Over six in 10 (63 per cent) institutional investors, including pension funds, are “quite concerned” that companies are making false claims about the extent to which they use artificial intelligence (AI) and its positive impact on operations, Robocap research has revealed.

The research showed that a further 37 per cent of pension funds, insurance asset managers, family offices, and wealth managers surveyed said they were “very concerned” about this issue.

AI-washing is a marketing practice where companies exaggerate or falsely claim the use of AI in their products, services, or operations to make them appear more innovative or technologically advanced than they are.

There are several types of AI-washing, which include companies claiming to use AI when in fact they are using less-sophisticated algorithms, overstating the efficacy of their AI over existing techniques, or falsely claiming that their AI solutions are fully operational.

Over the next three years, more than a quarter (26 per cent) of professional investors surveyed said that they believe that AI-washing will worsen slightly, while 3 per cent think it will get much worse.

However, almost two-thirds believe the problem of AI will become less severe and 7 per cent think it will not change.

Robocap founder and chief investment officer, Jonathan Cohen, stated that just like greenwashing, AI washing is a “genuine problem” for investors who are looking for exposure to companies that genuinely profit from the growth and operational efficiencies AI can bring.

He added that the fund manager believes there is a “strong” misunderstanding and misuse of the term AI, a great disparity between technological innovation and what is seen in derived revenues.

“When selecting investment opportunities, we look for companies with a good underlying exposure to the AI, robotics and automation theme, a strong business model backed by excellent technology, a good management team and at a compelling valuation," he explained.

This article was originally published on our sister website, Pensions Age.

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