• Integration of Sustainalytics ESG rating reports (webinar and recap) 
• Integration of ClarityAI ESG ratings (announcement and dashboard) 
• Multiple informational webinars including Impact Investing (open access webinar), UN PRI Implementation for alternative asset managers (webinar), SEC ESG reporting requirements (webinar and recap), using Sentieo for ESG research (webinar), quantitative ESG metrics (webinar)
• Presentations at conferences such as Neudata’s ESG trends (recap)
• Integrating ESG for UN PRI compliance in your Research Management System (guide)
• Multiple pre-built Dashboards for clients including Sustainalytics Dashboard and ESG Topic Monitoring Dashboard, as well as short videos such as Advanced ESG searches utilizing our ESG synonyms   
• ESG white papers/ESG trend books such as 33 Accelerating ESG Trends in Corporate Transcripts 

ESG data generated from the Sentieo platform has been quoted extensively in the media, including: 

• US companies add environmental and social targets to executive bonuses (Financial Times) 
• ESG Metrics Help CFOs Attract New Investors, Reduce Costs (Wall Street Journal)

In our latest Dashboard release, we have focused on ESG controversy monitoring, harnessing the extensive news sources integration, combined with Sentieo’s award-winning AI search, to bring clients a single dashboard that monitors twenty-one different ESG controversies, including:

• Embargoes and sanctions
• Incidents, fires and spills
• Corruption and bribery 
• Monetary fines and settlements
• Tax fraud and tax evasion 
• Product recalls 
• Collusion and antitrust issues 
• Deforestation and soil erosion 
• Animal testing
• Privacy violations 
• And much more, including both established and emerging ESG controversies  

The ESG Controversy Monitoring Dashboard is ready and available for all Sentieo clients and trial users who have the premium news package on the platform. In the three-minute video above, we go over the Dashboard itself, as well as how users can further customize it for their specific needs in seconds. 

The post Monitoring ESG Controversies in a Sentieo Dashboard appeared first on Sentieo.

This post was authored by Clarity AI, a leading sustainability data science and technology company and a Sentieo partner.

The recent move by the Securities and Exchange Commission to require disclosures of climate-related risks, including greenhouse gas emissions, is a positive step towards a more sustainable world. The announcement by the world’s largest economy came years after their European counterparts. The draft rule will disclose companies’ direct and indirect greenhouse gas emissions, otherwise known as Scope 1 and Scope 2 emissions. In a somewhat surprising but reassuring move, the proposal also indicates that firms will need to disclose, eventually, greenhouse gas emissions generated by suppliers and partners, known as Scope 3.

“At Clarity AI, we believe there is no pathway to net zero without fully incorporating Scope 3 emissions into regulation and reporting standards. And even then, regulation will only take us so far. Technology allows investors to access robust and transparent Scope 3 emission data at scale, which will be critical to check the reliability of the reported data and to start to understand the key drivers of those emissions. Deep granularity and full transparency will be needed for investors to manage their paths to decarbonization, while also keeping companies “on track” to meet the Paris targets,” our Head of Product Research and Innovation, Patricia Pina, said. To gain a better understanding of the challenges and opportunities surrounding Scope 3, Clarity AI has published a recent article on the topic, Why Have Scope 3 emissions data has become essential. 

Although the SEC regulation looks like a promising step there are a lot of details to iron out in the coming months and years. While we wait for additional details, it may be helpful to look to our neighbors across the pond to see where they encountered challenges on their sustainability journey.

The EU has dealt with a variety of challenges in implementing their various regulations; a couple include:

• Establishing clear definitions – Many of the EU regulations included content that was ambiguous and open to interpretation which could lead to different implementations of the regulation.
• Providing realistic timelines – The implementation timelines for SFDR and EU Taxonomy have been incredibly tight and due to the lack of internal resources, teams have struggled to meet the deadlines, causing overall delays in the process.

Regardless of regulatory challenges, the EU and UK are making progress. This all comes with a backdrop of rising demand for ESG investment products, so much so that it is becoming table stakes to have ESG offerings available.

The increased demand for ESG products has also increased the need for ESG-related resources. The demand is being seen across a variety of stakeholders, from in-house ESG teams to IR officers, to ESG consultants and many more. To meet these needs Sentieo has responded with ESG-specific dashboards and synonym groups, as well as integrating content and data with providers like Clarity AI. To further assist clients, Sentieo published a recent guide, 33 Accelerating ESG Trends, outlining ESG themes in proxy statements that are highlighted both at the broad and granular levels. 

Rising demand for ESG products and increasing regulatory initiatives are all a signal that sustainability interest is here to stay. If the volume of Google searches is any indication of interest, searches for Scope 3 recently hit a near all-time high. Now it’s a waiting game to see what comes next on the United States’ sustainability journey. 

Worldwide Google Trends: “Scope 3” Searches – 5-years Ending 4/9/2022.

The post The U.S. is Playing Catch Up on the Risk of ESG appeared first on Sentieo.

Greater flexibility and control over their research process and improved insights are key elements our customers are looking to get from their Sentieo experience and are the focus of this month’s release.

In our latest release, we are introducing:

Expanded Document Search Functionality 

We have streamlined the Table Explorer interface making it easier than ever to improve productivity with Sentieo.

To aid users in getting up and running faster, we’ve added the new Broker Research Manager. This allows users to check the status of their entitlement requests in real-time so they can know which brokers that may need a nudge for approval.

Broader ESG Coverage

As part of our commitment to supporting ESG research moving forward, Sentieo is excited to announce the addition of content from 3BL Media and Denny Ellison to the platform.     

And in case you missed it earlier in the month, Sentieo has has added ESG Risk Scores, powered by Clarity AI, as a dashboard widget in the tool. For more information on the new widget, please see our previous post.

If you are a current Sentieo user, log into Sentieo to read the February 2022 release notes. If you’d like to learn more about the Sentieo Platform, contact us today to meet with a solution executive.

The post February 2022 Release Highlights appeared first on Sentieo.

To that end, the latest addition to our toolset is the ESG Risk Score, available as a dashboard widget. The score is powered by Clarity AI, a leading sustainability data science and technology company.

The new ESG Risk Score widget for the Sentieo dashboard aims to add a new dimension to an investor’s portfolio analysis. It provides ESG risk scores for companies and delivers score breakdowns against the three ESG indicators (Environmental, Social, and Governance). 

This new tool offers an additional way for investors to make informed and socially efficient investments, gaining insights into the measurement and management of a company’s ESG risks and opportunities.

If you are a current Sentieo user, log into Sentieo to read the release notes. If you’d like to learn more about the Sentieo Platform, contact us today to meet with a solution executive.

The post Introducing ESG Risk Scores Powered by Clarity AI appeared first on Sentieo.

Last week we broadcast a webinar on the likely and potential ESG disclosures coming in the US, with Steve Soter of our partner Workiva, the leader in connected reporting. The 30-minute webinar is available for on-demand viewing. 

So, what is coming down the pipeline?

Guidance on materiality: we go over how to apply the existing concept of materiality to ESG, both on a quantitative and qualitative basis. However, introducing multiple stakeholders complicates the issue. 

Quantitative greenhouse gas emissions disclosures: there are three levels of disclosures known as Scope 1, Scope 2, and Scope 3. Scope 1 are emissions that are generated directly from operating the company, such as machinery and vehicles. Scope 2 emissions are indirectly generated by the company, such as emissions from electricity used in heating and cooling of company facilities. The broadest emissions disclosure is Scope 3: emissions generated up and down the value chain. This is the hardest one to quantify properly as it involves a number of assumptions. For example, how many uses will a food smoker see over its lifetime? 

Disclosures on assets at risk for climate change: big climate events dominate the headlines, from hurricanes to wildfires. This goes beyond merely location listings, and into capacity disclosures. Additionally, this would include risk from government-mandated climate initiatives. 

Adoption of standardized disclosures frameworks: similar to US GAAP for accounting reporting, ESG reporting frameworks have increased dramatically in popularity and adoption. The need for standardized ESG reporting is similar to the need for standardized accounting disclosures: this would ensure comparability between companies.

There is also a large number of disclosure requirements coming in the intermediate term. We go over third party audit assurances of reported ESG data, machine readability of reported ESG data, small company exemptions/phase-ins, and standardized, required human capital/diversity and inclusion disclosures. 

Learn more in the 30-minute webinar, available for on-demand viewing. 

The post New ESG Disclosures: What US Investors Can Expect appeared first on Sentieo.

Recently we had the opportunity to present at the Neudata ESG Deep Dive 2021 event. Our presentation focused on where we see strong ESG effects in the financial markets along with a discussion on several accelerating ESG trends found in corporate transcripts. We’ll highlight some of our data visualizations in this blog post, and you’ll find access to the full ten-minute presentation below. 

As we have covered extensively before (see our blog posts on UN PRI compliance and ESG research integration), ESG is of growing importance to both institutional investors and to corporations. In one Neudata presentation example of the effects of ESG, we pointed to the dramatically increased dividend yield spread of the global tobacco industry, versus the US 10-year treasury rate. We took the unweighted average LTM dividend yield of Philip Morris International, Altria, British American Tobacco, and Japan Tobacco, and subtracted the 10-year US treasury rate. We can clearly see that “something happened” starting in 2019. The widening spread is prima facie evidence that widely adopted measures, such as negative screening aka industry exclusions (i.e. not investing in tobacco, thermal coal, anti-personnel munition, etc. companies) is very visible now.

Click here to access the interactive chart viewer

Most of our Neudata presentation focused on accelerating topics across all three ESG segments: Environmental, Social, and Governance. For example, in the chart below, we look at ten years worth of monthly transcript counts where corporations have mentioned “net-zero”. The acceleration in the last two years is nothing short of stunning. 

Click here to access the interactive chart viewer

At the end of the Neudata presentation, we “brought it all together.” We looked at the number of 10-K filings where the Risk Factors specifically mention “sea levels” against search interest for electric vehicles, vs. Tesla’s quarterly revenues. They are all rising, pun intended.

Click here to access the interactive chart viewer

Watch the full Neudata ESG Deep Dive presentation on-demand.

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Institutional investors are incorporating ESG information into their investment processes more than ever to:

• mitigate risk
• comply with regulatory requirements
• meet client mandates
• fulfill fiduciary obligations

Sustainalytics’ ESG Risk Ratings help investors to identify and understand financially material ESG risks in their portfolio companies, including how that risk might affect performance.

“Demand for ESG data is at an all-time high and providing access to that data is paramount to our customers’ success. By incorporating Sustainalytics more than 12,500 corporate ESG research and rating reports into Sentieo’s AI-driven research platform, mutual customers can take advantage of industry-leading research in the workflow they already use every day. We are excited to work with Sustainalytics to empower customers to build smart, long-term ESG investment strategies faster.” Mark Coriaty, CRO, Sentieo

Learn more by joining Sentieo and Sustainalytics for a webinar “Examining ESG Investing Trends with Sustainalytics and Sentieo” on May 6 at 2pm ET.

The post Sustainalytics’ Industry-Leading ESG Research and Ratings Now Available in Sentieo appeared first on Sentieo.

As a UN PRI signatory, firms are required to produce data around incorporation and engagement across asset classes and portfolios that represent greater than 10% of a firm’s AUM. And firms must also centrally track the engagements that take place across an organization by topic and count. 

In addition to support for search and collaboration on ESG insights that I covered in last week’s blog post, the second major UN PRI benefit of partnering with Sentieo for asset managers is centered around our ability to help meet reporting requirements and other expectations of being a UN PRI Signatory. Utilizing our best-in-class platform to follow these 5 simple steps can help lessen the headache and burden of meeting UN PRI reporting requirements while increasing collaboration and communication across the firm. 

Step 1: Utilize Standardized Tags for ESG Factors

Standardized ESG tags used universally across a firm allow for quick aggregation of notes that are created containing those tags. Permissioned compliance accounts can see all, but not edit, notes from across investment teams, allowing them to aggregate total engagements, gain examples of Factor integration, and quickly understand all owned securities at a security, portfolio, and organizational level. 

Step 2: Universal Templates for Content Creation and Permissioning

By standardizing tags, organizations can leverage uniform templates across their investment teams to track analyst and portfolio manager perspectives on ESG factors as well as engagements around ESG. Consistency in format and content allows easy aggregation and consumption by marketing and sales staff, enabling them to find examples of ESG incorporation and impact when responding to demands of clients and prospects. 

Step 3: Centralize Research Content

Standardized tags and templates provide minimal value if they are located in disparate systems that don’t communicate with each other. By centralizing all investment content in a single, appropriately permissioned and secure platform, leverage of this RMS structure becomes powerful, allowing value to be created for the associate, analyst, portfolio manager, marketing, RFP, and compliance workflow.

Step 4: Appropriate Permissioning

By creating appropriate permissioning groups within an organization, centralized reporting agents can leverage the content from across an organization of multiple investment teams and products. This allows an organization to maintain the security and integrity of each team’s individual investment process while meeting the requirements of RFP, marketing, and UN PRI. 

Step 5: Aggregating Reporting

By following the top three steps, and adopting the Sentieo RMS across an organization, producing the metrics required by the UN PRI becomes painless. Our powerful Document Search engine allows users at all levels of an organization to quickly find relevant content and examples, and by combining standardized tags and templates across your organization, pulling aggregated metrics in 3 clicks. 

With powerful permissioning and security features, Sentieo allows you to provide appropriate access to individuals across the firm to easily complete those reporting requirements, respond effectively to client inquiries with context and examples, and provide the specific outputs that may be needed for RFP/RFI inquires.

ESG incorporation into the investment research process is here to stay and becoming a UN PRI signatory is becoming essential to winning institutional and consultant driven dollars.

Learn more about how Sentieo can help institutional investors explore a new, integrated approach to ESG research management that can overcome the challenges and maximize the opportunities of ESG investing in our recent guide. Or contact us to discuss how we can help you integrate ESG research into your workflow and UN PRI reporting.  

The post 5 Steps to Integrate ESG Reporting for UN PRI Compliance appeared first on Sentieo.

The United Nations Principals for Responsible Investment (UN PRI) continues to be a driving force of change among asset managers around the world. The organization’s goal of understanding “the investment implications of environmental, social, and governance (ESG) factors” and supporting “its international network of investor signatories in incorporating these factors into their investment ownership decisions” has seen tremendous progress over the past 10 years.

The number of UN PRI signatories has grown from just 734 in 2010 to 3,038 in 2020 with the AUM managed up from $21 trillion to $103 trillion.

A key requirement for a signatory is that an investment manager must incorporate ESG factors into their investment processes covering a minimum of 50% of the firm’s total AUM. As a result, ESG incorporation and tracking is no longer confined to ESG funds and portfolios. Firms must come up with a plan to incorporate ESG factors into all portfolios and think creatively about how they will aggregate the outputs from each individual fund up to the firm level. 

Becoming a UN PRI also continues to become a necessity for asset managers competing for AUM as asset owners begin to ask within RFPs if an investment manager is a UN PRI signatory across asset classes. Below is an excerpt from a public RFP for an Emerging Markets Equity and Emerging Market Debt mandate for San Bernardino County Employees Retirement Association which directly asks the question of whether or not a manager is a signatory along with requests for details. 

Sentieo can be an essential tool for UN PRI signatories by providing the unique ability to alleviate two headaches for asset managers: search/collaborate on ESG insights and ESG reporting.

8 Ways to Find & Collaborate on ESG Insights

Sentieo’s industry leading AI-powered search identifies ESG factors, insights, and news around a company or portfolio quickly, surfacing relevant issues to users, helping them identify risk, and communicate and collaborate on any relevant findings to incorporate ESG into an investment process, regardless of asset class. 

1. Search inside sustainability disclosures
2. Leverage Sentieo’s powerful synonym/acronym dictionary for more efficient searches
3. Use Sentieo’s category feature to quickly find numbers attached to concepts, for example emission reduction goal tonnage across publicly traded and private entities
4. Benchmark governance disclosures with in-proxy searches
5. Use Sentieo to automate ESG monitoring by setting up instant email, mobile, and desktop Alerts when new documents or data are published for a specific company or a watchlist
6. Save searches of companies, ESG topics, or industry trends
7. Monitor financial metrics, like ROIC, for a watchlist and track a company’s performance on a configurable Dashboard
8. Capture and collaborate on ESG theses and interaction meeting notes

Learn more in the guide we put together to help institutional investors explore a new, integrated approach to ESG research management that can overcome the challenges and maximize the opportunities of ESG investing.

Contact us today to discuss your ESG research integration challenges, and look for my post on ESG reporting next week.

The post 8 Ways to Integrate ESG Research for UN PRI Compliance appeared first on Sentieo.

The State of ESG Research Management

With public, investor, and regulatory pressures rising to integrate environmental, social, and governance (ESG) principles and transparency into investment research and decisions, institutional investors are struggling to find, analyze, and centralize the deluge of information provided by companies and ratings organizations. 

In fact, research conducted by McKinsey in 2019 “highlighted that while 90 percent of companies report on sustainability, only 15 percent of investors can successfully integrate this information into their investment decisions.”

The lack of ability to effectively and efficiently integrate ESG factors into investment research workflows leads to a significant amount of time wasted by expensive ESG and fundamental analysts, missed insights that could deliver better results, and a lack of confidence in ESG-driven investment decisions.

ESG Investing: Mainstream & Delivering Results

ESG investing has come a long way since Who Cares Wins, the report that made the case for integrating ESG factors into capital markets, was published in 2005.

Long considered a niche investment strategy, ESG investing has become mainstream, with assets under management using sustainable investment strategies on the rise across the globe:

The US SIF Foundation’s 2020 biennial Report on US Sustainable and Impact Investing Trends found that sustainable investing assets account for $17.1 trillion or 33% of the total U.S. assets under professional management–a 42% increase over 2018.

PwC Luxembourg’s late 2020 report, The growth opportunity of the century, called ESG a “paradigm shift” with European ESG assets forecast to make up “41% to 57% of total fund assets in the region, compared to the 15% of assets ESG accounted for at the end of 2019.”

In 2019, research from The Economist Intelligence Unit found that 76% of Gen X and Millennials in the UK say “it’s increasingly important to consider ESG factors when investing.”

And from Morningstar to Morgan Stanley, JUST Capital, RBC Global Investment Management, and Goldman Sachs, research shows that ESG investing pays off in terms of performance and returns.

ESG Research Obstacles

Despite strong returns and rising interest in ESG investing, institutional investors continue to struggle with the best way to confidently integrate ESG factors and research outputs into investment decision-making processes.

Proliferation of documents and data

The growing amount of financial and non-financial data points and documents that need to be consumed by ESG analysts and the typically small teams doing primary research is overwhelming, requiring complex fact-finding exercises and use of multiple tools and channels for sourcing from:

• Publicly-traded companies
• ESG ratings organizations (such as Sustainalytics, JUST Capital, and MSCI)
• Sell-side research
• Industry oversight groups

Lack of transparency and standardization

There are no standards for corporate sustainability reporting and disclosures as there are for financial disclosures, making it difficult to validate claims and reconcile this information to make comparisons between companies.The same thing applies to the growing body of third-party ratings, all of which have their own methodologies for evaluating a company’s track record on ESG factors.

Fractured research workflows

With disjointed processes and systems used to conduct and track research across teams of ESG and fundamental analysts, capturing and auditing all of the source material and engagement interactions–internally across teams and externally with company management–is time consuming and resource intensive at best and nearly impossible at worst.

Regulation on the Rise

When it comes to transparency and standardization of methodologies and reporting to support ESG investment strategies, legislators and regulators are starting to step up, particularly in Europe.

Europe’s SFDR Deadline Approaching

The first major milestone in the European Commission’s Action Plan on sustainable finance is swiftly approaching, with a March 10, 2021 deadline for compliance with SFDR, the Sustainable Finance Disclosure Regulation. SFDR imposes transparency and disclosure requirements on institutional investors and asset managers, including:

• Written policies on the integration of sustainability risks in the investment decision-making process
• Information on the methodologies used to assess, evaluate, and monitor the effectiveness of sustainable investments
• Periodic reports on the impacts of sustainable investments

UNPRI Signatories Growing

Some 2,600 global asset owners and managers, representing $103 trillion in assets, have committed to incorporating ESG issues into their investment analysis and decision-making investment processes by signing the United Nations Principles for Responsible Investment (UNPRI). Compliance with UNPRI mandates includes:

• Incorporation of ESG factors into 50% of total AUM
• Centralized capture and aggregate reporting of both internal and external engagement on ESG factors

SEC Exploring ESG Disclosure Standards

With Europe moving full speed ahead on regulating ESG disclosures, the Securities and Exchange Commission (SEC) is looking to catch up with the agency’s investment committee recommending with creation in May 2020 of a framework for ESG disclosure.

A New Approach to ESG Research Integration

Positive performance and returns combined with growing public, investor, and regulatory pressures to integrate ESG factors into investment strategies is driving greater interest in a new, integrated approach to ESG research management that incorporates content aggregation, NLP-powered search, notes standardization, and compliance in a single platform.

Learn more in the guide we put together to help institutional investors explore a new, integrated approach to ESG research management that can overcome the challenges and maximize the opportunities of ESG investing.

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