Here is FSI’s recap of the event: It’s Season 3 of the FSI Deep Dives and on November 7th, we gathered at the Deloitte Tower to discuss how AI and big data influence the integration of environmental, social, and governance (ESG) factors into investment analysis.
Our panelists were Bud Sturmak, Founder of BlueSky Investment Management, who joined us from New York to discuss their approach to investment analysis, Bouchra M’Zali, Professor with the Department of Strategy, Social and Environmental Responsibility at UQÀM, who discussed how AI is impacting her research in the field of social responsibility and sustainable development and Laure Fouin, Associate at McCarthy Tétrault and member of the FSI Board of Directors, who offered her perspective on fintech governance issues. The panel was moderated by Gildas Poissonnier, Senior Manager, Sustainability at Deloitte, also a member of the FSI Board of Directors.
Bud Sturmak started the conversation by describing BlueSky’s approach to integrating financial material ESG factors, which can vary across industries, into investment management decisions. There are challenges in using ESG data, most notably, the inconsistency of metrics across companies. Also, data is often backward looking and may not be a true reflection of a company’s current potential. Think of a spill or privacy breach in the past that has led to a tightening of operations and improved performance. Translating ESG data into measurable value creation allows investment managers to identify potential in companies that would have otherwise been overlooked with traditional approaches. Bud believes the BlueSky approach to assessing financial materiality will become more mainstream as investors see that considering ESG factors improves long-term performance and reduces business risk. As more data points become available, the challenge is to develop the right analytical approach and tools.