ESG data are becoming ubiquitous in the financial industry. The offering keeps increasing and asset managers are endeavouring to find the best ones in terms of consistency, robustness and quality of the underlying data.

We have analysed and discerned 3 major ones:

  • Sensefolio
  • Arabesque
  • MSCI
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1. Sensefolio

“Give Sense to your Investment Portfolio”

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https://sensefolio.com

Description

Sensefolio allows you to track and assess 20,000+ companies’ ESG involvement with the help of Sensefolio’s NLP and Machine Learning Algorithms.
Sensefolio aggregates data from more than 100,000 sources of information (i.e. financial news, financial reports, ESG reports, company reviews, as well as social media posts) before giving a score for companies out of 10.

Sensefolio is best for …

Machine learning and Natural Language Processing (NLP) techniques applied to read and aggregate big-data formed by reading so many sources of information. Indeed, Sensefolio reads not only news on the companies they cover (20,000 companies) but also their financial reports, ESG reports, company reviews and social media posts.
In this way, Sensefolio is reading all the information that are publicly available and applying leading-edge technologies on them while following the Sensefolio ESG Framework (SEF) that is listing more than 150 criteria.

Sensefolio has also constructed an ESG framework for countries (ie. Sensefolio Country ESG Framework — SECF) allowing them to rate countries as well using more than 150 criteria and relying on publicly available data (eg. news, the UN and the World Bank data).

Scores calculated using global and already known ESG and sustainability standards, such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the UN Sustainable Development Goals (SDGs).

You absolutely have to go with Sensefolio if …

  • You are a Quantitative Asset Manager or Hedge Fund relying on low-latency databases.
  • You don’t want to fully rely on ESG data that are rarely updated and solely relying on the companies’ annual and ESG reports (thus being updated every quarter).
    Sensefolio updates their scores on a near- real time basis (ie. as soon as they receive new information from any sources of information they are inputing into their model).
  • You have a global coverage of companies (indeed, Sensefolio covers around 12,000 global companies and are handling Chinese and Japanese companies very well).

2. Arabesque

“We are the Sustainability Quants”

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Description

Smart and simple to use, Arabesque S-Ray® looks beneath a company’s surface by assessing its extra financial performance, helping us to better understand its value to society.

Through machine learning and big data, Arabesque S-Ray® systematically combines over 200 environmental, social and governance (ESG) metrics with news signals from over 50,000 sources across 20 languages.

It is the first tool of its kind to rate companies on the normative principles of the United Nations Global Compact: Human Rights, Labour Rights, the Environment, and Anti-Corruption (GC Score). Additionally, Arabesque S-Ray® provides an industry-specific assessment of companies’ performance on financially material sustainability criteria (ESG Score).

Arabesque is best for …

Arabesque, through its S-Ray platform, provides data to clients such as Deutsche Bank, State Street and BNY Mellon (Sensefolio preferring not to show a list of clients).

You absolutely have to go with Arabesque if …

You are looking for a somewhat simplistic aggregation of data and framework. Indeed, Arabesque follows the principles of the United Nations Global Compact, making its scores less prone to diversification.

3. MSCI

“The world is changing. With it, the world of investing is changing.”

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Description

MSCI ESG Research provides in-depth research, ratings and analysis of the environmental, social and governance-related business practices of thousands of companies worldwide. Our research is designed to provide critical insights that can help institutional investors identify risks and opportunities that traditional investment research may overlook. Our clients use our research to help implement their responsible investment objectives.

MSCI is best for …

Being a global pioneer in various kind of data (equity, fixed income, hedge fund stock market indexes, and multi-asset portfolio analysis tools).
Even though the other ESG data providers (such as Sensefolio, Arabesque or TruValue Labs) provide much more sophisticated data and analysis, MSCI has a strong infrastructure, allowing them to be constant and reliable in what they deliver.

You absolutely have to go with MSCI if …

You are looking for a robust provider which, although is not updating its scores on a very regular basis, has a large team dedicated to ESG and a long career and history in research.

This article was written by Alt-Data Insights.
Edited on 17th March 2019.

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