AI as a Board member?
Welcome to this fascinating case study where we explore the synergy between artificial intelligence and human expertise in the realm of board meetings! In a recent Board training education, seven groups of six individuals each tackled ESG-related questions. Exercise was about Rail Baltica and ESG priniples.
The collective wisdom of these participants yielded results strikingly akin to the AI's insights (I just simply shared case study question with chatGPT-4). However, our seasoned board member instructor brought some extra flavor to the table, sharing unique perspectives not covered by either the AI or the groups.
As we delve deeper into the AI's analysis, we discover intriguing perspectives, explanations, and real-life examples, highlighting the importance of the elements it suggested. Picture the AI as a personal assistant dedicated to helping you excel in your existing role and ensuring that board meetings become a delightful experience for all.
So let's look at real study and how it went.
Location: BICG training in Riga (2023 March)
Humans: 6 in every group (7 gorups total)
Time: ~10 minutes for group discussions and later presentation
Your role: You are a Board member at RB Rail AS (www.railbaltica.org), which is implementing Rail Baltica rail transport infrastructure project, aiming to integrate the Baltic States into the European rail network.
Task: Prepare yourself for the next Board meeting, with the intention to challenge the company strategy by asking the CEO and the entire Management Board ESG-related questions.Write down questions, grouping environmental, social and governance topics.
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Case Study:
Rail Baltica
(ESG principles)
1. How is the company addressing the potential environmental impact of the construction and operation of Rail Baltica?
2. What steps is the company taking to minimize the carbon footprint of the project?
3. Are we exploring renewable energy options to power the rail infrastructure and reduce the project's dependency on fossil fuels?
4. How is the company working to protect and preserve biodiversity in the region during the construction of Rail Baltica?
5. What measures are being taken to manage waste and reduce pollution during the construction and operation phases of the project?
6. Are there any environmental certifications or standards that the company is aiming to achieve for the Rail Baltica project?
AI questions to CEO
(Environment)
1. What is the company doing to ensure that local communities are involved in the decision-making process and are consulted regularly throughout the project's development?
2. How is the company addressing potential displacement issues and ensuring fair compensation for those affected by the project?
3. What steps is the company taking to ensure that the Rail Baltica project creates local employment opportunities and contributes to the economic development of the region?
4. How is the company ensuring that the rail infrastructure is accessible and affordable for all users, including people with disabilities and those from lower-income backgrounds?
5. Are there any plans to collaborate with educational institutions and offer internship or training opportunities for students in the region?
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AI questions to CEO
(Social)
1. How is the company ensuring transparency and accountability in its decision-making processes and financial management, especially in relation to the use of public funds?
2. What measures are in place to prevent corruption and ensure ethical business practices throughout the project's implementation?
3. How is the company managing potential conflicts of interest among board members and stakeholders?
4. Are there any plans to include ESG-related expertise on the Management Board, to ensure that sustainability considerations are integrated into the company's strategic planning and decision-making processes?
5. How is the company planning to monitor and report on its ESG performance throughout the development and operation of Rail Baltica?
AI questions to CEO
(Governance)
Add explanation why it is necessary and any historical data (if available) to support that
My question / suggestion
to AI
It is necessary to address environmental concerns because the construction and operation of large infrastructure projects like Rail Baltica can have significant impacts on the environment. By minimizing these impacts, we can reduce potential harm to ecosystems, decrease greenhouse gas emissions, and promote sustainable development. Historical data from other rail projects has shown that incorporating environmentally friendly practices can lead to long-term financial savings and improved public perception of the project.
AI answer
(Environment)
Addressing social issues is crucial for the success of the Rail Baltica project as it ensures that the benefits of the project are fairly distributed among the affected communities, fostering social cohesion and acceptance. In the past, infrastructure projects that have not adequately addressed social concerns have faced delays, public opposition, and reputational damage. By involving local communities in decision-making, providing fair compensation, and ensuring accessibility, we can improve the project's social impact and promote inclusive growth in the region.
AI answer
(Social)
Good governance is essential for the successful implementation of infrastructure projects like Rail Baltica to ensure that public funds are used effectively and ethically. Transparency and accountability in decision-making processes help to build trust among stakeholders, reduce the risk of corruption, and promote long-term project success. Lessons can be learned from historical cases where poor governance has led to cost overruns, delays, and loss of public trust. By incorporating strong governance practices and ESG expertise into the Management Board, we can improve the project's overall sustainability and create lasting value for all stakeholders.
AI answer
(Governance)
Provide supporting examples with data and dates when that happened
My question / suggestion
to AI
1. High-Speed 1 (HS1) in the UK:
HS1, the high-speed rail line connecting London to the Channel Tunnel, incorporated various environmental measures during its construction, completed in 2007. They implemented noise reduction initiatives, habitat creation, and landscape restoration. As a result, the line saw a 10% reduction in CO2 emissions per passenger in comparison to air travel and contributed to an increase in rail modal share from 27% to 85% between 2003 and 2019.
2. California High-Speed Rail:
California's ongoing high-speed rail project, which began construction in 2015, is committed to using 100% renewable energy for its operations once completed. This commitment to sustainability has attracted federal support, as well as private investment, helping to secure the project's long-term funding.
AI answer
(Environment)
1. Three Gorges Dam, China:
The Three Gorges Dam, completed in 2006, faced significant social opposition due to inadequate compensation and relocation of affected communities, displacing around 1.3 million people. The project faced delays and increased costs due to social unrest and public opposition, highlighting the importance of addressing social concerns in large infrastructure projects.
2. Crossrail, London:
Crossrail, a major rail infrastructure project in London, which began construction in 2009, has made significant efforts to involve local communities and provide employment opportunities. The project created over 55,000 full-time equivalent jobs and engaged with over 12,000 students through its Young Crossrail program, demonstrating the potential positive social impact of large infrastructure projects.
AI answer
(Social)
1. World Bank's Infrastructure Projects:
The World Bank has historically emphasized the importance of good governance in infrastructure projects it funds. For example, in the early 2000s, it canceled funding for the Lesotho Highlands Water Project due to corruption allegations. This highlights the importance of transparency and ethical conduct in securing and maintaining financial support from major international organizations.
2. Olkiluoto 3 Nuclear Power Plant, Finland:
The Olkiluoto 3 nuclear power plant in Finland, which began construction in 2005, has faced significant delays and cost overruns due to poor governance and lack of transparency. The project's initial budget was €3.2 billion, but it has now exceeded €11 billion, with the plant's completion delayed by over a decade. This case underscores the importance of effective governance in infrastructure projects to avoid financial and reputational risks.
AI answer
(Governance)
What information do you need from me so you provide better ESG-related answers and ensure Rail Baltica is successful?
My question
to AI
To provide more tailored and effective ESG-related suggestions for the Rail Baltica project, the following information would be helpful:
1. Current ESG policies and practices: Understanding the existing environmental, social, and governance policies and practices that are already in place for the Rail Baltica project can help identify areas for improvement and potential gaps.
2. Stakeholder concerns: Information on key stakeholder concerns and expectations regarding ESG issues can help prioritize which aspects of sustainability should be addressed in more detail.
3. Project timeline and milestones: Knowing the project's timeline and major milestones can help identify critical moments when ESG considerations should be integrated into decision-making processes.
4... (and so on. AI just keeps giving you questions).
AI answer
(ESG suggestions)
Let's imagine I've provided all the details that you asked for. Insert those answers and provide me with better ESG answers. Simulate as you have answers to those questions already.
My suggestion
to AI
Based on the provided information, here are more tailored ESG-related suggestions to ensure the success of the Rail Baltica project:
1. As the project has already invested in renewable energy and carbon offsetting initiatives, consider conducting a lifecycle assessment (LCA) to identify additional opportunities for reducing the project's environmental impact across all phases of development, operation, and decommissioning.
2. Since biodiversity protection is a priority for local stakeholders, expand current efforts to include the creation of wildlife corridors, green bridges, and targeted habitat restoration initiatives, in collaboration with local environmental NGOs and academic institutions.
3. Use the project's budget allocation for waste management to invest in circular economy principles, such as recycling construction materials and implementing a waste-to-energy system for non-recyclable waste.
AI answer
(Environment)
1. Based on the feedback from local communities, develop targeted social investment programs focusing on education, healthcare, and infrastructure improvements to address their specific needs and concerns.
2. Establish a comprehensive worker welfare program, including fair wage policies, safe working conditions, and training opportunities, to create local employment opportunities and contribute to the region's economic development.
3. Strengthen communication channels with affected communities and stakeholders, including regular project updates and public consultation forums, to ensure their concerns are heard and addressed throughout the project’s lifecycle.
AI answer
(Social)
1. Appoint an ESG expert to the Management Board to ensure that sustainability considerations are integrated into strategic planning and decision-making processes.
2. Implement a robust anti-corruption policy, including regular risk assessments, employee training, and a whistleblower protection mechanism, to uphold the highest ethical standards and maintain trust among stakeholders.
3. Develop a comprehensive ESG monitoring and reporting framework aligned with international standards, such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB), to ensure transparency and accountability in the project's ESG performance.
AI answer
(Governance)
Conclusions / Takeaways
- AI may be a pretty good personal assistant.
- chatGPT-3 and chatGPT-4 answers differs in many ways (some are pretty significant).
- Best way to understand technology is by starting to use it.
- Beware: DO NOT add confidential/non-public information to AI tools (chatGPT and others).
- AI may replace lazy board members. But as you probably already know, a good board member is proactive and a hardworking one.
