EU Approves Groundbreaking Artificial Intelligence Act

The Council of the European Union has approved the Artificial Intelligence Act, the first comprehensive regulation of its kind worldwide. This landmark legislation adopts a risk-based approach, ensuring stricter rules for AI systems that pose higher risks to society. The AI Act is set to establish a global standard for AI regulation, reflecting Europe's commitment to fostering safe, trustworthy AI systems.

What is the Artificial Intelligence (AI) Act?

The Artificial Intelligence (AI) Act is a landmark legislation by the EU designed to regulate the development and use of AI systems within its single market. Proposed by Commissioner Thierry Breton in April 2021, the Act categorizes AI systems based on risk levels, imposing strict requirements on high-risk applications to ensure safety and respect for fundamental rights. It aims to foster innovation, enhance transparency, and establish robust governance for AI technologies, setting a global standard for AI regulation.

Key Facts and Recent Developments

The Artificial Intelligence Act aims to promote the development and deployment of secure AI systems across the EU's single market, involving both private and public sectors. It seeks to uphold fundamental rights for EU citizens while encouraging investment and innovation in artificial intelligence within Europe. Notably, the Act applies exclusively to areas governed by EU law, with specific exemptions for military, defense, and research purposes.

This legislation marks a significant milestone for the European Union, highlighting the importance of trust, transparency, and accountability in the realm of new technologies.

Mathieu Michel, Belgian Secretary of State for Digitisation, stated:

"With the AI Act, Europe emphasizes the importance of trust, transparency, and accountability when dealing with new technologies while ensuring this fast-changing technology can flourish and boost European innovation."

Classification of AI Systems

The AI Act categorizes AI systems based on their risk levels. Low-risk AI systems are subject to minimal transparency obligations, whereas high-risk AI systems must meet stringent requirements to access the EU market.

AI practices deemed too risky, such as cognitive behavioral manipulation and social scoring, are banned. Additionally, the law prohibits predictive policing based on profiling and AI systems that use biometric data for categorizing individuals by race, religion, or sexual orientation.

Related Article: The Role of AI in Shaping Global Sustainability Trends in 2024

General Purpose AI Models

The regulation also addresses general-purpose AI (GPAI) models. Those not posing systemic risks face limited requirements, primarily around transparency. However, GPAI models with systemic risks must comply with stricter regulations.

New Governance Architecture

To ensure effective enforcement of the AI Act, several governing bodies will be established:

• An AI Office within the European Commission to oversee the application of common rules across the EU.

• A scientific panel of independent experts to support enforcement activities.

• An AI Board consisting of member state representatives to advise and assist on consistent application of the Act.

• An advisory forum for stakeholders to provide technical expertise to the AI Board and the Commission.

Penalties and Enforcement

Penalties for non-compliance with the AI Act are severe, calculated as a percentage of the offending company's global annual turnover or a predetermined amount, whichever is higher. Small and medium-sized enterprises (SMEs) and startups are subject to proportionate administrative fines.

Transparency and Protection of Fundamental Rights

Before deploying high-risk AI systems, public service providers must conduct fundamental rights impact assessments. The regulation mandates increased transparency in the development and use of high-risk AI systems.

High-risk AI systems and certain public entities using these systems must be registered in the EU database for high-risk AI systems. Additionally, users of emotion recognition systems must inform individuals when they are being monitored.

Supporting Innovation

The AI Act fosters an innovation-friendly legal framework, promoting evidence-based regulatory learning. It introduces AI regulatory sandboxes, allowing controlled environments for developing, testing, and validating innovative AI systems under real-world conditions.

Next Steps

Following its approval, the AI Act will be signed by the presidents of the European Parliament and the Council. It will then be published in the EU’s Official Journal and come into force twenty days later. The regulation will be fully applicable two years after it enters into force, with some exceptions for specific provisions.

Background and Legislative Process

The Artificial Intelligence Act is a crucial component of the EU’s strategy to encourage the development of safe and lawful AI that respects fundamental rights. The proposal was submitted by Thierry Breton, European Commissioner for Internal Market, in April 2021. The European Parliament’s rapporteurs, Brando Benifei (S&D, Italy) and Dragoş Tudorache (Renew Europe, Romania), reached a provisional agreement on the legislation on December 8, 2023.

The adoption of the Artificial Intelligence Act signifies a decisive step towards regulating AI technologies, ensuring they are developed and used in a manner that benefits society while safeguarding fundamental rights.

You can find the full press release here.

---

We invite you to join our vibrant ESG community, a collective force driving positive change. This is your opportunity to be part of a dynamic network where knowledge, best practices, and innovative ideas are shared freely, empowering you to make impactful decisions.

Together, we can amplify our efforts to shape a sustainable future.

Join us and become a catalyst in the global movement towards a more equitable, environmentally responsible, and socially conscious business landscape.

🌍 Subscribe Now and Join the ESG Community 🌍