Purpose-driven investment is on the rise. Institutions and retail investors alike are increasingly looking to ESG performance, for reasons of conscience and to secure better returns. Today, it's estimated that there are USD 45 trillion of assets under management in the ESG market and up to one-quarter of consumer spending is now “purpose-driven.”
However, formal, standardized ESG reporting is currently only available from a few large corporates. Fund managers looking for an objective score of how the majority of companies perform on difficult to quantify metrics such as diversity and inclusion must trawl a huge range of diverse sources – for example, social media, news reports and official statements. It’s a monumental task. As a result, it’s hard for investors to build in-depth ESG performance into their strategies – and also difficult for companies to promote their ESG credentials to investors. This complexity can be solved with technology, automating data and portfolio records, while providing granular views, combing through multiple criteria such as ESG and beyond.
“While sustainable investing is becoming mainstream, the lack of simple, transparent, and comprehensive data to measure the ESG impact of investments continues to be a challenge.” Corrine Grillet, CEO, Alygne.
This is the problem that Finastra hackathon winner Alygne set out to solve with its Responsible Investors solution, which seamlessly generates and provides ESG metrics for asset managers within Fusion Invest, Finastra’s portfolio management solution. Via a suite of open APIs Fusion Invest has available on the FusionFabric.cloud platform, fintechs like Alygne can access information such as fund definitions, portfolio analytics, and accounting analytics.
Using this information, Alygne is able produce ESG metrics at a company level according to an asset manager’s specific needs. This is done by quantifying ESG compliance scores of multiple facets using natural language processing and machine learning to read press releases, social posts and corporate announcements. Alygne’s data can then be integrated back into Fusion Invest portfolio management, alongside data from providers such as Bloomberg and Refinitiv. Fusion Invest can then calculate ESG scores at a fund level.
The result is a holistic view that enables fund managers to make more informed investment decisions based on both financial and ESG performance, that cater to evolving market regulations and conditions. Data can also be made clearly available to retail and institutional clients, enabling institutions to promote ESG capabilities to their end customers. Alygne and Fusion Invest’s collaboration aims at augmenting investment decision-making capabilities, combining best-of-breed portfolio management with advanced ESG functionality.
In a segment of the market that is growing fast, Alygne’s award-winning solution points to a new way to assess investment performance.
“Partnering with Alygne on The Responsible Investors’ winning submission for the 2020 #HacktotheFuture hackathon, we had fun building a demo in the shape of a movie with a great cross-cultural team, to provide an integrated solution that enables the end client to assess ESG metrics and make better informed investment decisions”. Alexis Beuve, Head of Product Delivery, Finastra.
To discover more about ESG Funds using Fintech AI and Natural Language Processing on the Finastra platform, visit FusionFabric.cloud.
Jia Yin Tan
Jia Yin Tan is a Product Analyst at Finastra. As part of the Product Team for Fusion Invest, she works on enhancing the product offering especially with respect to Investment Accounting and Fund Management.
Jia Yin holds a bachelors' degree in Engineering from the National University of Singapore...
