StockSnips Inc Launches ESG News Sentiment Product
Public Sentiment Measure Empowers Investor Decisions
StockSnips Inc has announced an ESG News Sentiment product for socially responsible investing, built on their proven AI / Machine Learning platform.
StockSnips, a market leader in Financial News Sentiment Data, has released a new offering in the fast-growing ESG investment space. According to US Sustainable Investment Forum “The total US-domiciled assets under management using sustainable investing strategies grew from $12.0 trillion at the start of 2018 to $17.1 trillion at the start of 2020, an increase of 42 percent.” The adoption of ESG criteria by asset managers reflects a structural shift in investor preferences towards rewarding responsible value creation. ESG indices have performed well during the uncertain market regime caused by the Coronavirus pandemic. Institutional investors have become more aware of how corporate governance and policies can impact communities.
ESG ratings are based on data reported on topics like climate, data security, executive compensation and diversity which come from a variety of sources, e.g. corporate disclosures, regulatory filings and proxy statements. Several organizations publish ratings based on aggregating reports from multiple non-governmental and governmental sources, but these are only updated quarterly or annually and fail to capture public sentiment, which impacts investor decisions and thus a company’s value in the short term. From the treatment of essential workers, to supply chain resilience, or discovering the next breakthrough to combat climate change, measuring how companies address ESG issues directly impacts their public sentiment and thus financial performance. Investors would benefit from up-to-date data on ESG news sentiment to evaluate relevant new risks and opportunities as soon as they occur.
StockSnips ESG News Sentiment is a Proxy for Public Sentiment
Investors in socially responsible assets want to monitor ESG related corporate policies and events as reported in the news media, something not offered by ESG rating vendors. Big data and text analytics have now made it possible to derive real-time changes in ESG Sentiment.
StockSnips has a large corpus of news articles from reliable sources, including SEC filings for the last 5+ years. Using our advanced Natural Language algorithms and Machine Learning engine, StockSnips analyzes articles for key information, and assigns each ‘snippet’ to the correct ESG topic & company. Thus, investors get a continual and transparent ESG News Sentiment signal for public companies. StockSnips has developed its ESG topic categories using taxonomies published by United Nations, SASB and other organizations. A key differentiator is that our taxonomy is granular yet flexible, with subcategories routinely modified or added (e.g. Plastic Waste, Black Lives Matter) as vocabulary and initiatives evolve over time.
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News-based sentiment intrinsically covers many factors that affect stock price and represents an alternative data signal that is an early indicator of how stock prices will be impacted. Several studies have shown that news stories, especially around major events like data breaches, oil spills and labor practices, influence public sentiment and lead to changes in company valuations. Research results have confirmed that linguistic media content captures otherwise hard-to-quantify aspects of firms’ fundamentals, which investors quickly incorporate into stock prices. Our analysis has shown that there is strong correlation between sentiment change and price change. The next wave of research will identify patterns linking economic performance and ESG factors. ESG News Sentiment will play a major role in monitoring sentiment shifts and understanding how capital markets respond to a company’s actions and investments in sustainability activities.
Ravi Koka, CEO of StockSnips commented, “We are excited to bring this Alternative ESG News Sentiment product to the market, leveraging our extensive research in textual analysis and transforming it to a valid signal and a robust proxy for measuring public sentiment for a company related to ESG policies and actions.”
Stocksnips has partnered with Cirrus Research, LLC is an independent research firm dedicated to delivering innovative analysis and insights to investors. They have validated our Financial News Sentiment Signal and have blended this into one of their US Equities Capital Appreciation portfolios. Satya Pradhuman, CEO of Cirrus Research observed “As more interest and demand surface for ESG products, finding better tools will become more and more relevant. Integrating some forms of ESG Media Sentiment using real time textual analysis will provide useful trend alerts to investors.”
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