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Clifford Chance

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Responsible tech

We look ahead to what the expect this year

Infrastructure Trends 24 January 2022

As investment in the tech sector booms and potentially transformative technologies build momentum, responsible business and innovation becomes a focus for companies and regulators alike. In a short series of five articles, we look ahead to five key technology trends to watch in 2022. In this article we look at responsible tech.

Responsible tech

Political, regulatory and consumer demand for ethical business practices and responsible innovation is greater than ever. In 2021, we saw rapid development in ESG reporting and disclosures, and significant ESG investment. In 2022, we will see companies and governments using data and technology to advance their ESG objectives and digital ethics becoming ever more central to product and process design.

What's next? 

  • Digital ethics: In an increasingly digital world, businesses are navigating how best to embed ethical principles into their processes, products and services. Principles such as fairness, transparency, accountability, access and explainability will remain a focus in data protection and cyber security – as priority areas for targeted laws and guidance (such as codes for processing children's data or laws on use of facial recognition technology), as well as active areas of regulatory enforcement and civil litigation. These principles will be expanded upon in emerging regulation in areas such as online harms, AI and responsible supply chains. Technology developers an providers will increasingly be expected to be mindful of, and reactive to, end-user interactions, misuse and societal impact – particularly addressing circumstances that could undermine human rights, promote disinformation or facilitate or incite illegal or harmful behaviour. The increasing number and tightening of rules on ethical sourcing will see companies examining supply chain visibility and management in relation to a broad range of matters – from raw materials purchasing, to carbon footprint, to responsible labour practices – both as purchasers and, often, as suppliers themselves. The combination of regulatory pressure, litigation risk and public awareness will make ethical considerations key in tech design, due diligence, governance processes and data use in 2022.
  • Climate tech: COP26 commitments, public funding and heightened investor attention in ESG initiatives will drive innovation in climate tech in 2022. We'll see the rise of "electrification bundles", which will facilitate the adoption of more sustainability-focused technology for the home, such as rooftop solar, heat pumps and smart power devices. In the automotive industry, more battery-electric vehicles and other alternative engines will be put on the market, with new technologies increasing the range and efficiency of batteries and shortening charging times, and tech solutions for after-life-uses and the recycling of batteries will become ever more important. Carbon capture technology, long-duration storage, agri-tech in farming, circular economy tech and green proptech are all areas to watch. Climate tech companies in these fields and beyond, with their increasing moats in talent pools and intellectual property, strong market currency and growing financing options, will be a focus for M&A activity in the year, and the decade, ahead – with potentially world-changing results.
  • Infratech: 2022 will be a game changer for reimagining how the energy transition can be achieved through the integration of technology with infrastructure. The resilience of critical infrastructure is a priority for governments across the world as they look to "build back better" from the global pandemic and prepare strategies to achieve their climate targets. Integration of technologies such as smart wires, longduration storage and even blockchain and other DLTs with infrastructure will be key to the delivery of sustainable infrastructure for a low-carbon future. Across the energy sector, developers will seek to leverage technology to help decentralise energy distribution, create more efficient energy networks and provide demand response services linked to electricity usage and supply forecasting. To facilitate the integration of technology with infrastructure, we will see continued investment in autonomous vehicles, data centres and technologies like 5G and the Cloud, which has become an integral part of IT systems worldwide.
  • Sustainable finance: Sustainable finance will continue to surge in 2022, and technology companies will step in to help with the harnessing of ESG data and to unlock potential sources of liquidity. Reporting and disclosure requirements are driving increasing volumes of ESG data publishing and measurement. With "greenwashing" remaining high on regulators' agendas, accurate, ingestible ESG data will be crucial to both bond issuers and investors alike. Platforms using technology such as scraping and machine learning to assist with the extraction, collation and analysis of ESG data will be in high demand. We may also see an increased use of asset tokenisation (the conversion of hard infrastructure assets such as buildings or power stations into digital assets through the use of DLT-based tokens), which has the potential to unlock new sources of finance, particularly for projects in the developing world.

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