Dutch giant APG using artificial intelligence to filter sustainable investments

In-house algorithm reduces huge effort to assess companies

Dutch pension asset management giant APG says it is using artificial intelligence to filter out sustainable investments – reducing the “huge” manual effort to assess 10,000 companies.

APG, which manages €505bn, has teamed up with fellow Dutch pension provider PGGM to develop a framework for determining which companies contribute to the United Nations Sustainable Development Goals (SDGs). They call these investments Sustainable Development Investments (SDIs) and they must satisfy regular return, risk and costs criteria.

“If a company provides a real contribution to the realization of SDGs, we regard this as an important advantage and an extra argument to invest in that company,” APG says.

But the problem is how to assess the investible universe. The solution is AI.

“In order to determine whether a company contributes sufficiently to the UN Sustainable Development Goals, we must determine criteria and then make many choices based on these criteria,” APG says in its new responsible investment report for 2018.“We did this manually in 2017 for thousands of companies. It requires a huge effort to do this every year again. That is why ENTIS, our data analysis team, has developed a unique method to assess SDIs with the aid of artificial intelligence.”

ENTIS uses algorithms to determine whether an investment can be regarded as an SDI, based on criteria formulated by APG, which added: “Of course, human intervention is still required.

“At the end of 2018, ENTIS had assessed all 10,000 companies.”

APG, which is owned by civil service pension fund ABP, said by the end of the year it had invested €69.2bn (2017: €55.3bn) in such SDG-friendly companies, or around 15% of assets under management.

The report also notes that the carbon footprint of APG’s equity investments decreased by 28% in 2018 (against the reference year 2014).

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