INNOV Phase I: Leverage artificial intelligence to improve Environmental, Social, and Governance (ESG) data

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The Principles for Responsible Investment (PRI) were established in 2005 by the Financial Initiative of the United Nations Environment Program with the objective of providing a framework for improving the analysis of environmental, social, and governance issues (ESG) in the investment process and to help companies exercise responsible practices in managing their investments. Asset managers and other financial institutions are increasingly relying on ESG rating agencies to assess, measure, and compare the ESG performance of companies. Integration of the ESG impact within risk/return strategies helps investors who are willing to earn profit by investing in a sustainable market. However, no clear methodological standard has yet emerged, neither for measuring ESG performance nor for integrating ESG information into classical risk/return portfolio optimization frameworks. Yet, the emergence of such standards would have a great potential to encourage investors to adopt ESG information systematically in their decisions. In return, this would also incentivize companies to earn business value by evolving toward more sustainable activities.We propose to investigate the development of a framework by automatically extracting relevant ESG information from companies' reports, news, and social media posts using state-of-the-art Natural Language Processing (NLP) methods. Instead of offering ESG scores, we provide ESG data that promotes transparency and comparability and helps investors to make better-informed decisions. Our clients will benefit from a web interface in which they can search for a company and retrieve its ESG information. The outcome of this project brings an excellent opportunity to the sustainable finance market. Montreal is becoming a center of AI and sustainable finance. We believe our products specifically help Quebec to be a leader in both industries, AI and sustainable finance. By better informing the investors, we hope our technology directs more capital toward companies whose practices and values align with environmental, social, and governance precepts in Canada.