A startup that lets consumers check sustainability data on the companies and products that they patronise has also begun feeding its content to asset owners and investors.
San Francisco-based alternative data provider Alygne emerged from “stealth mode” last week with two products: a mobile app for consumers and a data feed into FinTech Finastra’s investment management platform Fusion Invest.
The company, which was founded in 2020 by three finance and technology professionals, uses natural language processing (NLP) and machine learning to scour news, social media, press releases, company reports and other text and voice sources for ESG information on companies. It converts that data into scores on specific – and potentially esoteric – metrics requested by Fusion Invest clients.“We founded the company because, as we work in technology, we found that there is tonnes of data – too much data available digitally – yet we had no idea how to easily find out what any one company thought about particular topics that matter to some investors,” chief executive Corinne Grillet told ESG Insight. “If you go beyond the 100 largest companies it’s very difficult to know where these companies stand on many issues.”
Alternative data is being increasingly used by ESG investors to provide insights into niche factors and those difficult to assess through conventional data collection methods. Among emerging providers, QuantCube uses satellite imagery analysis to assess biodiversity trends, such as water stress and deforestation. Their services are being harnessed as sustainable markets expand and as more ESG themes are included in fund and investor mandates.
Niche Topics
Among the key use cases Alygne provides is the testing of companies’ claims about their sustainability against public perceptions of their ESG position. Its technology can define the theme that clients want explored and begin gathering data. Grillet said the solution can manage the most esoteric of requests.
“I spoke with a family office, for instance, that doesn’t invest in violent video games,” she said.“Violent video games are not really your traditional ESG factor, but we have the ability to define a request and from there provide all the functionalities to monitor for any signal on that theme.”
Other examples she said can be investigated are corporate positions on social issues, such as abortion and gun control, as well as animal testing.
While Alygne’s service is not a regulatory compliance solution, it has been created to help investors build ESG portfolio- and risk-management models aligned with the Sustainable Finance Disclosure Regulation (SFDR) and reporting frameworks such as Sustainability Accounting Standards Board (SASB).
Grillet sees the service as a complementary one for investors and asset managers already using sophisticated ESG data and technology.
For Fusion Invest, Alygne’s data is fed into the platform via API’s and can be integrated with financial data and other non-financial data. The Finastra dashboard also enables clients to drill down into the Alygne’s reports to identify exactly which sources provided the sentiment assessments.
“Clients can see which articles on the web we found and direct them to the exact paragraphs within the articles,” she said. “It is fully transparent so that we can justify and explain to you why we offer such assessments.”
Fabien Féron, senior product manager for Fusion Invest said the Alygne feed would provide valuable insights through integration with other datasets.
“Making investments that coincide with corporate and customer values is front of mind for asset managers, but a lack of access to data and metrics makes this challenging,” Féron said in a statement. “In addition to using traditional financial metrics to monitor their portfolios, our customers can strengthen their decision-making process by accessing Alygne’s tailored ESG data through our solution. They can easily check the impact of trade simulations for both public and private markets.”
Small Companies, Large Scale
One of the key advantages of Alygne’s product is that it can provide strong signal and sentiment data on any company, even the smallest investable businesses. This is often missing from the larger data vendors’ feeds because it is too costly to gather within their frameworks.
“For them, adding custom-made indicators doesn’t really make sense and that’s to be expected given the size of the market that they service, mainly the large public companies,” Grillet said.
Alygne is betting that the more than 75 years of experience in FinTech and data services shared between Grillet and her two co-founders will be attractive to clients who want a reliable service as they scale their sustainable investing operations.
“This is not a startup formed by college dropouts,” she said. “We have built Alygne to meet a specific challenge we saw in the market and we have the expertise to help make a powerful contribution to sustainability investing.”
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