# TRFinRisk
What’s the best route to reduce costs, increase ﬂows 
and further improve the quality of ESG data from 
corporate reporter to end-user?
Available on demand at:
https://www.brighttalk.com/webcast/14001/218341
Presented by: 
Responsible Investor & 
Thomson Reuters
CAN FINTECH AND 
AI SOLVE THE ESG 
DATA PUZZLE?

Daniel Brooksbank,
Editor, 
Responsible Investor
Hendrik Bartel,
CEO,
TrueValue Labs Inc.
Cornis T. van der Lugt,
Senior Research Fellow,
Centre for Corporate
Governance, Stellenbosch
University Business 
School
Trevor Allen,
Product Sales Specialist
BNP Paribas
Securities Services
André Chanavat,
Senior Product Manager,
Thomson Reuters
2
CAN FINTECH AND AI SOLVE THE ESG DATA PUZZLE?
WEBINAR REPORT
CAN FINTECH AND AI SOLVE 
THE ESG DATA PUZZLE?
What’s the best route to reduce costs, increase ﬂows and further 
improve the quality of ESG data from corporate reporter to end-user?
Available on demand at:
https://www.brighttalk.com/webcast/14001/218341
Recorded on September 28th, 2016-09-30
The 2016 Carrots & Sticks report identiﬁes almost 400 sustainability regulations, guidelines, codes-of-conduct, 
frameworks and other reporting instruments across 64 countries. How accurate is this data? How are corporations 
coping with the pressure and cost of reporting? How can asset managers make sense of what it means? And will 
data vendors turn to AI to collect and deliver this googolesque volume of data?
The expert panel included:
Cornis van der Lugt, Senior Research Fellow, Centre for Corporate Governance, Stellenbosch University Business 
School, South Africa 
Available on demand at: https://www.brighttalk.com/webcast/14001/218341
It was moderated by: Daniel Brooksbank, Editor at Responsible Investor.
Hendrik Bartel, CEO, TruValue Labs Inc.
Trevor Allen, Product Sales Specialist, BNP Paribas Securities Services
André Chanavat, Senior Product Manager, Thomson Reuters

CAN FINTECH AND AI SOLVE THE ESG DATA PUZZLE?
WEBINAR REPORT
3
Available on demand at: https://www.brighttalk.com/webcast/14001/218341
     In a wide-ranging event, the possibility was 
explored of environmental, social and gover-
nance data becoming not just data – but intelli-
gence and, eventually, knowledge.
     Stellenbosch University’s Cornis van der Lugt 
kicked off the session, explaining how the 
Carrots & Sticks report is backed by KPMG, 
Stellenbosch itself, the Global Reporting Initiative 
(GRI) and the UN Environment Programme 
(UNEP). 
     The 2016 report identiﬁes almost 400 sustain-
ability regulations, guidelines, codes-of-conduct, 
frameworks and other reporting instruments 
across 64 countries.
    The growth in disclosure requirements was 
being driven not just by stock exchanges but also 
ﬁnancial regulatory authorities: central banks, 
banking commissions, the Institute of Directors 
and the like. Interestingly, for-proﬁt exchanges 
tend to be more active in demanding ESG 
disclosure, in contrast to not-for-proﬁt exchanges 
or governmental institutions. 
     The presentation looked at three disclosure 
research initiatives: the G&A Institute; GRI & 
RobecoSAM; and SASB, the Sustainability 
Accounting Standards Board. He highlighted 
elements of overlap between the various frame-
works. For example, there are differences in how 
they assess the materiality of banks’ paper 
usage. He argued that stock exchanges and 
regulators “have a speciﬁc role to play” in ESG 
information disclosure. Guidance from the 
institutions was helpful, van der Lugt said, to 
bring more consistency in how these issues are 
“framed and measured and disclosed”. 
     Asked if there is too much data, van der Lugt 
said: “There is necessarily information overload
and that brings us back to the question of 
materiality. I think the whole movement for 
reporting integration and integration, as well as 
between different types of accounting – I always 
refer to ﬁnancial accounting and sustainability 
accounting – all of this makes the link and 
focuses on what some would call ﬁnancial 
materiality. In some cases it’s not easy to quantify 
the ﬁnancial consequences because we don't 
have the right regulations in place.
     “There is not an obvious market price for 
many externalities – so the regulators are selling 
us short here in not leveling the playing ﬁeld to a 
market context where the market sends the right 
price signals, because we don't have the right 
regulations in place.” He cited the “painstakingly 
slow” pace of climate regulation as an example.
     TruValue Labs’ Hendrik Bartel explained how 
his three-year-old company, based in San 
Francisco - specialises in mining “massive 
amounts of unstructured data” as well as struc-
tured data to “uncover” ESG information. The 
product is available on the Thomson Reuters 
Eikon platform and currently covers more than 
8,500 listed companies – up from 500 companies 
a little over a year ago. 
     The system uses some 75,000 sources – 
“we’re very source agnostic” Bartel said. These 
range from newspapers, watchdog organisations, 
specialist publications, trade magazines and 
NGOs. “ESG data can be quite subjective,” Bartel 
said, “so we’re trying to be as objective as 
possible.” 
     He made the point that the data is created in 
real time. To illustrate what high density ESG data 
looks like, Bartel cited VW as “the cataclysmic 
ESG event of the past year” – and added his ﬁrm’s 
clients are building “alpha models” with the data. 
As for the artiﬁcial intelligence vs. the human 
factor debate, Bartel explained TruValue employs 
supervised learning AI, where the AI learns the 
context through “deep learning” rather than just 
key word look-up. The models take account of 
market developments and “update themselves”. 
Bartel said: “We don't have enough humans in our 
company to look after 8,500 companies or more 
than that.”
     BNP Paribas’ Trevor Allen pointed out how 
ESG runs through the ﬁrm. On the banking side 
there is green bond ﬁnancing and issuance while 
on the asset management side of the business 
there’s both SRI and ESG thematic funds and 
exchange traded funds (ETFs). On the securities 
services side there’s ESG reporting and thematic 
indices. 
     He described the securities services arm’s ESG 
reporting package and increasing engagement 
with clients -- and helping them increase the 
engagement with the companies they invest in 
and BNP Paribas’ aim to be a “climate custodian”. 
For reporting, Allen said they have taken the lead 
from France’s new Article 173 regulation, which 
covers climate reporting by investors. “There is 
going to be a lot of need for transparency.” He 
saw the custodian as increasingly being at the 
centre of all the data being transferred: whether it 
be data from clients and market vendors or 
accounting data. “We can centralise all this – 
which gets us into the ‘big data’ case”. 
“The proliferation of Fintech innovation has 
the potential to transform virtually every 
aspect of our nation’s ﬁnancial markets” – 
Securities and Exchange Commission.

CAN FINTECH AND AI SOLVE THE ESG DATA PUZZLE?
WEBINAR REPORT
4
Available on demand at: https://www.brighttalk.com/webcast/14001/218341
     So securities services would no longer just be 
about safe-keeping of the assets but rather an 
analysis of what those assets are – so clients can 
explain to their stakeholders what is going on in 
their portfolios, to help inform their decisions. 
     Custodians now have the technology to parse 
through massive amounts of data “at a very quick 
rate” and the ability to break things down on a 
“very granular level”. It all helps clients to avoid 
being unwittingly invested in controversial 
companies such as armaments.
     “I consider Thomson Reuters to be one of the 
biggest ‘ﬁntechs’ out there, globally” – the words 
of André Chanavat. He told the audience: “In our 
ESG content operations we have over 150 
trained content specialists, sourcing data from 
companies’ corporate sustainability reports, 
annual reports, regulatory ﬁlings and so on.”
     The aim, he said, is to counter the “scattered” 
nature of ESG data and standardise it, scrubbing 
the data in the process. He mentioned ‘cobots’ - 
collaborative robots – where the machine works 
with the worker: “We use semi-automation.”
     Asked whether users were actually looking at 
this data, Chanavat said there has been a 
“substantial uptick” in usage -- not just on the 
buy-side (asset managers) but also the sell-side 
(investment banks), as well as a huge take-up at 
universities that are looking at the data very 
keenly. There was also interest from corporations 
too. 
     Demand by asset managers was being driven 
by more detailed mandates and the need for 
differentiation. Corporations, on the other hand, 
want to be able to benchmark themselves 
against their peers.
     Moving to a lively audience 
Q&A session, the initial questions 
focused on data quality and the 
balance between unstructured 
and structured ESG data. Bartel 
explained how data such as the 
number of women on boards 
could be blended with less 
quantitative information in a 
complementary way. Van der 
Lugt said: “It’s going beyond 
data and onto intelligence.” He 
says using the Integrated 
Reporting framework, you 
quickly realise that people within companies who 
collect data “aren’t talking to each other”. “It’s 
only when you have a process of aligning 
accounting and reporting systems that these 
people start to talk to each other – and then that 
data will become interesting to investors as well. 
     “Because that integrated report is meant to 
speak to the providers of ﬁnancial capital.” We 
need to move, he argued, from ‘big data’ to 
‘material data’. He summed it up: “We can have 
masses of data without making wise decisions.”  
     “We have customers that clearly do see that 
materiality that we are providing,” said Chanavat. 
Allen added that his ﬁrm can provide various 
different views to help clients “zone in” on what 
they want to use to actively engage with compa-
nies: “It’s about our clients using the data that’s 
most important for them.”
     Questioning them moved, almost inevitably, to 
whether there is a predictive power in ESG data. 
     Bartel brought up corporate governance, 
where issues can become crystallised and which 
the data can pick up: “Then I do think we can see 
some predictability there.
     Van der Lugt, reﬂected that there was always 
going to be fraud or corruption such as the Enron 
case. But an issue for him was the fragmentation 
of standards, both ESG and ‘conventional’: “So I 
think our ability to predict performance is under-
mined by these different communities of expertise 
operating in isolation.” 
     The other shortcoming was the 
time-frame of decision-making. 
Chanavat spoke of the challenge 
of separating the signal from the 
noise while Bartel agreed “we are 
all drowning in data” so the way 
forward is to move from data to 
intelligence to the human area of 
forward-looking knowledge. “So 
from data, to intelligence, to 
knowledge, that’s the ladder we’re 
climbing up.” 
     For Allen, the jury was still out about predictive 
power of ESG data, but as for risk “we can start 
to home in on some of the signals there”. BNP 
Paribas’ own R&D is looking at this right now. 
Bartel made the point it’s not always about the 
negatives such as controversies, it was also a 
way of capturing the positives within a corpora-
tion.
     The session next turned to social issues – the 
‘S’ in ESG. Said Bartel: “We’ve taught the 
algorithm to really think like an analyst there.” In 
his view, ‘S’ would become a quantiﬁable metric 
in three to ﬁve years – using satellite data, for 
example, to build really accurate ‘S’ models. 
“That’s where it gets really exciting and there will 
be a lot more transparency coming down the line 
extremely quickly.”
     Van de Lugt said a lot of people reckon 
governance is the key factor, which is to say if  
It’s only when you 
have a process of 
aligning accounting 
and reporting systems 
that these people start 
to talk to each other – 
and then that data will 
become interesting to 
investors as well.
“
”
We are all drowning  
in data so the way 
forward is to move 
from data to intelli-
gence to the human 
area of forward-
looking knowledge.
“
”

CAN FINTECH AND AI SOLVE THE ESG DATA PUZZLE?
WEBINAR REPORT
5
Available on demand at: https://www.brighttalk.com/webcast/14001/218341
you get the governance right “then the ‘E’ and 
the ‘S’ will fall into place automatically”. You can 
assess human capital within companies but the 
challenge is the external one; how do you 
measure the socio-economic impact of a 
company more broadly. 
     To this point, Chanavat said: “We’ve been 
quantifying social metrics since 2002 and the 
social pillar is one of our biggest pillars of all our 
metrics.” But the externality factor is a “bit 
trickier”. Allen spoke of looking to the UN’s global 
norms; the ‘S’ was going to be a way for compa-
nies to differentiate themselves. 
     Van der Lugt pointed out that the reason 
senior executives buy into sustainability is mostly 
to do with ‘reputation’ – which is the most 
subjective to measure. He said: “So this 
highlights the shortcomings of this quantitative 
analysis. What keeps many senior managers and 
board members awake at night is reputation.” 
So there was a real issue for inves-tors and social 
scientists to grapple with issues of trust and 
reputation.
     The session concluded with 
a question about how do you 
square short-term noise with 
long-term investment. Bartel 
said: “The long-term is made up 
of multiple short-term horizons. 
When does short-term become 
long-term? I think that magic 
number might be ﬁve years or 
so.” Van der Lugt related a 
conversation with an asset 
manager, who told him they 
aren’t comfortable with fewer 
quarterly reports; they weren’t comfortable going 
12 months without getting an update. The last 
word went to Chanavat, who said it you’re not 
measuring it, you’re not managing it. 
What keeps many 
senior managers and 
board members awake 
at night is reputation. 
So there was a real 
issue for investors and 
social scientists to 
grapple with issues of 
trust and reputation.
“
”
This webinar was viewed live by more than 300 individuals representing 200+ 
institutions globally and has since been viewed on demand by a further 250+ 
individuals.
To learn more about Thomson Reuters ESG data please visit
ﬁnancial.thomsonreuters.com/esg
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publishers of Responsible Investor and ESG Magazine, 
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Managing Editor:
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+44 (0) 20 3640 9153
hugh@responsible-investor.com
Editor:
Daniel Brooksbank
+44 (0) 20 7709 2089
daniel@responsible-investor.com
Publisher:
Tony Hay
+44 (0) 20 7709 2092
tony@responsible-investor.com
Correspondence:
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