A Quant Investor Uses A.I. to Track Down Corporate Greenwashing
By analyzing how executives talk about their sustainability efforts, Acadian’s Andy Moniz hopes to figure out who’s full of hot air.
As sustainable investing becomes more mainstream on Wall Street, companies are doing everything they can to present themselves as eco-friendly and ethically run. But the environmental, social, and governance (ESG) ratings that money managers rely on don’t always do a good job of cutting out the greenwashers—businesses that talk a good game but don’t match it with action.
Andy Moniz, a London-based data scientist at Acadian Asset Management, says he’s not only figured out a better approach, he can make money trading on it. He’s using such sophisticated tools as natural language processing and machine learning to figure out what companies are really up to. “I became frustrated with what the ESG data providers were doing,” says Moniz. “A lot of the time they’re just relying on yes or no answers to questions like ‘Does this company have a human rights policy?’ That data is extremely stale and backward-looking.” He felt he could do a better job collecting the data on his own.