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BQuantNikko Asset Managementdevelops BQuant app tovisualize carbon pricing impact

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Case study

Case study2

Nikko Asset Management develops BQuant app to visualize carbon pricing impact

Leveraging quants for
ESG investing
Nikko Asset Management’s Carbon Pricing Impact on Portfolio
App wins Most Popular App award at BQuant ESG Hackathon 4With global ESG investment expanding, Bloomberg held its fourth BQuant ESG
Hackathon on March 5, 2021, with the theme of Quants in ESG Investing. Teamsfrom various companies competed to develop and present analytical functions
using Bloomberg’s Python tool, BQuant, with the Nikko Asset Management teamwinning Most Popular App, as voted by participants.
Nikko Asset Management’s app — Carbon Pricing Impact on Portfolio — analyzes
carbon impact in a user-friendly way to help managers, analysts and ESG
personnel perform corporate value assessments. Integrated into Bloomberg’sorder management system and asset management tools, the app enables users
to seamlessly analyze portfolio-linked ESG data as well as providing total GHG
emissions forecasts.
We interviewed the Investment Support & Planning Department’s teamdevelopment leader Kohei Kasaoka, ESG Specialist Kozue Saito, and Chief
Investment Officer Hiroki Tsujimura, to find out what they learned from theHackathon. We also discussed the challenges they face in daily ESG analysis,
the kind of apps they want to develop, and the future of ESG investment.

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The app developer’s perspective“You can create whatever you want all on one platform.”
Kohei Kasaoka, Investment Support & Planning Department
Sharing interactive apps with management
personnel
Q: What did you think of the fusion between ESG andBQuant? How was using BQuant to develop your app?
Kasaoka: The question of how to share developed programs
and analysis results with users has always been a source oftrouble. I think BQuant solves this. It’s very attractive in thatyou don’t need to be aware of the server or PC environment
when sharing, and you can easily share output created in
Python with users as an interactive app. I want to use BQuantextensively in the future.

AIM/PORT - BQNT coordination

Mr. Kasaoka, who led the development, talks about
participating in the hackathon.

You can create whatever you want to make
Q: How did you enjoy the Hackathon? What are your thoughts
on ESG?
Kohei Kasaoka: I’ve always thought that BQuant is afascinating feature, but I shied away from it because it seemed
expensive to learn a proprietary code that could only be usedwith Bloomberg systems. I wanted to try studying or using it
someday, but never thought that I would actually be able to.
I learned how to use BQuant and practical code samples that
fit our app ideas, and BQuant became more familiar to me.
When I actually tried using it, I found that there was almost
no proprietary BQuant code and that we could create apps
just with basic Python knowledge + x, so it is really very
inexpensive to learn. Once you get your head around it,
you can create anything you want to, so it was very fun using
it to develop an app.

From analysis to visualization on one platform
As for ESG, given the large number of data vendors it’d bedifficult to use something that has no unified data location orlayout. In addition to the extensive ESG data on Bloomberg,
it was easy to get data from BQuant and combine it withfinancial information and market data on a single platformthat covers everything from analysis to visualization.

Q: You said that you aimed for a helpful and easy-to-use app
for management, analysts and ESG personnel. What did you
try to achieve by linking Bloomberg’s AIM and PORT functions
with the hackathon app?
Kasaoka: If I was going to create an app in the hackathon, I
wanted to make it an app that would attract fund managersand could only be done with BQuant. BQuant can not only
retrieve data at the securities level, but also link with accountinformation in AIM/PORT, so fund managers can select theportfolio that they manage, link it to ESG data and analyze
it. For example, you can visually check the impact of carbon
costs by linking it to your own portfolio information.
Q: What kind of functions are you thinking of expanding tofrom here? What results do you think you’ll be able to achieve?
Kasaoka: Since there are not many companies that publish
ESG data, I want to make it possible to visually understandwhether these data are published values or estimatedvalues generated by the app. There are many other things
I want to do, such as making it possible to understand theproportion of public companies that publish data, and todo peer comparisons of individual assets. ESG personnel
and teams participated in this hackathon, but it was exciting
to collaborate with people I don’t have much contact withnormally. I want to continue developing BQuant apps bycollaborating with a diverse range of people who can provideideas for new functions.

AIM: An integrated solution developed for buy-side institutional investors, hedge funds, and proprietary trading departments using Bloomberg’s asset and investment management system.
PORT: A multi-asset portfolio and risk analysis tool that analyzes the current and past characteristics of investment portfolios based on Bloomberg’s vast stock database.

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Nikko Asset Management develops BQuant app to visualize carbon pricing impact

It’s a highly manipulable and flexible app thatallows you to select both the sector and the X- andY-axis. Being able to include past and projected
GHG emissions when comparing the carbon costsof each fund was extremely useful — and likely to be
essential in the future­.
-Takumi Matsuo, Senior Officer, Corporate Strategy, Japan Exchange Group3

Case study

The ESG specialist’s perspective“Get large quantities of comparable ESG data and link it to corporate
value assessment.”
Kozue Saito, Active Ownership Group, Equity Fund Management Department

Ms. Saito, the team’s ESG expert, discusses the challenges
involved in ESG analysis and her experiences using
Bloomberg’s ESG dataset.

will keep striving to improve the quality and quantity ofits data. Using estimates is an effective tool to secure data
volume, so I hope Bloomberg provides opportunities forstudy, such as seminars on machine learning.

The challenge is getting large quantities ofcomparable data based on unified standards

Growing interest in the company

Q: What are the most common issues in ESG analysis? Why did
you choose this theme for the hackathon?

Q: What did you think of BQuant Hackathon 4? How did
your colleagues feel when watching on?

Kozue Saito: As the first step in analysis, the challenge isto get large amounts of data that can be compared basedon unified standards. Although disclosure from individualcompanies is increasing, the fact that each company has its
own disclosure format remains a challenge to data collection.
Bloomberg delivers a wealth of data in variety of formats, so
we want to continue using this.

Saito: I learned a lot. I was able to collaborate withcolleagues that I usually don’t have much contact with.
I also recognized that it’s not only the efforts of developersthat are important for promoting DX, but also user savvy.
I received a lot of positive comments from colleagues andfeel that interest in ESG and programming is growing.

Linking ESG to corporate value assessment
Saito: Another important challenge is how to link ESG analysis
to support the selection of individual securities. I chose carbon
as a theme because it should be easy to see the impact onfinance as discussions proceed toward the introduction ofcarbon pricing. Going forward, we’ll use trial and error tofigure out how to link ESG-related risks and opportunities tocorporate value assessment.

Bloomberg has a wide variety of ESG data
Q: Tell us about your experience using Bloomberg’s
ESG dataset. What do you expect to see in our ESG datain the future?

BQuant’s strength: its ability to link with data
sources, high processing capability, and rich
expressiveness
Q: In your presentation, you said that you came tounderstand BQuant’s expressive power and potential.
What caused that? What kind of ESG applications do you
want to create?
Saito: BQuant is attractive for its ability to link not onlywith ESG information, but also with various Bloomberg
data sources, such as financial data and stock priceindices, as well as its high processing capability and rich
expressiveness through graphing. I want to do carbon
analysis by individual company as well as develop
applications in the S (social) area of ESG.

Saito: The hackathon enabled me to recognize the abundanceof ESG data types Bloomberg provides. I’m sure Bloomberg

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Nikko Asset Management develops BQuant app to visualize carbon pricing impact

It’s timely to focus on how carbon pricing directly connects
to corporate value assessment. This is a highly versatile appthat can easily create scatter diagrams and comparisonsof historical data corresponding to a diverse range of ESGfactors, depending on industry characteristics. Arbitrarily
setting carbon pricing levels also makes sensitivity analysis
easy, so I think it can be used in transition risk analysis andother TCFD framework-related tasks­.
-Keisuke Takegahara, Executive Officer, Deputy Chief Research Officer, Chief Manager
of Sustainability Management Office, Corporate Planning & Coordination Department,Development Bank of Japan Inc­.

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The CIO’s perspectiveAnticipating BQuant’s continuing expansion
Hiroki Tsujimura, Executive Corporate Officer, Global Head of Investment and CIO

Hiroki Tsujimura joined Nikko Asset Management in 2004.
After working as CIO of Nikko Asset Management America,
Global Head of Alternative Investments, and Head of Active
Investments, he was appointed CIO of Japan in January
2013, and to his current position in June 2019. He oversees
all of Nikko Asset Management’s investment management
activities globally. Mr. Tsujimura spoke about his experienceof watching the hackathon live.

the accuracy of current-state analysis and future forecasts
is improving. I expect that statistically backed position
management and investment decisions will become
increasingly common with the help of tools like BQuantand Python.

You can create new value depending on youridea – inspired by other companies’ efforts

Q: What’s your vision for investment, future technology
development, DX and human resource developmentthat entails?

Q: What was your impression of the hackathon andthe reaction in your company? What was the benefitof participating in BQuant Hackathons as an asset
management company?
Hiroki Tsujimura: I also saw presentations by othercompanies, and I was very inspired by their approaches.
I saw how Bloomberg’s data can create new value,depending on different idea. We’ve already started efforts
to improve the ESG analysis app that we presented and wehope to expand it to other business areas as well.

Creating an environment where diversity isincorporated and people enhance one anotherTsujimura: I think that we’ll need personnel with high IT
skills who keep abreast of technology development andcan incorporate this into investment management andinvestment decision-making.
We need those directly involved in fund management
to improve their IT skills, and those with high IT skills
to improve their understanding of fund management.
Communication is key — it’s vital to have an environmentthat embraces diversity and where people with different
areas of expertise can enhance each other.

Position management and investment decisions
will be increasingly backed by statistics going
forward
Q: Give us your perspective on how ESG investment willchange in the future. What possibilities do you think will
open up thanks to platforms such as BQuant?
Tsujimura: Corporate disclosure in the ESG area isprogressing, as are efforts to digitize and visualize initiatives.
With the increase of things that can be handled as data,

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Nikko Asset Management develops BQuant app to visualize carbon pricing impact

About Nikko Asset Management

With US$284.4 billion* under management, Nikko Asset Management is one of Asia’s largest
asset managers, providing high-conviction, active fund management across a range of equity,
fixed income, multi-asset and alternative strategies. In addition, its complementary range ofpassive strategies covers more than 20 indices and includes some of Asia’s leading exchangetraded funds (ETFs).
Headquartered in Asia since 1959, the firm employs approximately 200** investment
professionals, representing approximately 30 nationalities across 11 countries. More than 400
banks, brokers, financial advisors and life insurance companies around the world distribute thecompany’s products.
The investment teams benefit from a unique global perspective complemented by the firm’s
historic Asian DNA, striving to deliver consistent excellence in performance. The firm also
prides itself on its progressive, solution-driven approach, which has led to many innovative
funds launched for its clients.
For more information about Nikko Asset Management and to access its investment insights,please visit en.nikkoam.com.

* Consolidated assets under management and sub-advisory of Nikko Asset Management and its subsidiaries as of 31 December 2020.
** As of 31 December 2020, including employees of Nikko Asset Management and its subsidiaries.

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Case study

About BQuant
BQuant is an interactive development tool within a user-friendly Python environmentthat enables financial market participants on the buy-side to quickly build, test
and share quantitative research. Integrated with the Bloomberg ecosystem andcombining dedicated libraries with access to open-source libraries, BQuant enables
you to perform powerful analysis across asset classes to generate investment ideas
and easily share them with other Bloomberg users via Launchpad components.
For more information on BQuant, and examples of interactive applications such as
those shown below, visit BQIQ <GO> on the Bloomberg Terminal.

BQuant Hackathon
Bloomberg organizes the BQuant Hackathons series to create a community wherepeople can exchange opinions on data and technology and to contribute to thedevelopment of human talent for asset management. For more information about
upcoming events, please contact your sales representative.

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Nikko Asset Management develops BQuant app to visualize carbon pricing impact

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