Technical white paper on an AI platform awarded the Monetary Authority of Singapore FSTI POC Grant that resolves challenges in ESG investing, including data interoperability
Singapore, 23 February 2023 – Nexus FrontierTech (“Nexus”) and APS Asset Management (“APS”) have released a technical white paper awarded the Monetary Authority of Singapore’s (“MAS”) Financial Sector Technology and Innovation (“FSTI”) Proof-of-Concept (“POC”) scheme grant, demonstrating the technological success and commercial viability of an artificial intelligence (“AI”) platform for asset management.
The paper details a unique collaboration and commercial innovation among investment managers, ESG experts, and technology providers across Singapore and China. The results of this partnership are newly discovered insights into innovating AI-driven data analysis into investment processes, and the award-winning Environmental, Social, and Governance (ESG) data platform, ANAFES (APS-Nexus AI-Fundamental ESG System).
ANAFES taps on new and advanced technologies to resolve the challenges of ESG investing in China, such as the lack of transparency, inconsistent reporting standards, and available ESG data systems being scattered, manual, and not integrated into asset management operations. ANAFES also successfully demonstrated interoperability between an ESG framework such as GRI with an asset manager’s in-house framework.
Nexus and APS developed three sets of AI models embedded in ANAFES, with accuracy rates averaging 80%, fundamentally changing the ease of use of ESG data for businesses:
i) the ESG data parser allows users to customise accurately extracted ESG data into their own investment frameworks, rather than relying on ESG scores from potentially less relevant and opaque one-size-fits-all global service providers
ii) the News Monitoring function allows users to automatically perform sentiment analysis based on news aggregated from both publicly available and subscription-based sources, and
iii) the Investigative AI function conducts deeper analysis into important data categories like footnotes and business terms in company annual reports as well as other written investor communications. This function also maps out senior corporate figures’ key related parties and factors these relationships into each target company’s ESG scoring
Functioning as a central portal that manages all ESG frameworks, data, and news efficiently and accurately on a single dashboard, ANAFES helps portfolio managers and analysts visualise, benchmark, and analyse company ESG performances across industries and geographies, as well as standardising an asset manager’s integration of ESG into their investment process.
From a productivity standpoint, the automation of various tedious, manual research workflows is expected to increase the productivity of investment analysts by 50-70%, freeing up more time for them to concentrate on higher value tasks and functions, such as fundamental analysis.
ANAFES unlocks the potential for a large number of small and mid-sized asset managers with limited resources to accelerate the implementation of ESG investing via their own manager-defined approach. Although the initial focus is on China, ANAFES’ AI-native capabilities can easily scale into other markets. This would augment the capabilities of asset managers and researchers in the region.
By releasing this paper, Nexus and APS are optimistic that the experiences and end products of this project will add to the growing pool of intellectual capital and capabilities for Sustainable Finance, as well as spur greater dialogue and collaboration in ESG data interoperability.
The full paper can be accessed here: https://nexusfrontier.tech/resources/ai-fundamental-esg-scoring-platform/
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