Analysis of AI-Related Information in S&P 500 Companies’ 10-Ks
The CAQ analyzed S&P 500 companies’ Form 10-Ks to understand the extent of AI-related disclosures in those SEC filings. This was our first year performing this analysis over AI-related information.
The CAQ, using data by ESGAUGE, looked at the most recent SEC Form 10-Ks for S&P 500 companies available as of June 2024.1 We analyzed 10-Ks from S&P 500 companies to understand what companies disclosed in their SEC filings about AI-related information (e.g., mention of AI or machine learning).
This analysis was solely focused on information disclosed in an S&P 500 company’s SEC Form 10-K, and does not contemplate AI-related information communicated by companies outside of their SEC Form 10-K.
The CAQ observed that 359 S&P 500 companies, approximately 72%, mentioned AI-related information in their 2023 10-K.
Most companies that mentioned AI-related information in their 10-K did so in Item 1A. Risk Factors and Item 1. Business. Some companies also mentioned AI-related information within Item 7. MD&A and Item 8. Financial Statements. While less common, we noted that some companies also provided AI-related information in their Cautionary Note Regarding Forward Looking Information, Item 1C. Cybersecurity and Item 3. Legal Proceedings.
Section of 10-K AI is Mentioned (2023)
The type of information mentioned by companies in Item 1A. Risk factors, Item 1. Business, and Item 7. MD&A varied from company to company, but we observed some common themes:
- When discussing AI-related topics in Item 1A. Risk Factors, companies were largely focused on legal, regulatory, reputational and cybersecurity risks. Legal and regulatory risks were noted around the rapid adoption of AI technologies by companies or third parties and the privacy or protection of data within these AI technologies that could be subject to laws, policies, legal obligations, and codes of conduct. Companies were also concerned that the aggressive use of AI technologies by new entrants to the market may decrease their competitiveness and thus harm their performance and reputation. Companies noted that the use of data by a variety of AI tools increased their exposure to cybersecurity events, and further noted the risk that malicious actors could leverage emerging AI technologies to access, use, disclose, or destroy information.
- Within Item 1. Business, companies discussed their use of and investments in AI-related technologies often indicating how they had incorporated it into new or existing products or services or into their own internal operations. Companies also discussed current and potential regulation in the US and the EU around AI and related technologies.
- Within Item 7. MD&A disclosures, companies often discussed their AI-related acquisitions, investments in AI-related products or services, or AI-related enhancements to their internal operations. Some companies provided their outlook for the use of AI-related technologies in the future and the impact (risks and opportunities) they expect that to have on their business.
Most mentions of AI-related information in Item 8. Financial Statements fell within one of the following types of footnotes:
- Segment information – companies provided information on their business segments that are focused on AI or related technologies.
- Acquisitions – some companies discussed information on acquisitions of companies in AI or related industries noting that the businesses were acquired to innovate and advance their products, services, or strategies.
- Description of business – some companies shared information describing how AI and related technologies are used in their businesses when providing a general description of their business.
While less common, we also observed mention of AI-related matters in footnotes covering goodwill and intangible assets, commitments and contingencies, subsequent events and various others.
Endnotes
- The data herein reflects the S&P 500 index from 2024 and the company’s most recent SEC Form 10-K as of June 30, 2024.
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