Augmenting ESG Ratings With NLP for Better Investments

With the increased focus on ESG, over the next couple of years financial institutions will be pressured to incorporate more and better data. Relying on ESG-ratings alone won’t be enough to convince regulators that investment firms are putting maximum effort into serving their clients right.

We believe that ESG ratings, in their current form, prove insufficient for adequate risk management, due to lack of coverage for non-listed and private assets and other secondary drawbacks, as well as struggle to promote investment objectivity. However, if complemented with real-time technology that ensures continuous news monitoring, they can be a sound basis for a collaborative solution that fully satisfies investment managers’ needs and regulators’ requirements.

This white paper examines the drawbacks of current ESG ratings and how their effects translate through the chain to investment firms and their clients. The analysis examines how a platform like Owlin can help build upon the existing ESG rating methodologies to ensure financial institutions are ESG-compliant and better positioned to safeguard their reputation.

It also takes a look at how the risk management team at NN Investment Partners uses Owlin to complement its ESG ratings and in-house scoring models to serve its clients sustainability-aligned investment opportunities.