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ESG2.0: Investors Can Now Use AI, Big Data to Reveal Companies Real-Time ESG Momentum

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This week, TruValue Labs unveiled its ESG Momentum™ score – the first ESG indicator that leverages artificial intelligence, big data and the Sustainability Accounting Standards Board’s (SASB) materiality framework – as part of its Insight360™ suite of products. The score reveals the positive or negative direction, or trend, of ESG performance based on daily data. ESG Momentum was built to serve investment professionals who know that today's company valuations depend heavily on environment, social and corporate governance (ESG) performance.

ESG2.0 moves beyond self-reported data

Today, much of ESG data is derived from company-provided materials — taking an inside-out perspective on ESG, focused on what companies disclose. With its ESG2.0, TruValue Labs — which has previously partnered with organizations including Trucost to provide enhanced, real-time, environmental, social and governance (ESG) data — takes an outside-in perspective, capturing the widest variety of perspectives available on companies' ESG performance.  

Unique within the industry, TruValue Labs' ESG2.0:

  • Leverages AI technology to analyze unstructured data
  • Creates ESG performance scores based on non-company-disclosed data
  • Updates on a continuous basis

Why ESG Momentum matters for the investment industry

Research studies show a correlation between ESG momentum and investment performance. Furthermore, the studies found that improvements in sustainability are often a better indicator of future success than a company's current ESG scorei.

In addition to an ESG Momentum Score and a timely Pulse Score™, which charts ESG activity as events happen, the Insight360 platform includes a longer-term measure of ESG performance called the Insight Score™, which is suitable for portfolio and index construction.

All three scores enable a range of investment strategies, leveraging artificial intelligence to analyze the massive volume of publicly available data on companies. Unlike annually produced ESG ratings, TruValue Labs' scores incorporate events as they occur.

"When it comes to ESG, investment professionals need more than ratings based on annual, company self-reported information — they require timely data from an external, objective perspective that we call 'ESG2.0,'" said Hendrik Bartel, CEO and co-founder of TruValue Labs. "This next-gen ESG data incorporates events around the clock, with scores that demonstrate how company performance is changing over time."

"TruValue Labs' new Insight and Momentum scores, built using the SASB materiality framework, will further the mission of improving the availability and transparency of ESG data and support decision-making for a broad spectrum of investment strategies," said Mark McDivitt, head of ESG Solutions at State Street Global Exchange.

 

iNN Investment Partners. (2016.) The materiality of ESG factors for equity investment decisions: academic evidence. Available on request from NNIP


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