Solactive, the German index engineering firm, will collaborate with San Francisco-based AI company Truvalue Labs, intensifying efforts to meet a significant increase in client demand for ESG indices.
“We are looking for innovative ways to uncover insights from ESG data”, says Steffen Scheuble, CEO of Solactive. “Quality and timeliness in ESG data are high priorities for investors. As a company that puts substantial research into Machine Learning and Natural Language Processing, we are very confident that we have found an ally in Truvalue Labs, which also has Artificial Intelligence as its core competency.”
Truvalue Labs sources and analyzes information differently than other ESG data firms through its use of artificial intelligence and machine learning. The firm parses unstructured data from more than 100,000 sources compiling an independent perspective on company ESG performance instead of relying on company disclosures.
Hendrik Bartel, CEO and Co-founder of Truvalue Labs, states: “As more investors increasingly integrate ESG into their investment processes, it is our mission to provide signals that are timely and sourced from transparent data,” says Bartel. “With Solactive, we are pleased to find a partner that shares our values and vision with respect to AI and ESG. We look forward to working closely to bring new innovative indices to market.“
The first series of indices under development utilize Solactive’s Global Benchmark Series as the starting universe. From this universe, Solactive selects companies with high data volume and high “Insight Scores”, Truvalue Labs’ proprietary ESG rating. Backtests of the strategy have shown outperformance in different markets. The index design allows clients to individually form regional or domestic index combinations, providing full flexibility in the creation of custom equity strategies in index format.