place some businesses under further financial pressure at a time when retail and hospitality insolvencies are already rising.”

    Deloitte predicts real retail turnover to increase from zero per cent this year to 2.3 per cent in 2025. Household goods turnover should pick up with better economic conditions and an uplift in national building activity supported by government housing targets. Additional dollars from tax cuts later this year may bump up spending at cafes, restaurants and takeaway in the September and December quarters.

    Sustainability remains a top-10 business priority

    CEOs in the Asia Pacific region (APAC) view sustainability as a leading business growth opportunity in 2024, according to a recent Gartner survey, with 79 per cent responding positively, compared to 69 per cent globally.

    “Sustainability consistently remains a top-10 business priority, surpassing even productivity and efficiency this year,” says Gartner’s Kristin Moyer. “Leaders and investors know that environmentally cavalier corporate behaviour is a mid to long-term risk to business results, with a big price to be paid when environmental factors are ignored as externalities. However, smart CEOs realise big sustainability challenges create new areas of business opportunity.”

    According to the annual survey, the leading ways CEOs are using sustainability to drive business growth are through sustainable products and services (26 per cent), sustainable business practices, stakeholder engagement and decarbonisation (all 18 per cent). Digital investments and innovation are ranked ninth at eight per cent.

    Federal Court ruling

    Active Super’s representations were found to be misleading and deceptive in relation to exclusions applied.

    The Federal Court has found LGSS Pty Ltd, as trustee of the superannuation fund Active Super, contravened the law in connection with various misleading representations concerning its environmental, social and governance (ESG) credentials.

    On 5 June 2024, Justice David O’Callaghan found that Active Super published representations that were misleading and deceptive in relation to exclusions applied to gambling, coal mining,

    Russian entities and oil tar sands investments on its website, reports and disclosure documents. His Honour found that the use of terms such as “not invest”, “No Way” and “eliminate” were unequivocal and not the subject of any potential qualifications by the company’s “Sustainable and Responsible Investment Policy”.

    “This is a significant outcome, which shows our commitment to taking on misleading marketing and greenwashing claims made by companies in the financial services industry,” says ASIC deputy chair Sarah Court. “ASIC took this case because it sends a strong message to companies making sustainable investment claims that they need to reflect their true position.”

    The matter has been listed for a further hearing at which the Federal Court will consider the appropriate form of declaratory relief. It will consider the pecuniary penalty to impose for the conduct at a later date.

    This article first appeared under the headline 'AI for the future’ in the July 2024 issue of Company Director magazine.

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