Brunel Pension Partnership using artificial intelligence to monitor managers’ ESG performance

Asset owners are increasingly able to check up on their fund managers

Brunel Pension Partnership (BPP), the £30bn (€33.7bn) UK local authority pension scheme, is now able to monitor the real-time ESG performance of its portfolio managers by using artificial intelligence to analyse alternative and unstructured data sources.

It has emerged that BPP appointed AI firm TruValue Labs in May this year to evaluate ESG and reputational risks across its portfolios, in both listed equities and fixed income. Financial terms weren’t disclosed.

Brunel has joined the likes of Japan’s Government Pension Investment Fund (GPIF) and Dutch giants APG and PGGM in utilising AI for sustainability.

In July, RI reported that APG was using artificial intelligence to filter out sustainable investments – reducing the “huge” manual effort to assess 10,000 companies.

This has developed into an AI-powered platform for investing in the UN Sustainable Development Goals with PGGM.

In August GPIF investment chief Hiromichi Mizuno told a CalPERS investment committee meeting that the giant fund was working with the Sony Computer Science laboratory to monitor asset managers’ behaviour.

San Francisco-based TruValue uses natural language processing and AI to scour thousands of sources for insights into company ESG performance, based on the Sustainability Accounting Standards Board (SASB) Materiality Framework.A TruValue statement quotes Brunel’s Chief Responsible Investment Officer Faith Ward as saying: “We have actually used the tool quite extensively in a live fashion in manager meetings. When a manager wants to articulate a case for a particular company, we can also dynamically look up company information on the fly as well to dig deeper—a real advantage.”

“We have actually used the tool quite extensively in a live fashion in manager meetings” — Brunel’s Faith Ward

“We think that this combination of the long-term score and momentum is a strength over other tools that may use just a single rating. If a company has scored well historically but now has negative momentum, that can be just as concerning as a company with a lower score.”

According to Brunel, insights from the Platform will also feed into shortlisting of managers during the manager appointment process.

TruValue was founded by former Amazon employee Hendrik Bartel and has raised $8.5m of venture capital funding to date, according to the company.

See the earlier article: ESG Frontiers: Artificial intelligence: The rise of the responsible robots