Introducing GaiaLens®: AI-Powered ESG Analytics for Investors
Updated: Oct 6
In recent years, Environmental, Social, and Governance (ESG) considerations have taken centre stage as the world becomes more attuned to the pressing issues of sustainability, responsible corporate practices, and ethical governance. This trend holds particular significance for institutional investors.
In the fiduciary role they embody, institutional investors shoulder the responsibility of safeguarding the optimal long-term interests of their beneficiaries. Within this purview, ESG issues exert a substantial influence on the performance of investment portfolios – to varying degrees across companies, sectors, regions, asset classes, and through time.
A notable shift is occurring as asset managers globally anticipate raising their ESG-related assets under management (AuM) from US$18.4 trillion in 2021 to a projected US$33.9 trillion by 2026. With an expected compound annual growth rate (CAGR) of 12.9%, ESG assets are poised to represent 21.5% of total global AuM within five years. This transformation reflects ongoing changes in the asset and wealth management (AWM) sector, as highlighted by PwC's Asset and Wealth Management Revolution 2022 report.
According to the survey, there is a prevailing belief among asset managers that integrating ESG into their investment strategy will improve overall returns. While a substantial 60% of institutional investors indicate that ESG-focused investments have already delivered better performance when compared to non-ESG alternatives.
The bedrock of sound investment decisions lies in data. ESG metrics, drawn from various factors related to the environment, social impact, and governance practices, guide investment choices. These analytics offer investors a comprehensive view of a company's policies, practices, and performance beyond just financial aspects. The integration of data-driven insights has shifted ESG considerations from the sidelines to central factors in investment strategies, driving the pursuit of long-term value and sustainability.
Against this backdrop, we have seen a surge in ESG reporting platforms. Research by Verdantix indicates that the ESG reporting software market was valued at over $905 million in 2021 and is expected to grow to more than $4.34 billion by 2027, with a compounded annual growth rate (CAGR) of 30%. This underscores the escalating significance of accurate ESG reporting. Among these platforms, GaiaLens® stands out.
Introduction to GaiaLens
GaiaLens presents a real-time ESG analytics platform tailored for institutional investors who recognise and embrace the substantial potential of technology to facilitate informed decision-making. The GaiaLens platform is comprised of a suite of tools to help investors fulfil their ESG needs, including portfolio reporting, investment screening, and deep-dive research capabilities.
In 2019, The founders, Gordon Tveito-Duncan and Seb Kirk, were originally introduced to the ESG space whilst they were studying a Master's course in Data Science. They saw the potential for ESG investing to make financial markets more sustainable and for technology to solve the challenges of working with ESG data. After listening to asset managers' criticisms of existing legacy ESG data providers, they launched GaiaLens in 2021.
At its core, GaiaLens is a data-centric product that aggregates and analyses structured and unstructured datasets alongside conventional financial data to ensure comprehensive ESG-relevant information is gathered, consistently measured, and transparently scored across the E, S, and G pillars for approximately 19,000 companies in real-time. The platform covers both equity and debt securities and boasts environmental data on over 2 million private companies.
Moreover, GaiaLens can integrate and process data currently absent from our system, such as data from private companies. As ESG data experts, we adeptly manage new data, which can subsequently be utilised to calculate ESG scores and showcased on our ESG Analytics platform.
GaiaLens: Revolutionising ESG Insights
So, you might be curious about how GaiaLens distinguishes itself from other emerging ESG platforms. There are a variety of ways:
1. Real-time Evaluation
Our commitment to real-time evaluation sets us apart from other solutions. We understand the importance of up-to-date information with regard to ESG analytics. Through daily data updates, GaiaLens ensures that the ESG scores we provide are a true reflection of the most current ESG data available. This approach means investors and stakeholders can make better-informed decisions based on the very latest insights, improving their ability to respond effectively to evolving market conditions.
2. Transparent Scoring
Transparency is at the core of our scoring methodology. We give our clients the power to gain a comprehensive understanding of how our scores are derived. We offer complete visibility into the origins of these scores, allowing users to trace the journey from the raw data sources all the way to the final score. This transparency empowers investors with confidence in the accuracy and reliability of the information guiding investment decisions.
3. Automated Objectivity
At GaiaLens, we leverage automation to guarantee objectivity and independence. Our scores are carefully calculated using an in-house algorithm driven by robust data analytics, effectively eliminating the potential influence of human biases and providing data-driven scores that reflect the latest ESG data available. This automated, quantitative approach to ESG ensures that our ESG scores are objective and independent.
4. Forward-focused Analysis
GaiaLens employs cutting-edge techniques that combine time series data with machine learning capabilities. This approach allows us to generate forward-looking ESG scores, offering insights into the potential ESG performance of companies across our expansive coverage spectrum. By anticipating trends and shifts, we empower investors to make strategic decisions that align with future ESG developments.
5. Tailored Solutions
ESG data and regulations are constantly changing, and as a result, investors each have their own strategies and priorities when it comes to ESG. That's why we believe in the power of customisation. Our platform enables investors to tailor their ESG scores to align with their unique viewpoints. Beyond this, users can craft bespoke thematic screens focusing on specific ESG themes that are of interest. This versatility ensures that GaiaLens accommodates investor preferences while delivering meaningful insights.
6. Seamless Integration
GaiaLens excels in seamlessly incorporating a wide range of data, including information from private enterprises. As seasoned ESG data specialists, we have the expertise to process new data sources efficiently. This integration capability enables us to compute accurate ESG scores, effectively enriching the insights presented on our ESG Analytics platform.
7. Comprehensive Coverage
GaiaLens® offers an expansive scope, leaving no stone unturned. With coverage spanning approximately 19,000 publicly listed companies, each extensively evaluated across 200 ESG factors, we provide a comprehensive view of the ESG landscape. Our coverage encompasses a significant portion of small-cap and emerging market entities and environmental data for 2.5 million private firms, ensuring a holistic understanding of ESG performance.
8. ESG Insight Reporting
Our mappings extend to all major sustainability frameworks, facilitating quick assessments of portfolio performance against these benchmarks. Through the ESG Analytics platform, investors gain valuable insights, enabling them to swiftly evaluate their portfolios' alignment with established sustainability standards.
9. Advanced ESG News Processing
Our dedication to real-time insights extends to news analysis. GaiaLens employs a cutting-edge news processing system that continuously monitors and processes news from diverse sources. This includes news outlets, social media, and NGOs. Our sophisticated LLM-based model is adept at detecting controversies and scandals, providing a daily assessment of articles for potential implications on companies' reputations and ESG standings.
10. Proprietary ESG Factors
GaiaLens goes beyond the ordinary by incorporating exclusive data points into our scoring algorithm. These proprietary parameters, such as the Beneish M Score, Board Gender Pay Gap, Ethnic Diversity on the Board, Independent Director Percentage, Board Women Percentage, Employee Satisfaction Rating, and Corporate Misconduct Penalties, contribute to a multi-dimensional ESG evaluation that goes beyond conventional approaches.
In the ongoing pursuit of a sustainable future, GaiaLens is a crucial resource for institutional investors, offering tools to navigate the complexities of ESG considerations, make well-informed decisions, and contribute to a more responsible and prosperous global economy.
A Worldview for a Sustainable Future
At this point, you may be wondering what our name actually means.
In Greek mythology, Gaia was the goddess of the Earth. Jumping ahead to the 1970s, scientist James Lovelock introduced the "Gaia Hypothesis," suggesting that Earth's living and non-living parts work together as a complex system, maintaining conditions ideal for life.
For us, "GaiaLens" signifies a "world view" and reflects our desire to distil complex yet interdependent signals into accurate, truthful and absolute meaning. Our aim is to offer investors this valuable insight so they can make clear assessments and informed decisions for a better future. GaiaLens' core belief is that economic value creation can and should be combined with environmental stewardship, social inclusion, and sound governance.