AI to play a significant role in sustainability

Over 50% of the world's asset management companies are adopting artificial intelligence (AI) to measure a stock's performance and company's sustainability. Omar Selim, CEO of Arabesque Asset Management, says the trend is likely to strengthen at a Global Islamic Finance Forum 2018 session titled Technological Disruption Impacting Sustainable Finance.

Within the financial sector, AI offers practical and accurate analysis for investors compared to existing annual or quarterly tools available in the market, he said. He added that Malaysia is one of five countries in Southeast Asia which have taken the lead in adopting AI for the market.

Omar said big data was the future as information becomes more complex, with a growing number of companies looking for data to support religious, ethical and social value-based investments. 

Arabesque Asset Management's S-Ray diagnostic tool analyses the sustainability performance of some 7,000 of the world’s largest listed firms using self-learning quantitative models and data scores.

The tool analyses over 50,000 data sources in 15 languages, looking for data points based on the core principles of the United Nations Global Compact (UNGC) and the Environmental, Social and Governance (ESG) score on financial materials of listed companies.

In the Islamic finance sector BIMB Investment Management has been working with Arabesque to analyse data for a better understanding of companies and their performance. Last year, the Malaysian bank and Arabesque launched two funds using S-Ray, namely the BIMB-Arabesque i Global Dividend Fund 1 and the BIMB Arabesque Malaysia Shariah-ESG Equity Fund.

Omar acknowledged that governance may be questioned, but the algorithms and S-Ray's AI architecture have been audited by external auditors and governed by a board backed by the UN Global Compact. His team checks data points for reliability and credibility, and is inclined to analyse negative news as positive news can be manipulated.