Ping An Digital Economic Research Centre (PADERC), a macroeconomic research arm of Ping An Insurance (Group) Company of China, says the increase in the number of companies in China improving their environmental, social and governance (ESG) disclosures is an opportunity for technology companies to provide data solutions with artificial intelligence (AI).
"Many companies are willing to improve their ESG disclosure but lack the expertise and resources to do so. Meanwhile, investors are increasingly integrating ESG into their investment decisions, but are faced with limited data points," Chex Yu, deputy director of strategy of Ping An Technology, said in a recent ESG workshop.
"The pain points for wider ESG adoption present market opportunities for technology companies to provide solutions that make disclosure easier for companies, using artificial intelligence to improve availability of non-disclosure-based data."
With regulators expected to mandate ESG disclosures for listed companies soon, more companies are starting their ESG reporting. Ping An is developing new tools and models to improve the breadth and depth of disclosures. These include:
Climate Risk Assessment: All signatories to the United Nations-supported Principles for Responsible Investment (PRI) will have to issue Task Force on Climate-related Financial Disclosure (TCFD) reports starting in 2021. However, there is a lack of tools that help companies carry out climate scenario planning and assess climate risks based on their financial metrics. As Ping An was one of the first companies in China to issue a TCFD report, PADERC is partnering with Imperial College of London to develop models that will help in climate risk assessment and asset pricing.
Automated Assessment of Disclosure Quality: PADERC also recently issued a report that used natural language processing (NLP) to automatically assess the breadth and depth of companies' disclosures, which could be scaled up in various markets.
Rating Framework with Chinese Characteristics: Ping An also developed its own proprietary ESG ratings framework that incorporates both global and mainland Chinese standards.
Ping An has its own ESG strategy, pushing ESG adoption across many parts of the group and has received market recognition for its efforts. The group's MSCI rating was raised to A in 2020 from BB in 2018. It is also the only mainland Chinese financial company to be included in the Dow Jones Sustainability Index.
Ping An is developing its own AI-ESG Management Platform that is used in 40+ subsidiaries and accelerated the Group's annual sustainability report process by 22 days. It can help companies with ESG data collection, performance evaluation, task management and peer benchmark comparison.