Softbank and Blackrock invest in sustainability data and analytics platform Clarity AI

As reported by ESG Today and Reuters, Sustainability and analytics platform Clarity AI last Friday announced the conclusion of the second round of fund raising.  

Resources, in the amount of $50 million, were provided by SoftBank’ Vision Fund 2, famous for investing heavily on start up with high potential, and Blackrock.

The biggest asset manager in the world already got a minority stake in the startup this January and it is now planning to integrate the platform in its portfolio management system.

Clarity AI is a New York based startup providing end to end technology to optimize the societal impact of investment portfolios, using big data and machine learning to perform analysis on a set of 30000 companies, 135000 funds and 375 country and local governments.

In particular they help players in the financial sectors, ranging from wealth managers to big banks and corporations, to obtain data based information on the ESG performance of their portfolios.

Rebeca Minguela, the founder and Ceo of the company, in an interview published by Environmental Finance explains that their distinctive features are the technologies and the capabilities rather than just the data or the ratings. She adds that they were able to create the most reliable database of environmental and social impact using structured and unstructured data, enhanced by Machine Learning and reliability algorithms, expanding coverage with estimation models.

Therefore at the basis of their success there are transparent and science-based methodologies and frameworks that investors can leverage and customise to reflect their risk preferences or personal values and beliefs.

Minguela then specifies that rather than performing qualitative analysis they focus on quantifying and monetizing the impact a company makes in real world terms.

Moreover, as highlighted by Reuters, the interest of big players like Softbank and BlackRock is caused by the growing appetite for reliable data as companies are graded on their sustainability credentials and regulators begin to demand clarity in formal disclosures about the impact of business activities on society and the environment.

With respect to this, from a Case study published on Clarity’s AI website it is possible to infer that the platform can help European asset managers to comply with the EU Sustainable Finance Disclosure and EU Taxonomy regulations. The former, which came into force on the 21^st of March 2021, has the objective of making the funds’ sustainability profile more easily comparable and understandable, while the latter has the objective of facilitating sustainable investing disclosure by providing a classification system establishing a list of sustainable economic activities.

Clarity AI succeeded in aligning their machine learning algorithms and their metrics with the SFDR definitions and UN SDGs goals, allowing their clients to respect all the regulatory requirements.  

In conclusion, ESG investments already represent more than a third of total global assets and the field is growing quickly, leaving the room open for misconducts and greenwashing.  

Hopefully data and algorithms-based platforms like Clarity AI will facilitate the implementation of regulations to reach the now necessary standardization.