We know EESG Kung-Fu
In The Matrix, the hero plugs himself into a computer to upload knowledge on Jiu-Jitsu and other martial arts directly to his brain; becoming a Kung-Fu master in the blink of an eye. Don’t worry, we won’t plug your brain to a computer. But we did teach a computer how to become an economic and ESG (EESG) analyst, reading corporate reports and analysing EESG content.
Caspian, our newest research tool, reads corporate reports just as an EESG analyst would. However, it goes a step further, objectively spotting patterns across more than 40,000 reports published by over 6,100 companies from 2010 to present.
In other words, Caspian surpasses the limits of human insight. As Julien, one of our data scientists puts it:
“You can have an army of analysts, but an algorithm is different. An algorithm is always objective, is never tired and does not need coffee, sleep or food. It is able to catch patterns and trends that are not visible to the human eye.”
Robot trainers
Caspian is different from other repositories of corporate filings. Not only does it collect annual sustainability reports, annual financial reports and SEC 10-K filings, but through its Topic Browser, it unlocks the informational value of their narrative content. And it does so in a way which is completely transparent; there is no black box (for more details on Caspian’s functionalities read here).
This is possible because our team of industry experts worked to develop a sound and adaptive analytical framework to delve into EESG disclosures.
“Frankenstein reporting”
Coined by Ioanna, manager of the Industry team, this expression summarizes one of the major challenges of EESG analysis. The proliferation of standards and frameworks has resulted in EESG information being fragmented across a variety of different sources. Consequently, creating a comprehensive database of EESG data is not an easy task.
“We cut through all the wide ‘non-financial’ terminology. With all that redundancy it is very difficult to understand the informational value of each report. This database is unique as it streamlines all the tasks EESG analysts have to do: download reports, code the content, check the consistency of the coding rules, ensure comparability for analytics, run the analysis and visualize the results. We do all that, plus we provide an analytical framework that is expertise-based.” – Michael, Industry Associate
Materiality in the era of “contextual reporting”
Contextual reporting refers to the process of connecting the information included within corporate reports to additional external information, such as that found in websites and in the the news. Jyoti Banerjee, contributor to the seminal book “The Integrated Reporting Movement” by Bob Eccles and Mike Krzus, summarizes the contextual reporting challenge in one question, “is it possible for companies to be more transparent about their operations and meet growing disclosure requirements while providing smaller reports than before?”
Caspian integrates different sources of information so that is possible to track which EESG issues are more recurrent, more emphasised, more material. Furthermore, the observation of topic disclosure trends allows users to understand crucial new dynamics, such as the “migration” of topics from sustainability reports to financial reports (read more here).
“Our approach does not involve a specific source of information. Instead, it looks at the whole corporate reporting suite and its dynamics. By analysing the qualitative and narrative content of reports we are able to observe unique trends, such as topic migration from one document to another. This opens up new possibilities for understanding the future trends in EESG reporting and what is and will be material. ” – Melissa, Industry Associate
Expert companions in your journey through the Data Lakes
With more than 80 percent S&P 500 companies disclosing EESG issues in 2015 (up from 19 percent just five years ago) the amount of EESG information available is enormous. These – “content farms,” or data lakes as we like to call them, represent a huge amount of strategic value. Caspian allows its users to unlock this value through its innovative use of technology; it’s the tool of the future.
From left to right: Michael Agenga (Industry Analytics Associate), Alessandro Laterza (Industry Analytics Associate), Ioanna Chatzidimopoulou (Manager – Industry Analytics), Andreanna Mazereeuw (Marketing Manager), Melissa Fricheteau (Industry Analytics Associate) and Feym Akdas (Communications Associate)
