Why Corporations Should Pay Attention to MALENA
Learn how the International Finance Corporation is harnessing artificial intelligence to deliver critical ESG data
We recently participated virtually in The 2023 UN World Data Forum held in Hangzou, China. Although the Forum — like all UN events and communications — emphasized that we are not on track to achieve many of the global targets set for the Sustainable Development Goals (SDGs) by 2030, we remain optimistic about the SDGs as a framework for advancing global development and believe corporations with good environmental, social and governance (ESG) practices can play an outsized role in advancing SDG progress.
Our optimism is bolstered by the hundreds of examples of new, improved, and more integrated initiatives presented at the Forum, like MALENA.
What is MELANA?
MALENA is an AI-powered software developed by the International Finance Corporation (IFC) of the World Bank Group. It provides an impartial evaluation of a company’s ESG performance using real-time data.
MALENA helps corporations advance SDG progress by fostering data-driven, strategic decision-making internally and signaling to external stakeholders that the company is committed to advancing positive social and environmental impact.
How Does MALENA Work?
The software employs natural language processing (NLP) of unstructured text data, such as news articles, sustainability reports, and bond prospectuses. By analyzing factors such as carbon emissions, labor practices, diversity and inclusion, and supply chain management, MALENA generates a score for a company’s overall ESG performance.
With over 1,200 pre-determined ESG risk terms, like “child labor” or “water pollution,” MALENA’s NLP model assigns a positive, negative, or neutral sentiment for each term based on context. The software boasts a 90% accuracy rate and has been tested on more than 48,000 documents, making over 15 million sentiment predictions.
How Corporations Can Use MELANA
- Benchmarking ESG performance against industry peers and identify areas for improvement or competitive advantage.
- Identifying potential regulatory and reputational risks, and developing risk mitigation strategies.
- Monitoring progress in implementing sustainability initiatives and meeting ESG targets over time.
- Improving ESG disclosures to enhance transparency and demonstrate commitment to sustainability to investors, customers, and other stakeholders.
- Attracting impact investors and those investors whose values align with the company’s environmental and social impact priorities.
- Evaluating the ESG performance of suppliers and partners, ensuring that the entire supply chain aligns with its sustainability values and goals.
- Informing strategic decision-making, ensuring that ESG considerations are integrated into all aspects of the business, from product development to marketing and operations.
- Boosting employee morale, engagement, and loyalty with demonstrated social and environmental responsibility activities.
- Facilitating collaboration between different departments to work together on developing innovative solutions to enhance the company’s overall ESG performance.
Conclusion
Good ESG practices are not just key to sustainable and ethical business practices but also pivotal to long-term profitability. MALENA’s ability to provide real-time, objective insights into ESG practices from a variety of external sources gives corporations a much-needed tool for identifying areas of strong ESG performance and areas needing improvement. It should be an essential part of any corporate leader’s toolkit.
Additional Resources
UN World Data Forum Session on MALENA: IFC’s Machine Learning ESG Analyst: Harnessing Artificial Intelligence to deliver critical environmental, social and governance data for emerging markets
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This article was written with the assistance of Otter.ai’s transcription tool and OpenAI’s ChatGPT4.
