The last year has seen an incredible and exponential uptick in global demand for sustainable funds. Inflows, having already shattered records in 2019, grew tenfold in the last twelve months. Unfortunately, non-financial data has failed to keep investors informed of the true impact of those funds. To address this alarming trend, Util has unveiled an objective, comprehensive and scalable alternative to traditional environmental, social and governance (ESG) analytics.
Events such as the recent Boohoo scandal have put the ESG data market under sharp scrutiny. While there are a plethora of data providers, there is little agreement between them: correlations average a meagre 0.54. If data providers disagree on the criteria, scope, and relative weight of ESG considerations, how can investors know their investments are truly sustainable?
Patrick Wood Uribe, CEO, Util said: “The disparity between growing demand and inadequate supply is a recipe for greenwashing at best, a bubble at worst. It has led to investments being mis-sold as sustainable, when in reality, they’re inconsistent with investors’ values.” (Just 6.7% of European funds labelled as ‘sustainable’ explicitly screen out or reduce exposure to fossil fuels.)
It’s time for a different system. Using natural language processing, Util measures the myriad ways in which 50,000 listed companies—no matter the size, geography or industry—affect the 17 United Nations Sustainable Development Goals (SDGs).
Wood Uribe added: “There’s a growing backlash to ESG ratings on the basis of quality and availability. Traditional data tends to rely on subjective assessments and so can be a poor basis for investment decisions. Understanding the real-world impacts of multiple businesses is a difficult and time-consuming process for investors seeking to react to a changing market quickly.”
He added: “Util is a qualitatively different offer, designed to capture complexity at scale. We’re on a mission to increase information transparency across the industry, and look forward to helping investors make investment decisions that truly align with their values.”
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