Refinitiv is building out its portfolio of ESG solutions with the addition of MarketPsych ESG Analytics, an analytics tool that provides numerical ESG insights on companies and countries based on news and social media monitoring.
The analytics tool extends a long relationship between Refinitiv and MarketPsych, a provider of data feeds based on the application of AI and behavioural economics to online media and text. In 2012, the Refinitiv MarketPsych Analytics data set was introduced, followed by a cryptocurrency extension in 2018, and the predictive StarMine MarketPsych Media Sentiment model in January 2020.
The companies have also worked together on MarketPsych Indices, including an index for wealth managers. These Refinitiv MarketPsych Indices are being rebranded as Refinitiv MarketPsych Analytics.
The software underlying the Refinitiv MarketPsych ESG Analytics is an AI-based natural language processing (NLP) engine, which locates, filters and scores ESG themed content about specific companies as well as cities, regions and countries from tens of millions of authors in thousands of global resources – over 2 million credible articles and posts in a dozen languages are processed every day. The engine excludes corporate press releases, corporate websites and regulatory filings to maintain the perspective of third-party media and minimise the impact of corporate greenwashing.
Leon Saunders Calvert, head of research and portfolio management at Refinitiv, says: “The Refinitiv MarketPsych ESG Analytics are built to appeal to both ESG fundamental users and existing MarketPsych Analytics users. For the former, Refinitiv is offering a package with one to one hundred scores daily, allowing users to compare rankings based on company disclosure with what news and social media have to say about a certain metric. In addition, a more advanced package offers minutely-updating scores with a much wider set of scores.”
Richard Peterson, CEO at MarketPsych, adds: “Using this data, our clients can explore how media perceptions and corporate behaviour impact business performance over time. For example, we’ve found that the share prices of companies with higher workplace sentiment scores significantly outperform their peers, and it appears that happier employees generate more value for shareholders. We hope that such insights inspire positive changes in corporate structure and behaviour.”
Potential users of the MarketPsych ESG Analytics include quantitative investors deploying the data to enhance alpha generation and risk management; discretionary investors using the data to improve portfolio construction; corporate clients monitoring market perceptions of their own and competitor firms; regulators using the data to more precisely direct investigations; and analysts and researchers exploring relationships between ESG and economic performance.