Daily ESG Briefing: Arabesque launches AI tool for active sustainability strategies

The latest developments in sustainable finance

Arabesque has launched what it claims is the “world’s first fully AI-powered portfolio manager that emulates the human decision-making process”, to deliver actively-managed sustainability strategies. AutoCIO runs through Google Cloud, forecasting the performance of 25,000 stocks using artificial intelligence. “As new data is inputted, the AI Engine re-learns what is driving stock returns and aims to improve over time, removing human biases and reducing the potential for errors,” Arabesque said in a statement. The German asset management and ESG data house added that AutoCIO was already underpinning $400m of investment strategies, but did not disclose further details on its clients or mandates. 

UK pension funds Railpen and Tesco Pension Investment, and Denmark’s AP Pension are among 12 new asset owners to join the Paris Aligned Investment Initiative’s Net Zero Asset Owner Commitment. The group, run by the Institutional Investor Group on Climate Change and its regional counterparts, now has 14 members with more than $2.36trn in assets. The commitment requires them to decarbonise their portfolios by setting interim climate targets, increasing investment in green solutions and engaging with portfolio companies. Superannuation fund HESTA became the initiative’s first Australian member, and the UK-based London Pension Fund Authority also signed up. 

A group of investors managing more than $2.5trn in assets are calling for governments to mandate Net Zero accounting disclosures in companies’ financial statements. In a letter to COP26 President Alok Sharma the investors, including for example Sarasin & Partners, AP2, Brunel Pension Partnership, Candriam, Church Commissioners for England and KBI Global Investors, urge governments to set clear and urgent timelines for companies to produce accounts that “consider the global transition onto a 1.5C pathway”. The investors are also calling for requirements for auditors to ensure they call out companies failing to do so. 

The UN Sustainable Development Goals (SDGs) financing gap is at $100trn, according to a new report by Force for Good, an organisation working with financial institutions to mobilise the deployment of capital to, for example, sustainable development. The report, written in collaboration with the UN, says that additional annual funding worth roughly one-tenth of global economic output will be needed every year to meet the SDGs by 2030. 

Financial services provider Apex has launched a Carbon Footprint Assessment & Reporting product for the private equity market, which quantifies and reports on companies’  Scope 1, 2 and 3 emissions and calculates a carbon footprint.  Its team of analysts will also offer guidance to help funds and companies reduce their  carbon footprints and recommend “verified carbon offsetting projects and schemes, so that businesses can offset any residual and unavoidable emissions to achieve carbon neutrality”.