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Ping An Upgrades AI-based ESG Evaluation System to Drive Responsible Investment

Ping An Insurance (Group) Company of China, Ltd. upgraded its proprietary ESG evaluation system to meet the Group’s rising demand for high quality ESG scoring data.

Growing attention to environmental, social, and governance (ESG) investing has led to an increase in the demand for data on ESG factors. The majority of ESG performance assessment relies primarily on manual data collection and processing, which is inefficient and slow and result in poor data quality.

Ping An unveiled its ESG evaluation system in 2021 powered by natural language processing (NLP), knowledge graph, machine learning, and satellite remote sensing. The system was able to collect ESG regulatory disclosure-based data as well as alternative non-disclosure-based data to provide richer, multi-dimensional information. The recently upgraded ESG evaluation system has further improved the accuracy and comprehensiveness of data. It consists of 21 first-level indicators, 90 second-level indicators, and 278 data points to measure ESG risks and opportunities for 37 industry sectors. The system can make real-time adjustments based on public news and sentiment.

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A unique feature of the AI-based system is its ability to generate company disclosure and performance scores separately for a more comprehensive assessment of a company’s ESG disclosure and performance. The disclosure score mainly examines the level of information disclosure by companies in traditional ESG data sources, such as ESG reports and annual results reports, with a focus on qualitative indicators. The performance score measures ESG performance with an emphasis on quantitative indicators.

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The system covers more than 4,500 A-share listed companies and more than 2,700 Hong Kong listed companies. It evaluates more than 4,600 corporate credit bond issuers and 58,000 green bonds in the bond market, and nearly 140 fund management companies and more than 14,900 funds in the fund market. The system frequently updates different data points – daily, monthly or semi-annually, depending on type – and adjusts the results in real-time based on news sentiment scores.

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Ping An’s CN-ESG evaluation framework incorporates domestic and international disclosure standards and key frameworks to adapt to the Chinese context. The scoring framework refers to a number of mainstream ESG evaluation frameworks including GRI, HKEX, SASB, TCFD, Shenzhen Stock Exchange Social Responsibility Guidelines, and Shanghai Stock Exchange Social Responsibility Guidelines. Out of all the core issues included in the CN-ESG framework, 87% overlap with at least one international framework and 13% of the indicators are specific to the Chinese context. Next, CN-ESG framework will also focus on developing industry-specific material indicators driven by in-depth industry fundamental analysis that will supplement the existing set of core indicators.

Ping An believes that responsible investment helps to manage risk and contributes to long-term stable returns. This system has been applied within Ping An’s subsidiaries with investment business to support ESG investment. As of December 2021, the scale of Ping An’s responsible investment and financing reached nearly RMB1.22 trillion, of which Ping An’s green investment and financing was nearly RMB 224.58 billion. Inclusive investment and financing was nearly RMB 68.467 billion, and social investment and financing was nearly RMB 926.860 billion, with 2,303 sustainable insurance products offered. The Group is the first asset owner signatory from China that joined UN-supported Principles for Responsible Investment network.

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[To share your insights with us, please write to sghosh@martechseries.com]

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