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By James Peter Rubin
Investors scrutinizing target companies’ commitments to environmental, social and governance principles sometimes find they need a hand cutting through the feel-good fluff to measure what’s actually getting done.
Germany’s Arabesque S-Ray says it can help. The unit of London-based Arabesque Asset Management measures ESG performance in 200 categories and flags companies involved in controversial businesses, including arms, gambling and tobacco.
The data tech firm is seeking to expand and this month landed $20 million in funding from backers including the investing arm of Allianz Group, Germany’s largest insurer. Other participants include the German state of Hessen, German asset management groups Commerz Real AG and DWS.
“Sustainability assessments are becoming increasingly important for making informed investment decisions, including our own,” Nazim Cetin, CEO of Allianz’s investing arm, said in a statement.
- The platform incorporates news and information from more than 50,000 sources in 170 countries and generates a numeric rating based on principles that the United Nations outlined in a 2017 manifesto for responsible companies.
- S-Ray said that it would use the capital infusion to develop new ESG data products and features including an artificial intelligence tool that will draw information from Internet of Things sensors and other devices in buildings to evaluate the sustainability of real estate projects.
- The deal offers the latest evidence of ESG’s importance among investors. About three out of every four investors worldwide believed it was important to be able to invest based on their personal values and ethical requirements, according to a global survey of 12,375 investors and financial advisors released in May by the investment bank Natixis Investment Management.
- Consultants from service companies with clients in a range of industries have seen the effect of social impact on their businesses. “In our line of business, we see an increased focus and opportunity,” said Trevor Pritchard, partner at executive recruiting firm Boyden, which created a practice focused on social impact about three years ago.
- Karma Takeaway: German data technology provider Arabesque S-Ray’s securing of a $20 million funding round highlights the growing demand among investors for better ways to measure companies’ commitment to sound environmental, social and governance principles.