Research & Insights

Regulatory Compliance • March 17, 2022 • Patricia Pina, Rodolphe Bocquet, Carmen Boulet, Luis Angolotti, Javier Rodriguez

EU Taxonomy: Using Tech to Analyze “Green” Fund Performance

In today’s sustainable investment markets, a growing cadre of emerging finance taxonomies aim to clarify what it means to be sustainable. As a common classification system for sustainable economic activities, the EU taxonomy is a pioneer in the field and will be instrumental in achieving the emissions reduction and mitigation goals of the European Union’s […]

Climate • April 29, 2022 • Andrés Olivares, Henry (Chun-Yu) Lin

Using ESG Scores to Evaluate Sustainability-related Political Promises

Clarity AI’s ESG Impact Score measures how a company’s operations affect our environment and society. A company’s score is calculated by aggregating its impact on the environmental, social and governance challenges that society faces, and comparing it to the impacts of all other companies in the Clarity AI universe.

Climate • April 22, 2022 • Jean-Charles Prabonneau

An Estimated 80% of Emissions Globally Are Classified as Scope 3

Scope 3 emissions have proven much more difficult for companies to account for than Scopes 1 or 2, both of which are under their direct control. The lack of standardized methodology and the need to rely on modeling have until now led to a limited and cautious integration of Scope 3 data into investment processes. […]

Climate, Regulatory Compliance • April 14, 2022 • Patricia Pina, Jean-Charles Prabonneau, Jaime Oliver

Why Scope 3 Emissions Data Has Become Essential

As the shift towards low carbon development pathways becomes an even stronger imperative, Scope 3 emissions can no longer be ignored. Investors can look to technology for accurate data.

Regulatory Compliance • April 11, 2022 • Rodolphe Bocquet, Mikel Alvarez

Three Reasons Why MiFID II Opens A New Paradigm For Sustainable Investment

An extension to MiFID II, which will come into force on August 2, 2022, is one of the key components of the comprehensive European Commission’s sustainable finance regulatory agenda, alongside SFDR, EU Taxonomy and CSRD. Among a host of new MiFID II requirements is one major change – distributors and financial advisers must incorporat...

Regulatory Compliance • April 7, 2022 • Andres Olivares, Henry Lin, and Camila Mateo Volkart

Particulate Matter Emissions Is An Issue Companies of All Sizes Must Address

The World Health Organization (WHO) is using World Health Day to place an emphasis on clean air. Businesses have a crucial role to play in reducing air pollution. Understandably, it is often large companies that are singled out as needing to do more, but our data indicate that the impact of smaller companies on air […]

Regulatory Compliance • April 4, 2022

EU Taxonomy: How to Solve for Sovereign Bonds

The EU Taxonomy Regulation is an essential component of the European Commission’s action plan to reorient capital flows towards a more environmentally sustainable economy, and it provides all stakeholders with a classification system to determine which investments are environmentally sustainable. The draft Regulatory Technical Standar...

AI, Data Coverage, Regulatory Compliance, Technology • February 7, 2022

How Can AI Fill In the Gaps for Full SFDR Compliance?

The European Union’s Sustainable Finance Disclosure Regulation (SFDR) could revolutionize sustainability reporting—and, in turn, rescope the data that companies track to measure their ESG performance. The purpose of SFDR is to improve the transparency of ESG disclosures by financial product and service providers. As not every piece of...

AI, Data Coverage, Regulatory Compliance, Technology • February 3, 2022

Sustainable Investing: How Data Science can Improve Reliability of Reported Data

Sustainability performance data are still in their early days. The Corporate Sustainability Reporting Directive (CSRD) will eventually make these data part of companies’ annual reports with third- party auditing. However, CSRD will not be fully implemented until 2025, and in the meantime, limited reliability in reported data is to be ex...

AI, Data Coverage, Regulatory Compliance, Technology • January 25, 2022

Natural Language Processing (NLP) to Improve SFDR Reporting

Most of the solutions available in the market for the analysis of companies’ behavior rely heavily on the manual assessment of news or on sentiment analysis, leading to weaknesses like subjective assessment, volume limitation, and limited ability to interpret metrics. These limitations reduce the capability to provide timely and meaning...

AI, Data Coverage, Regulatory Compliance, Technology • January 8, 2022

How Machine Learning Can Expand Sustainability Data Coverage

Lack of data coverage is a major hurdle that can be overcome through the use of machine learning. Today, 80% of listed companies do not report required sustainability data. That means that, regardless of reliability issues, only 20% of publicly listed companies report comprehensive data on sustainability as a baseline. Many providers may ...

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AI, Data Coverage, Regulatory Compliance, Technology • December 10, 2021

How Data Science Can Enable SFDR Reporting

Enabling SFDR reporting is an essential dimension of bringing societal impact to markets. This paper on SFDR presents three specific use cases that showcase the merits of enabling reporting via data science.

ESG Impact, UN SDGs • November 26, 2021

Impact Investing: Measuring What Matters

The measurement of Impact investing currently has many dialects but no lingua franca. The Global Impact Investment Network (GIIN) defines impact investments as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” While this definition provides a theoretica...

ESG Impact, UN SDGs • November 25, 2021

Impact Investing and Financial Sectors

Clarity AI has a holistic approach to societal impact when aggregating all the different dimensions of impact for the UN Sustainable Development Goals (SDGs). What companies have the greatest levels of impact when all different impacts are evaluated and compared, and what is the source of that impact? Ultimately, it is the job of investor...

Data Coverage, Technology, UN SDGs • November 20, 2021

Using the UN SDG Framework to Measure Impact

As we outlined in our recent article, Impact Investing: Measuring What Matters, there is no singular universally recognized means of measuring impact. One approach that Clarity AI uses is to understand the impact that a company has on each of the UN Sustainable Development Goals (SDGs). The SDGs are the actionable core of the 2030 [&helli...

Regulatory Compliance • November 20, 2021

Using NACE Code Comparison to Examine Greenwashing

As organizations begin to classify EU Taxonomy activities there is a natural tendency to overestimate eligibility. If you don’t examine each activity in thorough detail you run the risk of greenwashing the technical criteria associated with the activity. When you look at the regulatory text provided with the EU Taxonomy, there are very ...

Regulatory Compliance • November 19, 2021

EU Taxonomy: Leveraging Technology to Analyze Controversies

After you have proven that your investment engages in activities that are included in the technical criteria of the EU Taxonomy regulation then we turn our attention towards proving that the activities “Do No Significant Harm” and meet “social safeguards” through controversies. Clarity AI has a unique approach to the process, usin...

Regulatory Compliance • November 18, 2021

How to Satisfy EU Taxonomy Regulation Requirements with Limited Data

There is an obvious disconnect occurring in the market, between what investors need to report as it relates to the EU Taxonomy and what type of data is available to inform that reporting. The lingering question for investors is, how do we broaden the coverage of the data we have while maintaining quality and satisfying […]

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ESG Impact, UN SDGs • November 1, 2021

Quantifying Corporate Societal Impact Using United Nations’ Sustainable Development Goals

Access the second in a series of Clarity AI and Qontigo research papers focusing on how the SDGs framework can be used to produce estimates of companies’ impact.

ESG Impact • August 25, 2021

Impact Investing as a Tool to Address Climate Change and Wealth Inequality

Despite significant regulatory evolution and increase in financial flows as indicated by the growth in assets, many of the critical environmental and social challenges facing the world have become even more acute and have led to systemic risks emerging. The most mainstream sustainable investment (SI) practice of ESG (environmental, social...

ESG Impact • August 24, 2021

Choose an Impact Framework that Bridges the Gap Between Theory and Practice

Many investors choose to start their impact measurements by evaluating company level impact, but that often fails to measure the magnitude of the impact likely to be driven by the company and considers all SDGs as equal. In light of this phenomena we found that the framework provided by the World Benchmarking Alliance (WBA) and […]

ESG Impact • August 23, 2021

Common Elements Among Impact Investing Frameworks

There are three widely referenced frameworks (see table below) to derive a baseline of the impact components. The second column in the figure summarizes the frameworks’ descriptions of the key defining features of impact investments, while the third column lists the mechanisms by which investors can create impact through investment proc...

ESG Impact • August 22, 2021

Impact Investing is Highly Appealing, But Are Investors Ready to Incorporate It into Their Portfolios?

As we discussed in our article, Highlighting Consistency Across Impact Investing Frameworks, we established that intentionality, additionality, and inclusivity are the baseline for a sound impact investment approach, but it’s vital to look at how real-world investor approaches are currently embedding these components in their produc...

ESG Impact • August 21, 2021

Just How Big Is the Market for Impact Investing?

Although a widely accepted definition of impact investing has emerged from the Global Impact Investing Network (GIIN), there are still many measurement frameworks. In line with this divergence in understanding and measuring impact investing, there is currently no perfect methodology for determining the size of the Sustainable Investment (...

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ESG Impact, UN SDGs • August 1, 2021

On the Way to Impact Investment: Mind the Gap between Theory and Practice

Clarity AI collaborated with Qontigo to deep dive into the theory and practice of impact investment, define the gaps and propose the reconciliation methods between the two.

ESG Impact • October 25, 2018

What Banking and Phone Data Tell us about the Socioeconomic Groups and Their Consumption Patterns?

Clarity AI's published paper on "What Banking and Phone Data Tell us about the Socioeconomic Groups and Their Consumption Patterns?" demonstrates the feasibility and capabilities of Big Data sources to understand the consumption behaviour of the population, overcoming some of the limitations of traditional approaches in terms of coverage ...

ESG Impact • August 1, 2018

The New Physics of Financial Services

Understanding how artificial intelligence is transforming the financial ecosystem: "Clarity AI quantitatively tracks the social responsibility of firms, which can be used by fund managers to optimize socially responsible portfolios."

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EU Taxonomy: Using Tech to Analyze “Green” Fund Performance

Using ESG Scores to Evaluate Sustainability-related Political Promises

An Estimated 80% of Emissions Globally Are Classified as Scope 3

Why Scope 3 Emissions Data Has Become Essential

Three Reasons Why MiFID II Opens A New Paradigm For Sustainable Investment

Particulate Matter Emissions Is An Issue Companies of All Sizes Must Address

EU Taxonomy: How to Solve for Sovereign Bonds

How Can AI Fill In the Gaps for Full SFDR Compliance?

Sustainable Investing: How Data Science can Improve Reliability of Reported Data

Natural Language Processing (NLP) to Improve SFDR Reporting

How Machine Learning Can Expand Sustainability Data Coverage