Bots and bubbles: DC investors navigate the growing carbon footprint of their tech-heavy portfolios
DC investors tend to have outsized allocations to the tech industry. How does the rise of AI impact the carbon footprint of their portfolios?
Over a billion people use artificial intelligence (AI) every day. As Lombard Odier’s head of Sustainability Research, Thomas Höhne-Sparborthputs it, “you can’t put it back in the box”.
It’s playing an outsized role in our retirement pots too. The “magnificent seven” (Mag7) make up 22% of the MSCI World Index. They appear consistently across the top pension holdings, with around £31.5bn going directly to these AI-focused firms. That’s 1.3x the value of the UK’s entire renewable energy sector.
Even actively managed funds can be “tech heavy”, according to Lok Ma, director of Law Debenture, an independent trustee for a number of DC Master Trusts as well as own-trust arrangements. “Not that many active managers would massively deviate [...] because you’d end up getting results that are so-off market”.
In a never-ending game of chicken, nobody wants to be the first to disconnect from the Mag7 and their ballooning size.
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