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GaiaLens Launches Innovative User Interface Tackling Common ESG Data Complaints

Extends focus on data-driven explainability and adds customizability

Published: Wednesday, July 20, 2022 - 10:58

(GaiaLens: London) -- GaiaLens, the AI-driven environmental, social, and corporate governance (ESG) analytics platform that takes a purely quantitative approach to ESG scoring, has gone live with new versions of its three main dashboards offering Portfolio Level analysis, Stock Level analysis, and a new sophisticated Screening Tool designed to aid portfolio construction.

The interfaces showcase GaiaLens’ core benefits, which are “explainability,” “objectivity,” and “customizability,” addressing some of the criticisms of existing ESG ratings, such as their lack of explainability and subjectivity.

The Portfolio dashboard enables investors to upload a portfolio in seconds and compare its ESG performance to a benchmark of their choosing, such as the S&P 500. Users can then drill down into their portfolio to find out what is driving its overall portfolio score. The dashboard also flags up any ESG news incidents that are taking place concerning their portfolio companies.

Figure 1: Portfolio Level dashboard

GaiaLens’ new interface also features a simplified summary of a portfolio’s alignment with various ESG reporting frameworks. This new interface provides simplified screens that show the extent of the portfolio’s alignment with investors’ ESG reporting framework of choice, including UN SDGs, EU Taxonomy, SFDR, and TCFD.

Figure 2: Sustainability Frameworks view enables users to check a portfolio’s alignment with their chosen ESG reporting framework, including UN SDGs, EU Taxonomy, SFDR, and TCFD

Users can also drill down into specific ESG factors to view the performance of portfolio holdings relative to a company’s peer group. This drill-down facility makes it possible to easily probe why a specific stock is underperforming in one aspect of its ESG performance.

For example, if a company has a poor environmental pillar score, you can drill down into individual factors within its ’E’ performance to probe which areas are dragging down its score, whether it be “percentage of nonrenewable energy” they use in their factories or “direct air pollutant emissions cost impact ratio” (for two examples). You can see how far off the industry median average they are.

“Investors can also view what percentage of the industry has published figures associated with that specific factor. For many of the factors we look at, we have data for over 90 per cent of the entire peer group,” says Gordon Tveito-Duncan of GaiaLens. “So, if a specific company is in the bottom 10 to 15 percent for a particular ESG factor, you can be very confident that the company in question is an ESG laggard.

“Pilot users of our new dashboards have commented on how easily they can conduct these comparisons, assess the weaknesses in their portfolios, and understand quickly why some holdings are underperforming in ESG terms. GaiaLens’ Portfolio Level dashboard means it has never been so easy to upload, manage, and monitor portfolios in real time.”

The second interface is a Screening Tool designed to aid the construction of portfolios. It enables users to screen on ESG and financial metrics at the same time—addressing the issue that many asset owners in our recent study complained about (that better ESG performance was coming at the expense of financial performance). This shouldn't be an issue anymore.

GaiaLens’ Screening Tool allows investors to select their investment universe (by region, country, sector, industry, or index), and then filter coverage on traditional financial valuation metrics, such as Last Close Price/Earnings, Last Close Price/Book, and EBITDA Margin Percentage, as well as on ESG scores and factors. So, if users only want to build portfolios with stocks that are showing in the top 20 percent for E, S, and G in a given sector, they can specify that in this Screening Tool.

Figure 3: Screening Tool

“It has been very challenging to screen for financial metrics as well as ESG factors until now,” says Tveito-Duncan. “Traditionally, if investors chose to screen on value first, they would most likely be left with bottom quartile performing ESG companies and vice versa. GaiaLens’ offering provides a balanced tool which accurately screens for both of these types of metrics simultaneously. This makes our Screening Tool extremely powerful.”

GaiaLens’ embedded objectivity and explainability can be fully experienced by users in its Stock Level dashboard. This dashboard enables users to drill down into four levels of data from the overall ESG score, right down to the factor-level scores.

Users can search for any company from its more than 17,000 coverage and see the latest ESG data. This dashboard enables users to drill down into each pillar to view the underlying theme scores, such as “Community” for the Social pillar, and finally down into factor-level scores like the “Corporate Citizenship and Philanthropy Score.” GaiaLens has enabled its users to peer down to the most granular level of data to see what is driving those top level scores.

Figure 4: Stock Overview showing investors both ESG theme and feature-level performance

GaiaLens’ new development offers investors the chance to customize their materiality weighting between E, S and G. So, if they don’t agree with the weighting which GaiaLens creates for each of the 69 industries profiled on the platform, asset manager or owner users might choose to reduce the E pillar weighting and increase the S or the G weightings.

“Investors can create bespoke [custom] ESG scores by adjusting our building blocks in order to reflect their worldview. For example, you can change the pillar materiality weights and recalculate the score,” says Tveito-Duncan.

GaiaLens has gone further to accommodate Thematic (theme-specific) investing to help asset managers who might regard ESG as too broad to be meaningful or have been handed a mandate which demands their portfolios excel in specific areas, such as moving against modern slavery and improving diversity and inclusion or business ethics.

These thematic investment screens highlight the power of GaiaLens’ system in bringing together structured and unstructured data. For each theme, the top table shows the structured data side where a company’s performance is benchmarked against its peer group. The bottom table then shows the unstructured data in the form of news items that are relevant to that theme.

GaiaLens collects news data from mainstream news publications, NGO updates, law court filings etc. The GaiaLens Momentum News Service tracks hundreds of thousands of news sources and tags them based on more than 50 different ESG topics that can be drilled into by users. The service then distills these news stories further into “ESG incidents,” which selects the most pressing issues facing a company and displays the incident type such as “data security,” as well as the incident’s score, number of articles appearing against that company, and topic.


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