white

Blog - ESG - AI and ESG

  • on 15 Dec.2022

COVID-19 served as a huge catalyst for corporations to start their sustainable investing journey. Combined assets of funds concentrated on ESG (Environmental, Social, Governance) investing reached $3.9 Trillion in 2021 according to Morningstar.

Today, as remarkable as it sounds that the world is embracing a greener future, asset managers are facing some obstacles in order to keep up with investors’ returns and staying sustainable simultaneously. Complications such as corporate greenwashing and unreliable data are the roots of these stresses.

Fortunately, with the huge market that is already available and still growing exponentially, Artificial Intelligence (AI) can actually unravel most of the dilemmas that asset managers are facing today in regards to ESG investing.

AI equips asset managers with the capability of handling tons and tons of data easily and efficiently in order to proceed with better confidence with their investment strategies.
How can AI also help Asset Managers? 

Most companies nowadays state that they’re following their ESG guidelines and are taking the necessary steps in order to become more sustainable, yet the issue is what each of these companies’ sustainable profile actually is.

An asset manager can employ AI-powered machine learning techniques to analyze vast amounts of data and go beyond disclosure-based ESG information to avoid overly relying on self-reporting and protect investors from being duped by corporate greenwashing.

Moreover, measurability is an additional technique where AI can help since investors now want to be able to determine just how sustainable their portfolios actually are. In order to achieve it, they need a high level of specific information about the business operations of the relevant companies.

Some platforms already employ AI and machine learning to offer comprehensive sustainability scores for entire portfolios and specific equities. These platforms can deconstruct the components of the scores based on whether the data is published or approximated.

What about you? How could you use AI to magnify your ESG investment process?

 References:

  1. https://new-narrative.com/2022/05/17/the-rise-of-artificial-intelligence-in-asset-management-a-sustainable-solution#:~:text=AI%20allows%20asset%20managers%20to,make%20the%20correct%20investment%20decisions.
  2. https://www.spglobal.com/en/research-insights/articles/how-can-ai-help-esg-investing
  3. https://www.sesamm.com/blog/how-investors-use-ai-to-get-esg-data
  4. www.omega-financial-solutions.com

COVID-19 served as a huge catalyst for corporations to start their sustainable investing journey. Combined assets of funds concentrated on ESG (Environmental, Social, Governance) investing reached $3.9 Trillion in 2021 according to Morningstar.

Today, as remarkable as it sounds that the world is embracing a greener future, asset managers are facing some obstacles in order to keep up with investors’ returns and staying sustainable simultaneously. Complications such as corporate greenwashing and unreliable data are the roots of these stresses.

Fortunately, with the huge market that is already available and still growing exponentially, Artificial Intelligence (AI) can actually unravel most of the dilemmas that asset managers are facing today in regards to ESG investing.

AI equips asset managers with the capability of handling tons and tons of data easily and efficiently in order to proceed with better confidence with their investment strategies.
How can AI also help Asset Managers? 

Most companies nowadays state that they’re following their ESG guidelines and are taking the necessary steps in order to become more sustainable, yet the issue is what each of these companies’ sustainable profile actually is.

An asset manager can employ AI-powered machine learning techniques to analyze vast amounts of data and go beyond disclosure-based ESG information to avoid overly relying on self-reporting and protect investors from being duped by corporate greenwashing.

Moreover, measurability is an additional technique where AI can help since investors now want to be able to determine just how sustainable their portfolios actually are. In order to achieve it, they need a high level of specific information about the business operations of the relevant companies.

Some platforms already employ AI and machine learning to offer comprehensive sustainability scores for entire portfolios and specific equities. These platforms can deconstruct the components of the scores based on whether the data is published or approximated.

What about you? How could you use AI to magnify your ESG investment process?

 References:

  1. https://new-narrative.com/2022/05/17/the-rise-of-artificial-intelligence-in-asset-management-a-sustainable-solution#:~:text=AI%20allows%20asset%20managers%20to,make%20the%20correct%20investment%20decisions.
  2. https://www.spglobal.com/en/research-insights/articles/how-can-ai-help-esg-investing
  3. https://www.sesamm.com/blog/how-investors-use-ai-to-get-esg-data
  4. www.omega-financial-solutions.com