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Technology & Data

CFA Makes Case for AI in ESG Investing

Generative AI tools have enabled new ways to leverage unstructured and alternative data to drive an increase in investment opportunities, according to new research by the CFA Institute Research and Policy Center. Platforms such as ChatGPT have increased the development and usage of large language models (LLMs), which in turn has increased the pace of evolving workflows in the investment industry, the CFA Institute said. The research outlined a framework for the ethical building of investment models in the open-source community, noting that investment professionals needed to embrace a more holistic and scientific approach to investing to “stay ahead”. It discussed open-source tools and techniques for building and fine-tuning AI projects, and then extracting insights from open data sources. For example, the CFA Institute highlights the role of natural language processing (NLP) when dealing with alternative and unstructured data. “ESG investing seems ripe for AI adoption,” it said. “The complexities of ESG investing, where datasets are often unstructured and fragmented, offer an example for exploring fine-tuning methods to detect material information to generate investment returns.”

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