Blog: Two ways Artificial Intelligence will reshape Environmental, Social and Governance (ESG) Investing
Machine learning and artificial intelligence will reshape many industries and in ESG aware investments it is no different.
Here are two of the greatest opportunities for investors and ESG professionals.
Data analysis at scale
In many industries AI presents the opportunity to analyse both structured and unstructured data (text documents, Tweets) will provide access and the understanding of data on a scale that we currently do not have.
The reliance on individuals to judge the ESG performance of a company will be replaced by systematic ways to delve wider and deeper into a companies performance, exposure exponentially reducing the time taken to gather and analyse information.
The availability of gigabytes of data will allow ESG professionals to make more sophisticated and fully aware decisions.
Complex Risk Identification
Risk is a clear part of ESG investment and the complexities of understanding the full extent of risk can be difficult to understand.
Machine learning models can be used to understand risks to society and the environment (e.g. pollution). Perhaps most interestingly will be the ability to integrate alongside these risks considerations to a companies climate resilience and exposure, for instance to an organisations supply chain. This is increasingly important in ever complex supply chains and globalised companies.
David Brown runs MishaAnalytica.com a consultancy using Artificial Intelligence and data science to solve some of the biggest problems facing the planet.