The Quest for Alternative ESG Data: Sensefolio
After days and hours spent on looking for the best alternative ESG data provider, we think we’ve found the right one — it’s called Sensefolio.
They are using A.I. for the good of investments.
“Does your portfolio make sense?” (Sensefolio motto)— ie. is your portfolio fully ESG-compliant? What insights do your ESG data provide? Most of the ESG data are now converging towards a steady point. Metrics such as gender equality or board of directors’ composition are among the most popular ones. But how do we find signals in it? Are there any ESG data providers giving us more information for current and prospective investments?
Sensefolio consider themselves as an Alternative ESG Data provider. What does it mean? They are providing data that take into account not only what companies themselves are reporting, but also what internal and external stakeholders are reporting.
Examples include reviews from employees of the covered companies, social media posts, as well as news from various sources, including NGO reports.
“It doesn’t make much sense to only take into account what the companies are reporting. It would be too subjective and completely biased. Companies are not going to say bad things about their acts and structures. What is also very interesting and very significant to integrate as part of our solution is what the internal/external are saying about these companies. At Sensefolio, we want to have a very broad overview of what companies’ ESG policies and acts are. This means taking into consideration viewpoints , perspectives and thoughts from everyone.” says the Chief Data Scientist, Olivier Khatib.
Sensefolio takes also into account all the controversies that companies are facing. All violations from companies are recorded and adjust the companies’ ESG Scores. This can include topics such as money laundering, any sort of discrimination, child labor, customer privacy violation and tax fraud.
“ESG has become a huge buzzword and every single asset manager is rushing into it - most of the time falling into the ‘greenwashing trap’. Once they will recover from this, they will start adopting their own frameworks with the help of Alternative ESG data that we provide.” adds Olivier Khatib.
“Asset managers are now realising that they need to obtain data they [the whole industry] don’t have yet. So, they’re calling Sensefolio in order to check the signals their peers haven’t yet integrated.
It’s for both the pursuit of alpha, and the pursuit of new data not available from the ESG data providers’ oligopoly.” adds Olivier Khatib
Sensefolio doesn’t want to disclose their list of clients to keep the signals to a few customers.
Now comes the question of why Sensefolio is relying so much on AI? Sensefolio claims they are retrieving alternative data on companies from more than 100,000 different sources of information. Considering they are covering more than 20,000 listed companies, and now more than 11,000 private companies, it might then end up as being Big-Data… Let us understand better the relation between AI and ESG.
We asked for permission to access their platform to deep dive into the different sources Sensefolio are currently integrating.
How about the “Compliance Environmental Regulations” score for BP plc?
How about the “Board Leadership” score for Alphabet Inc.?
How about Sensefolio’s global coverage? Do they cover much in Asia and Africa?
“We have quite a good coverage in Asia and Japan, but it is fair to say that it’s not as good as the coverage we can have for European and American companies. This latter provides much more information and are undoubtedly more transparent, especially when it comes to sustainability and ESG reports.” says Olivier.
An AI and Machine Learning / Research — dedicated team…
The Sensefolio Market Intelligence team carries out various research on sentiment analysis using Big-Data. This includes research not only on Environmental, Social and Governance topics, but also on politics (with their work notably on the 2019 UK General Election in which they predicted the trend of the elections).
To find out more about Sensefolio:
Sensefolio Website:
https://www.sensefolio.com
Link to the Sensefolio documentation: https://www.sensefolio.com/Sensefolio_TechnicalPaper.pdf
Article written on the 18th of September 2020.
An article from Alt-Data Insights.
keywords: esg alternative data, alternative esg data, esg data, esg data provider, alternative esg data provider
