HSBC has launched a global index that uses artificial intelligence to assess the improvement of the company’s ESG indicators and their potential in terms of the possibility of influencing the growth of financial dynamics.
The index was developed by Arabesque AI and is based on ESG Book data. The digital indicator was created to track the dynamics of the price range of more than 100 liquid shares of global companies. According to the developers, these firms will benefit in the form of financial growth from the improvement of their ESG risks.
Yasin Rozovsky, co-founder and vice president of engineering at Arabesque AI, said that according to the results of a special study, it was found that investments in stocks showing ESG momentum exceed the annual return compared to S&P’s global performance over the same period. According to him, this means that there is a positive correlation between the transition of companies to more sustainable business strategies and the level of their financial performance.
ESG Book calculates the ESG score for each component of the index. In this case, natural language processing is used for the daily collection of relevant publicly available sources, including ESG-related news and NGO data.
Arabesque AI calculates the ESG momentum indicator every six months. This procedure is necessary to determine the dynamics of the indicator.
Investors will be able to direct financial resources to the development of products that track the index. In this case, capital should be used to improve ESG.
Patrick Kondardjian, Global Head of Sustainable Markets and Securities Services at HSBC, says that the HSBC ESG Risk Improvers Index allows investors to access stocks that demonstrate positive ESG dynamics. According to him, this is a reliable financial indicator that allows you to determine future results at a high level of accuracy.
This approach contrasts with the traditional investment methods of ESG best-in-class or ESG integration, which are aimed exclusively at high ratings regardless of the dynamics of stock performance.
As we have reported earlier, HSBC Hong Kong Debuts POS Financing for B2B Sales.
