Firms use artificial intelligence for ESG index

Machine learning and artificial intelligence will play a part in the new indices from Solactive and Truvalue Labs

German sustainable index constructor Solactive has announced a partnership with American data research group Truvalue.

Working in collaboration, the two companies are planning to create a new range of environmental, social and governance indices that use machine learning and artificial intelligence to score companies in their ESG credentials.

Truvalue Labs looks at unstructured data sets from more than 100,000 sources to create an independent view on corporate ESG performance instead of using corporate disclosures as the foundation.

Hendrik Bartel, chief executive officer and cofounder of Truvalue Labs, said the company will provide “timely” signals that are sourced from transparent data.

He explained: “With Solactive, we are pleased to find a partner that shares our values and vision with respect to AI and ESG.”

The initial set of indices in development use the Solactive Global Benchmark Series as the starting universe. Companies with substantial data, a high Insight Score and a Truvalue Labs ESG rating are eligible for inclusion. Clients are able to form regional or domestic index combinations.

Steffen Scheuble, chief executive officer of Solactive, said the company wanted to find new ways to identify trends in ESG performance that aren’t purely based on corporate disclosures.

He said: “We are looking for innovative ways to uncover insights from ESG data. Quality and timeliness in ESG data are high priorities for investors.

“As a company that puts substantial research into machine learning and natural language processing, we are very confident that we have found an ally in Truvalue Labs, which also has artificial intelligence as its core competency.”

Related: Report – Time to rethink ESG index construction