Research Projects

Europe’s largest companies increasingly respond to investor, regulatory and public demand for transparency in AI practices, as revealed in new research by FTI Consulting, Inc. (NYSE: FCN) and Trinity College Dublin.

The study shows strong AI disclosures on its use and application throughout the organisation, which highlights its integration and value. However, the findings reveal significant gaps in critical areas of governance, including AI policy, risk management, oversight, audits and key performance indicators (“KPIs”).

The report, Decoding AI Disclosure, is a comprehensive analysis of the AI-related statements in the annual and sustainability reports of Europe’s 50 largest companies in the STOXX Europe 50 Index — a blue-chip index comprising sector leaders in Europe. The study examined the companies’ AI statements across 10 categories, including AI Policy, Board Oversight, Senior Leadership, Knowledge Development, Audits, Strategy, Risk Management, KPIs, AI Usage and AI in Chair or CEO Statements.

Eight companies reported at least eight of the 10 identified categories of AI transparency, placing them among the top disclosers in Europe: Allianz, AstraZeneca, Deutsche Telekom, GSK, Mercedes-Benz, Prosus, RELX and Zurich Insurance.

“Disclosing AI activities in annual reports is a powerful way for companies to show they are adapting to the AI revolution,” said Niamh O’Brien, a Senior Consultant in the Strategic Communications segment at FTI Consulting. “This research provides valuable insights into how companies are communicating on their AI initiatives and the steps they are taking to govern its use. Some companies are setting high standards by tracking their progress through performance indicators and audits, which will be an important trend to watch in the years ahead.”

“This research provides valuable baseline information about AI disclosure,” said Daniel Malan, Director of the Trinity Corporate Governance Lab. “We look forward to continuing our collaboration with FTI Consulting and to report on future progress as companies settle into the new regulatory context provided by the EU AI Act.”

Key Findings:

• Comprehensive AI Strategy and Usage Disclosure: All 50 companies provided some information on their AI strategies, with 42 sharing specific AI use cases. This highlights that companies understand the importance of demonstrating their preparedness for the future of AI.
• Gaps in Governance and Risk Management: Twenty-three companies provided disclosure on board oversight, while 20 reported on risk management frameworks and 19 on AI policy. These are fundamental aspects to address AI’s potential risks and essential for companies to showcase how leadership navigates AI-related decisions.
• Inconsistent Governance: Some companies demonstrated strong governance in one area but showed surprising gaps in others, such as a lack of board oversight on AI decisions or their senior leadership’s responsibilities related to AI.
• Sector Comparisons: The sectors at the forefront of AI innovation and risk management, such as technology, media and telecommunications, were more likely to report on the role of their leadership, knowledge development and KPIs. Banks, insurance and financial services companies focused on risk management and knowledge development, which aligns with their regulatory responsibilities.

Arnaud Cave, a Director in the Strategic Communications segment at FTI Consulting, added, “Companies should close the gap between strategy, usage and governance, providing transparency on material risks and how these are mitigated. Comprehensive disclosure on AI is no longer a nice to have, but something investors actively seek assurances on from companies.”

The report includes best practice examples and 10 recommendations for companies looking to enhance their AI reporting, three of which include documenting board oversight on AI-related activities, establishing robust KPIs complemented by qualitative insights on AI deployment and providing detailed use case examples grouped by impact or function, illustrating value creation and risk management.

Read the Decoding AI Disclosure report.

Not many people know that Ireland was the first country in the world to have a national code of corporate governance. More information is provided in this piece by Stephen Davis and Daniel Malan that was published by the Harvard Law School Forum on Corporate Governance. The two documents mentioned in the piece can be downloaded below:

IAIM Statement of Best Practice

IAIM Comments on Cadbury

For more information, contact Dr Daniel Malan.

A research project funded by the European Research Council (ERC) to establish the responsibility of firms, to explore the sources of their immorality, and to chart a path for their improvement. 

For more information, contact Dr Kenneth Silver. A short video about this project and Dr Silver’s views on the value of philosophy for management is available here.

This project explores how firms can successfully manage the complexities and tensions associated with adopting sustainability as a strategic priority at the core of the organisation.

The Trinity Corporate Governance Lab was delighted to invite everyone to a special webinar celebrating the publication of the latest special issue of Business Ethics Quarterly (Vol. 33, Issue 1, 2023) “The Challenges and Prospects of Deliberative Democracy for Corporate Sustainability and Responsibility”. A recording of the online event can be found here.

For more information, contact Dr Maximilian Schormair.  A short video about Dr Schormair’s research interests, the BEQ edition and his work in executive education is available here.

Dr Ulrich Leicht-Deobald is an associate professor at Trinity Business School, and a participant in this project that is funded by the Swiss National Science Foundation. The aim of this interdisciplinary project is the development of a methodology for the design of fair AI applications. The methodology will help guide stakeholders when considering the usage of AI in a socially responsible way, and will make it possible to train software developers in ethical topics.

For more information, contact Dr Ulrich Leicht-Deobald.

Appropriate governance oversight frameworks are critical to support the effective governance of universities. This has been confirmed by the Irish Higher Education Authority (HEA) Act 2022.  In collaboration with the Office of the Secretary of the College & Director of Governance of Trinity College Dublin, the Lab will investigate best practice in third level governance in Ireland and abroad.

For more information, contact secretar@tcd.ie.