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Truvalue Labs gets the most out of ESG data

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ESG data provider, Truvalue Labs’ recently announced a multitude of enhancements to its platform and data service, with one major development being the integration of the final codified Sustainability Accounting Standards Board (SASB) framework.

“These standards are gaining a lot of traction in the US and internationally. The SASB framework is very compelling in that it focuses on materiality which we believe resonates best with investors,” says Phil Kim (pictured), co-founder and chief product officer, Truvalue Labs.
 

“Through our partnership with SASB, we can leverage the codified framework and provide clients with ESG data, based on this major standard. SASB, can in turn, look at our data to verify and identify new emerging issues that they might not have already incorporated into their framework.”
 
SASB’s standards are the result of six years of research and extensive market consultation to identify the sustainability issues that are likely to affect the financial condition or operating performance of companies within an industry. Truvalue Labs was the first data provider to integrate SASB’s materiality framework and it has recently expanded company coverage to more than 16,000 public and private companies globally, added six new languages (Japanese, German, French, Portuguese, Spanish, and Italian) and expanded its fixed income coverage.
 
There is a surge of interest from asset owners and managers, hedge funds and wealth managers looking to incorporate ESG issues into the investment process, explains Kim. “Hedge funds use our data to find alpha because we have a faster moving system of rating companies; unlike many other ESG data companies, our data is updated hourly throughout the day. We are also seeing more interest from fixed income managers.”
 
One of the reasons for this demand, cites Kim, is that the company applies AI to identify both risks and opportunities from unstructured text. In fact, he adds that it was one of the first companies to do this.
 
“Traditional ESG data is built around companies’ disclosed information, such as in corporate social responsibility (CSR) reports. However, we take a different perspective. We look at ESG through the lens of third parties and stakeholders. We scour the web and look at a lot of information across a large universe of companies. Essentially, traditional ESG data sets are tracking what companies say they are doing. However, we track what they are actually doing.”
 
“We also mine more than 100,000 sources to get that external perspective on ESG; using a range of sources such as media reports, non-governmental organisations and industry journals. Including languages in our data sets quite often provide us with nuggets of gold in terms of the information,” he says.
 
“In addition, our multi-pipeline architecture means that we are able to process historical data for any ESG framework. Right now, we have collected 12 years of historical data, all of which can be reprocessed for any framework,” states Kim.
 
As the ESG data offerings become more sophisticated and investors are increasingly looking to differentiate themselves from their competitors, Kim is finding that clients want their own spin on ESG.
 
“We are seeing a trend towards people building their own unique frameworks and leveraging multiple ESG data sets.”
 
The company also recently announced the release of its new artificial intelligence engine, Truvalue AI, which enables rapid implementation of any investment framework whether ESG-specific such as SASB or proprietary client-defined categories.

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