ESG Investor’s weekly round-up of news on technology and tools in the sustainable investing sector, including Sustainable Trading, Impact Cubed, BME, ClimateTrade, MSCI, GeoQuant, ELEVATE Insig AI, and Higg.
A new initiative has been launched by financial markets participants and service providers to create a more sustainable trading environment by embedding ESG principles into trading processes and practices. Sustainable Trading, a 30-strong non-profit member network, aims to “drive positive ESG change” by devising practical solutions to industry-specific ESG issues and developing mechanisms for self-assessment and benchmarking. Members will consider the environmental impact of how the financial trading industry builds, maintains, and operates trading infrastructure along with a focus on areas such as diversity, equity and inclusion, employee wellbeing, engagement with communities and a stakeholder-oriented approach to enterprise governance. Founding members include several global asset managers – Aegon Asset Management, AllianceBernstein, AXA Investment Managers, Federated Hermes, Invesco, Investec, Liontrust, M&G, Ninety One, Russell Investments, State Street Global Advisors, T. Rowe Price and Union Investment – as well as brokers, exchanges and technology providers. “Sustainable Trading will mobilise members around a practical approach to setting and achieving their ESG goals and establish grassroots champions of change. Working together we can create a robust, sustainable industry for the future; one where the principles of good ESG practices are woven throughout our daily lives,” said Founder and Director Duncan Higgins, formerly a senior executive at Virtu, ITG, Turquoise and UBS.
Impact Cubed, an investment analytics and solutions provider, has launched a solution to help investors meet the disclosure requirements of the EU Taxonomy Regulation. Developed in consultation with investors in Europe and the US, Impact Cubed’s technology-enabled solution includes data, portfolio analytics and ready-made regulatory reports, which investors can use to assess companies against taxonomy criteria, enabling them to build more sustainable portfolios. “Our quantitative ESG and impact models were built to assess company business activities in a more objective, granular way with global coverage, which gives us an edge when dealing with EU Taxonomy criteria and compliance reporting,” said Antti Savilaakso, head of research at Impact Cubed. Impact Cubed’s data science and digital tools provide full coverage of all 40,000+ globally listed equities. Investors can elect to use Impact Cubed’s estimation and science-based proxy data, which offers a holistic picture of portfolio alignment. Full transparency is provided into Impact Cubed’s methods for calculating taxonomy aligned revenue, including eligibility, substantial contribution, do no significant harm, and minimum safeguard content for both climate change mitigation and adaptation criteria.
BME, the Spanish stock exchange operator owned by SIX Group, has partnered with ClimateTrade to conclude a proof of concept for blockchain-based carbon footprint offsetting. It aims to allow companies to offset carbon emissions through green credits in a digital and traceable way, using a blockchain-based emissions registration and verification process. Based on a photovoltaic plant, the proof of concept consisted of digitally measuring, reporting and verifying the tons of CO2eq spared to the atmosphere. As a key part of the project, BME, its Iberclear central securities depository, and carbon offset specialist ClimateTrade developed a voluntary registry for carbon and biodiversity inventories. Using an API connection, Iberclear received, validated and recorded the verified green credits in its registry. The automatic connection between Iberclear’s Voluntary Registry and ClimateTrade’s Marketplace then allowed the sale of the green credits and their cancellation in Iberclear’s Voluntary Registry, eliminating the risk of double entry bookkeeping. In addition to managing information and monitoring mitigation initiatives, the registry certifies the transfer and cancellation of carbon credits, thus ensuring the integrity, transparency and traceability of all entries.
MSCI, a data, analytics and research services provider, has announced partnerships with GeoQuant and ELEVATE to enhance its ESG data ecosystem. MSCI clients will now have access to GeoQuant’s ESG Geopolitical Risk Dataset, which uses political and computer science to provide daily indicators and two-year predictions on 40+ governance, social, security, and environmental risks across 127 countries. Through GeoQuant’s ‘Human + Machine (AI)’ model, large volumes of reputable data, news and social media content are sorted to create intelligent algorithms that are further calibrated by a team of PhD political scientists and country-specific experts. The GeoQuant ESG Geopolitical Risk Dataset is customisable by risk type, sector and asset class, allowing investors the ability to integrate geopolitical risk considerations systematically. To support investors’ understanding of social and governance risks within portfolios, ELEVATE’s Supply Chain ESG Risk Ratings aggregate data on supply chains in more than 100 countries. The data is collected through direct engagement with suppliers and workers and is independently audited and verified before being used in ELEVATE’s proprietary ratings. ELEVATE’s assessment includes an overall score, as well as 38 sub-scores organized under labour, health and safety, environment, business ethics and management systems.
Insig AI, a data science and machine learning solutions company, is partnering with CarVal Investors, a global alternative investment manager, to develop and launch a new line of high yield and investment grade ESG scoring tools, used to optimise CarVal’s portfolios. The agreement follows the launch of the CarVal Clean product line and CarVal’s first ESG Collateralised Loan Obligation in 2021, which was supported by Insig. CarVal’s proprietary ESG risk scores, combined with Insig AI’s Natural Language Processing disclosure scores which use the latter’s machine learning techniques, enable rapid analysis of more data, scenarios and outputs. “This joint development will create a major differentiation in the evaluation and optimisation of ESG HY and IG funds and investment products,” said Steve Cracknell, Chief Executive of Insig AI.
Higg, a US-based sustainability insights platform for the consumer goods industry, has partnered with the Apparel Impact Institute (Aii) to launch a measurable carbon management framework for manufacturing facilities. The Carbon Leadership Program, led by Aii’s strategic partner RESET Carbon, developed a new carbon assessment as a collective effort to reduce global supply chain carbon emissions. Higg will serve as the technology partner hosting the assessment. Once manufacturers complete the assessment, they receive a potential carbon reduction score, which helps brands prioritise manufacturing partners with the highest potential for improvement. As an optional second step, with the support of a dedicated engineer, nominated manufacturers will receive personalized strategies, training, and tools to help set and achieve their carbon targets. On a monthly basis, manufacturers then share assessment data via the Higg platform to help engineers and brands understand progress and identify future areas of improvement.