HSBC has introduced a global Index that leverages artificial intelligence (AI) to assess a company’s ESG (environmental, social, and governance) improvements and potential for positive financial outcomes. Developed in collaboration with Arabesque AI and powered by ESG Book data, the Index tracks the performance of over 1,000 liquid stocks of global firms expected to benefit financially from enhancing their ESG risk profiles.
ESG Book employs natural language processing to calculate the ESG score of each Index constituent, sourcing relevant public data daily, such as ESG-related news and NGO information. Arabesque AI then calculates the “ESG momentum score” every six months to assess ESG improvement.
Investors can choose from various products tracking the Index, allocating capital to companies labeled as ‘ESG improvers’. Patrick Kondarjian, Global Head of Sustainability for Markets & Securities Services at HSBC, emphasized that the HSBC ESG Risk Improvers Index offers exposure to stocks demonstrating ESG momentum, which serves as a financial indicator for future performance. This differs from traditional ESG approaches focused solely on high ESG ratings.
By FCCT Editorial Team
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