Machine Intelligence is a branch off of Artificial Intelligence Although the lines often cross or become blurred Artificial Intelligence can be thought of as an umbrella term that encompasses any input being asked of a machine and in return that machine generates an output that would we consider correct and in line with the original request Machine Intelligence can be thought of giving a machine lots of data and information and allowing that machine s algorithms to take that information and makes sense of that information or learn from it by itself Without asking for a certain output Machine Intelligence can start seeing correlations and patterns that was hidden in the data These patterns predictions correlation or self-taught skill was not originally coded to find generate or learn This is creating a major advantage as this technology continues to get better when applying it to Big Data or extremely large data sets The amount of ESG information that is becoming available today has become an extremely large data set or as we call it Big ESG Data Company in the past did not feel obligated or find it necessary for them to report on ESG topics New standards and pressures have pushed companies in this decade to be more clear with their practices and approaches to running day to day operations
Why has this occurred Studies have indicated a major push for impactful investing is coming from the community of millennials Millennials are becoming the majority in the workforce and are wanting to work for companies that have a sense of purpose are doing good for the world and creating positive work environments Studies by the TIAA have also shown 90 of affluent millennials are looking to invest in these vary companies that are willing to report on their governance standards how they re positively impacting the environment or trending towards positive environmental changes along with the health and safety standards companies are creating for their employees This kind of culture shift has pushed companies to report more ESG information than in previous years and decades As reported by Oppenheimerfunds 20 of S P 500 companies published sustainability reports in 2011 That percentage of S P 500 companies drastically increased to 81 by 2015 This is just one area where larger pools of data can be extracted for analysis There are also third party sources that continually to grow everyday from news stories company websites to abstract sources like blogs and twitter where large portions of information are being dumped giving away to indicators on how a company operates This increased amount of information has allowed Harmony to push past the old ESG narratives of the past Narrative such as there is not enough ESG information available collecting and picking material outcomes for companies based on human judgement is too complex there is no standardization ESG does not provide a positive outcome
These are all narratives the team at Harmony was focused on eliminating or spotlighting there are solutions Harmony Analytics has been able to assemble a comprehensive standard to measure a hundred plus ESG issues that can be correlated to a material outcome We have done this through our advanced algorithms that can analyze this complex problem of having different standards and measurements reported by companies all over the world and determine how this affects these companies Harmony can answer questions human analysis alone cannot with more precision and speed Understanding how to analyze and construct algorithms that can read through inconsistent company ESG reports created from their various measurement tools and categorize what is material for each company This process significantly reduces the time and bias that was once built into human analyst reports on these companies Harmony Analytics Intelligence produces profiles on companies that are far more consistent than those of the past Beyond those factors the Machine Intelligence once constructed and trained can be scaled to read through more reports than any army of individuals could ever get to
This is extremely important as ESG information on emerging markets is an area often asked for and will continue to grow to add even more complexity to large data set of ESG information on companies Having a consistent way to analyze ESG issues allows for capital owners to understand their assets with more clarity The reason clarity in the ESG arena is helpful and a most have is because ESG clarity provides capital owners the ability to not break their fiduciary obligations The studies on ESG have shown through hundreds of reports that not only does taking ESG issues into account reduce the amount of financial risk a portfolio can carry exposure the risk carried in each company the reputational risk political risk and regulatory risk which influence the volatility of a stock Taking ESG issues into account also creates opportunities for positive financial effects that can lead to positive financial performance The power of this technology is revolutionizing the way ESG data can be collected analyzed standardized and used to inform the likelihood of a companies approach to ESG risk and opportunities ESG is beyond a buzzword or a megatrend at this point and will continue to transform the financial landscape it is up to capital owners to make the decision who they get their information from
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