[MUSIC] Let's introduce our panelists today. So on the data collection and provider side we have Shirley Berman. Who's a quantitative researcher at facts that owned to value labs. Welcome Shirley. We also have good luck. Thank you Shirley welcome. Also, 11 Filipova. She's global head of ESG at Refinitive. Welcome to Elena also to provide some commentary and analysis for us. We have Ari's Alden, the CEO of Quantum Research group and we have RESG manager here at BKR Eddy Soffer. Welcome Eddie. Welcome everyone. I'll begin by providing some brief background about big data and ESG. Investing that I came across when putting together the ESG investing course we have here on Abby Cars traders academy. It appears that when traders and investors conduct their due diligence or perform fundamental analysis on ESG related issues. Whether on a stock or fixed income or other financial product, there are massive amounts of variables to distill. Since this process may be quite onerous, if not nearly impossible to do without some form of help from more advanced technology companies. Such as facts that aren't true value labs and refinitive have established certain big data driven tools and scoring systems to aid in this effort. Artificial intelligence sentiment analysis algorithms, natural language processing, among others. Each of these have been employed to arrive at a picture of a company's ESG profile. To help determine whether or not it aligns with or adheres to practices that are against and investors own personal values. And that's where also I be KRS tools come into play and we'll talk more about how the data is collected. How it's evolved and how it scored and presented to traders and investors at IVR. But before we even get into the data and the data science and the tools that help drive financial decisions in the ESG. Investing sphere, I want to present this quote to our panelists to help clarify what ESG means if indeed it even needs an explanation. So I'll explain this. In early March of this year, John Coates, the SSC acting director for the division of corporate finance. Made some comments in a statement that was published in connection with the speech he gave at the Tulane corporate law Institute. Here's is the quote and I'm reading this passage from this statement in the context of the challenges of regulatory disclosure pertaining to ESG. The coach said I'm quoting this from the screen here too. And you can read along that ESG no longer needs to be explained, illustrates how important these issues have become. To today's investors, public companies and capital markets. It also illustrates the pace of ESG developments. There remain substantial debate over the precise contents and details of what ESG disclosures might or should encompass. So, my question for each of you on the panel is do you think that there remains a population that still needs an explanation of what ESG is?. And and how do you define ESG. And let's start with Elena. >> Good morning, everyone in good afternoon and thanks for having me. I think that it's not so much about, do we need the definition? I think everyone has their own definition. We need an alignment of the definitions that exists out there. For us at refinitive ICI has always been defined, and when I say always, I mean for the last two decades. That we've been active in the space and servicing the investors with the data. ESG is fundamental investment, creates data and, what it it really allows users to do is to go beneath the surface. And understand a lot of the depth and breadth of actual considerations that are many times left not understood. And not properly valued, to make more informed investment decisions and respond to new emerging systematic financial risks. So it's important to understand that ESG is moving away from being a nice to have associated with a low entropy to actually being defined. And agreed by regulators and by the market is presenting very real systematic financial risks. So it is attractive not only for investors that want to deliver financial results, but it's also attractive to investors that want to ally on their investments. To with their personal objectives, beliefs, impacts that they want to have on the environment, on the society. And the two are very closely related and interlinked. >> Surely would you, agree with Elaina's description of ESG. How do you define it? >> Yeah, absolutely. Thanks so much, Stephen. So my view on ESG is that it is an evolving set of characteristics and behavior that can really impact the value of the company. So regardless of if it's measured in financial or societal terms, so it's really that in today's world the overwhelming majority of value of company value. Is driven by these intangible factors where these intangible factors can be defined by the ESG characteristics of the company. So, for example, from an ESG perspective, these financially material intangible factors represent things like data. Security, customer privacy, product quality and safety as well as energy management. So it's not that people don't know or utilize or really know understand how to utilize ESG is, how does one define ESG. So we know that there's a relationship between sustainability and future financial performance. So the real question that investors have to ask themselves are in this environment. How do we truly measure and capture ESG. And to really understand what a company is doing, both from the positive and the negative side. So in other words, looking at both the risk and the opportunities that companies hold past. >> Ari, how do you define ESG, would you agree with our other panels? >> I don't know, I would push maybe this is just me being taking the devil's advocate approach or just being a very combative New Yorker. But I would tell you Steven that the I don't think that the average investor knows what what ESG is. I think the capital markets guys have probably heard it as a buzzword the investment bankers by itself. So I think they're hearing the term. If you were to ask them what the definition is, I'm not, what the letters stand for, I'd be surprised if a lot of them knew. Let alone a definition of exactly what ESG is. So I guess the industry as a whole, all of us who are ambassadors of the course need to come out with the unified standard. An agnostic platform if you will to be able to start creating and defining what exactly ESG. because I think going back to my statement, I think that it has an identity problem is that, it's so broad, environmental social governance. Well I think you need to have the who, what, where, why and when and I think it lacks that. So I think words are important and I think we need to define that in my gut is. And it could be way off but I think the UN. Kind of this is a bit out there Stephen, but I think the United Nations, similar to what they did with the SDG is the sustainable development goals. How they started creating meaning around that. I wouldn't be surprised if the UN got involved in terms of trying to explain and build a framework and standards around ESG. And then the rest of the community. Financial community will kind of follow suit. So that's my thoughts around that. >> Eddie, what do you think? Do you think that there is a population out there that still needs an explanation of what he ESG is. How do you define the ESG. >> Yeah, it's a very interesting question, I do agree with Ari. I do feel that outside of financial services a lot of people don't know what ESG is. Even as Ari eluded, the average investor or someone that's just getting started does not know what it is. They probably heard it through other terms like sustainability or responsible investing that resonates more. So I think we still need to do more work to get that definition polished or better framed. What's interesting is I think it also depends on the geography where we are located. In the US ESG is not as advanced as it is in Europe or Australia or Canada. We're probably, more people know about ESG. So I think we are rapidly catching up here in the United States. Especially with the new administration in terms of providing a uniform framework. I hear what we're already seeing and others, which I think is definitely necessary. But those kind of things are already happening. We see, for example, Sassy, the sustainability accounting standards board just announced it's going to be merging with my IRC. The International Degree of Reporting Council, all in an effort to simplify the reporting frameworks. And I think that's going to allow to have a more uniform way of defining what ESG is for everyone and also for companies. [MUSIC]
