“As we accelerate the climate transition, it is increasingly important to be able to map the social and environmental impact of companies. A growing number of investors are now seeking robust sources of sustainability data to assess the positive or negative contributions to sustainability goals of different companies, as this allows them to make informed investment decisions that reflect their sustainability objectives.”
To meet the goal she mentioned in the press release, Luxembourg Stock Exchange CEO Julie Becker, like Eldridge, like the Chicago Board Options Exchange (CBOE Global Markets) and like an early investor in London-based fintech Util, Oxford Science Enterprises (OSE), has raised $6m in seed investment.
120 million publications screened
In the midst of all the solutions that are appearing to try to establish whether companies are meeting the commitments they make, often with great communication, in favour of sustainable development, Util has chosen to use language processing technologies to search through 120 million academic publications to find out who is complying with the 17 SDGs and who is not, in order to compensate for two well-known blind spots in greenwashing.
“First, the assessments are highly subjective, with scores varying considerably from one provider to another. Second, they are often dependent on disclosures, meaning that fossil fuel or tobacco companies can get high scores based on their transparency,” explained the fintech. "The Boohoo scandal of 2020 is a good example of the pitfalls of ESG. The question should never have been ‘Does Boohoo report positively on supply chain management?’, but instead, ‘Is a company that sells £5 dresses likely to have a positive social and environmental impact?’”
In 2020, the well-known ultra-fast-fashion brand was accused of paying those who made its products two and a half times less than the social minimum wage and exposing them to covid for lack of protection. In two days, the company's stock lost nearly $2bn in value. Prestigious clients such as Zalando and Amazon, reluctant to see their own brand associated with the company that the British authorities had described as a “modern-day slaver,” stopped distributing its products.
The company's share price, which had reached £435 before the scandal, has been languishing at less than £100 since the beginning of the year.
Top recruits and awards
Among the fintech’s clients are Danske Bank Asset Management and Degroof Petercam Asset Management (DPAM), which can develop portfolio reports and create differentiated financial products.
The announcement comes as the team accelerates hiring in key management positions. Most recently, Util appointed Riaz Shaikh to lead product development. Shaikh was previously global head of data analytics strategy at Credit Suisse's investment bank, where he led strategy and products related to alternative, ESG and sustainability data. Earlier this year, the chief data officer at US unicorn Interos, Mike Goynes, became CTO.
The fintech has won a few awards, including “Best Sustainable Investment Research and Ratings Provider” at Investment Week’s Sustainable Investment Awards 2022, where it was also highly commended for “Best Sustainability Thought Leadership Paper.” Util also won “ESG Research of the Year” at Environmental Finance’s Sustainable Investment Awards 2022.
This story was first published in French on Paperjam. It has been translated and edited for Delano.