28 Apr Data-driven Approach to News Creates Paradigm Shift, Leading to New Best Practice Approach to ESG
In today’s fast-paced and perpetually connected society, there is a very real risk of information overload, given the sheer volume of information that comes out on the internet daily.
According to news intelligence company YUKKA Lab, it’s estimated that around 97,000 financial news items are published online daily.
If a researcher takes an average of 55 seconds to read an article, it would take them 23 days just to read through all the financial news that came out in a single day.
97,000 financial news published daily
Realistically, someone can read around five to 15 articles a day, from one to three sources, but this poses the risk of having a biased view.
Furthermore, environmental, social, and governance (ESG) is a quickly growing priority in many businesses’ boardrooms. In order to comply with elevated ESG standards, companies must stay on top of these issues and avoid scandals that can greatly hurt their reputations.
Continous monitoring of ESG news
Companies must continuously monitor the news on ESG matters, as part of their due diligence procedures, especially during major undertakings, such as partnering with a supplier, or making an investment.
If a company fails to do their due diligence, and partners with a supplier that is accused of a scandal, such as reports of child labor, then it could cause huge damage, both financially and reputationally.
Oliver Berchtold, co-founder and chief product officer of YUKKA Lab, says that the majority of businesses are still making decisions based on structured data.
Stuctured data: solid, but incomplete and not up-to-date
While said data is solid, it’s also infrequently updated and captures only around 20% of the picture. The remaining 80% is unstructured data, which has to be read and analyzed for it to be of any use to the business.
YUKKA Lab’s goal is to use artificial intelligence technology to initiate a paradigm shift towards a data-driven approach to news. Turning unstructured news into scores that represent a company’s exposure to ESG, risk, credit, or investment events.
Thus creating an alternative data point to consider, when making investment decisions or screening the counterparties you do business with.
Unstructured data makes up 80% of all relevant information
It’s been said that data is the new oil. Raw oil cannot be consumed immediately, and must be refined first. Similarly, businesses must learn how to extract, condense, and distill massive amounts of unstructured news data into something valuable that can benefit their organization.
While ESG ratings are valuable, they cannot provide the whole picture. ESG ratings provide an inside-out view of a company’s stand on ESG issues, while what’s said in the news reflects the public’s perception of the company.
These are two complementary perspectives that are important in determining the company’s status with regard to ESG matters,” says Oliver Berchtold.
Reduce investigation time by up to 85%
YUKKA Lab says that its proprietary Augmented News Intelligence Engine can reduce investigation time by up to 85%. It does this by processing thousands of news articles and supplying them to users in an easily understandable format. The platform is therefore able to turn unstructured data into structured data points, such as sentiment, news volume, and news-based scores.
Identify ESG exposures in supply chains & portfolios
The intelligence engine can take all the news articles on a certain topic and summarize them into a condensed output, allowing companies to identify which partners have the largest ESG exposures in their supply chain or investment portfolio.
It can also be used to have a differentiated investment approach through the alternative data signal, allowing companies to make better-informed investment decisions and achieve outperformance.
AI augments our capacity to a whole new level
Says Berchtold, “We are standing at a crossroads in time where AI can augment our capacity to analyze unstructured news to a whole new level, allowing us to complement our biased view with a neutral overall evaluation of the world’s news that comes in a data-driven way. Making news for the first time measurable and thus creating transparency.”
Eradicating uncertainty & empowering business experts
“Eradicating the uncertainty of having overlooked something when making a business decision and empowering business experts to make more confident and timely decisions.
AI allows you to condense information overload into an easy-to-understand format, creating a paradigm shift in how companies work with news and establishes new best practices when it comes to risk or investment management.”