Diversified financial services firm Cowen announced today that it will include ESG scores on its equity research reports, aimed at helping investors to quantify differences between companies in areas of environmental, social and governance focus. The ESG scores will be powered by technology and data from artificial intelligence (AI) and data mining company Truvalue Labs.
Robert Fagin, Cowen’s Director of Research, said:
“ESG factors have become a critical component of the investment process and there is a distinct need to have a solution set that can address the volume of information involved and standardization needed to have a clear view of corporate progress. Cowen, through its industry leading equity research team, is pleased to offer an unbiased, common ESG framework that can be used to distinguish between companies. Unlike many other ESG ratings systems, Cowen’s ESG Scores are forward-looking and uniform, which allow us to thoughtfully approach ESG discussions with our clients.”
The new ESG scores encompass Cowen’s entire coverage universe of more than 800 public companies. Companies are scored on a 0 to 100 scale, with a score of 50 representing a neutral impact, above 50 indicating a more positive indication, and scores below more negative.
Truvalue Labs enhances the research capabilities of investment firms by leveraging artificial intelligence to rapidly analyze and interpret massive amounts of unstructured data from more than 100,000 sources, in 13 languages, which provide an indication of how stakeholder issues and potential controversies may affect a company based on real-time information. Rather than relying on self-reported numbers, data points are collected from a wide range of sources with varied perspectives, including industry publications, news outlets, NGOs, trade unions, government sources, legal and regulatory filings, and academic publications. Natural language processing is then applied to interpret semantic content from the original sources and generate analytics by applying criteria consistent with established sustainability and ESG frameworks. Truvalue Labs was acquired by financial information and analytics provider FactSet in October 2020.
Hendrik Bartel, SVP of ESG Strategy at FactSet, said:
“We are delighted that Cowen has chosen Truvalue Labs, a FactSet company, to power their ESG research and analysis. We are aligned in our commitment to providing investors with timely, consistent ESG scores from an external stakeholder perspective.”
“The new scoring is also deeply reflective of Cowen’s commitment to supporting the global transition to more sustainable assets. Our partnership with Truvalue Labs is another way we are mobilizing our best thinking across the firm on ESG-related questions for our clients and supporting impactful, long-term change that can benefit industries and communities.”