Measuring Businesses’ ESG Performance a Growing Challenge Standard Measures and Data Needed

The rapid growth of investment based on environmental, social and governance (ESG) criteria requires innovation and co-operation to create reliable risk disclosure systems, speakers said at the “Integration of ESG and Climate Risks in Investment Management” virtual conference hosted by Imperial College Business School, Brevan Howard Centre for Financial Analysis and Ping An Technology, a member of Ping An Insurance (Group) Company of China, Ltd. (hereafter “Ping An” or the “Group”, HKEX: 2318; SSE: 601318).

With increasing numbers of investment managers seeking to integrate ESG factors into their portfolio management decisions, the challenge of measuring and comparing companies’ ESG performance is growing in importance. Advances in technology are making more sophisticated analysis tools available, speakers said, but there are different views on what data is relevant and how disclosure frameworks should be standardized.

Ping An: Understand ourselves first

Ping An’s fintech arm, OneConnect Financial Technology, is developing intelligent tools for companies to gather their own ESG data for publication. “We need to understand ourselves first,” said Tan Bin Ru, OneConnect Southeast Asia CEO. “Our platform monitors 400 indicators across the 40 units of Ping An Group, then places us in a wider context by adding intelligence which benchmarks us against our industry peers.”

While such insight is invaluable to the company, regulations set out how companies report this data to the market. “The Hong Kong Stock Exchange has worked to standardize disclosure of ESG risks,” said Grace Hui, Head of Green and Sustainable Finance at Hong Kong Exchanges and Clearing Limited (HKEX). “As a regulator and exchange operator, we must supervise fair and orderly ESG markets – listed companies must comply and commit to conduct their business well.”

Balanced targets

A Singapore Exchange (SGX) survey on ESG disclosures by Singapore-listed companies showed issues are concerned about differing ESG risk criteria and frameworks. They called for more guidance on environmental standards, particularly regarding greenhouse gas emissions. “Companies tend to disclose their successes, so those reporting less favorable numbers are the minority,” said Herry Cho, Head of Sustainability and Sustainable Finance at SGX. “But providing detail on progress over time is essential, so we are encouraging more balanced target-setting.”

While regulators set the rules for companies to follow, the responsibility for implementing policies and setting objectives falls on company management. “ESG is more than a label – people need to look at what’s underneath,” said Christine Chow, Global Head of Strategic Governance, IHS Markit. “Companies shouldn’t see ESG as a compliance issue: it is a strategy option which over time should be embedded in all aspects of the business.”

Ping An’s OneConnect has partnered with the SingaporeShanghai and Shenzhen stock exchanges to establish systems that enable listed companies to gather and analyze comprehensive ESG data in ways that are comparable and actionable. Companies can generate detailed reports with valuable insights at the peer group, sector and country levels.

Disclosure linked with performance

Companies that work to quantify and disclose their ESG risks can generate even greater value. Ping An’s research partnership with Imperial College Business School has used artificial intelligence (AI) to analyze how well listed companies are covering key ESG themes in their reports. “This work has also established a statistically significant relationship between disclosures and companies’ financial performance,” said Enrico Biffis, Associate Professor of Finance, Imperial College Business School. “NLP (natural language processing) analysis of climate indicators can flag which companies are objectively greener than others – essentially exposing greenwashing.”

For investors, a lack of a comprehensive ESG taxonomy, a classification system of environmentally sustainable economic activities, is the major stumbling block for assessing companies’ ESG credentials. Lise Renelleau, Head of Sustainability, Rosenberg Equities at AXA Investment Management, said investors are being proactive. “We need a new ecosystem to deliver a new ESG and climate taxonomy. Investors need to understand these elements even if it means spending time and resources,” she explains. “We recommend starting from broad principles – for example, how your portfolios support the Paris [Agreement] goals.”

Ian Simm, founder and CEO of Impax Asset Management, stressed that the three elements of ESG – environment, social and governance, “are less three separate terms but more a prompt for companies to do better – not a box-ticking exercise but a radar sweep to take in the whole picture of a company with a focus on materiality. And this will lead to better information and assessment of risks and opportunities, as well as cost of capital for the companies.”

Ocean of data

The question of how to apply ESG data to address real-world climate impacts through investment decisions concerned several speakers. “Actionable data can be the basis for creating a range of investment aids and products,” said Chex Yu, Deputy Director of Strategy at Ping An Technology. “These extend the usefulness of information to create long-term insights.”

The risk of being swamped by too much unfocused data can be managed with smart technology, said Vanessa Barnett, Global Head of ESG at FactSet. “Data integration makes the datasets work together to produce actionable insights,” she said. “Regulation can define what is disclosed and in what formats, but vendors enable companies and investors to share data and compare like with like.”

Helena Fung, Head of Sustainable Investment, Asia Pacific, at FTSE Russell, said that well-designed benchmarks can help embed sustainable practices at listed companies by directing investor funds to companies that are well-managed. “Newer benchmarks can help with transition pathways by setting standards for management quality and carbon performance,” she said. “We’re seeing more and more passive investing which dovetails well with sustainable benchmarks.”

The conference speakers representing corporations, investors, vendors and regulators were unanimous in acknowledging the importance of technology and data partnerships to ESG integration in investment management. “It takes an ecosystem approach to unite the many players engaged in ESG investing,” said Sohee Park, Chief Product Officer, Ping An Technology. “Data and technology are powerful tools, but working together to share our insights is what makes complex systems work.”


Marriott International Pilots AI Solutions to Streamline Hotel Design Process for Future Properties in Asia-Pacific


Marriott International Inc. (NASDAQ: MAR) is reinventing how hotels in its Select Service brand portfolio are designed and constructed using a suite of proprietary solution. A first to be piloted in Asia Pacific, Marriott’s end-to-end, one-stop solution is part of the latest design package that includes the use of artificial intelligence leveraging the Building Information Modeling (BIM) platform. With Marriott International offering this latest solution, the design process for owners will be more efficient with increased speed-to-market while at the same time maintaining cost control.

“Marriott International’s new end-to-end design solutions are a world-first in our industry, and we are excited to offer this to our owners in the Asia Pacific region. The current solutions package will offer greater cost efficiency, consistent quality and faster delivery times for each new Marriott International property being designed from the ground up,” said Michael Wang, Senior Continent Head, Global Design, Asia Pacific.

Streamlining the design process

Leveraging the Building Information Modeling (BIM) platform, the newly introduced suite of solutions provides an intelligent Cloud and 3D reference throughout the life cycle of a project, from early planning through design development to construction and operations. BIM prototypes can create an entire virtual hotel in days, instead of the months normally required. The flexibility of BIM means Marriott International’s rigorous design guidelines are built right into the platform. Customizations to guest rooms such as room size and furniture layouts are easily editable, with the rest of the design process automatically recalibrated to incorporate any type of changes, greatly improving coordination and workflow amongst the many stakeholders involved in the design process. With this, Marriott is offering a one-stop solution so that owners can have increased confidence that Marriott brand style guides and specifications are maintained throughout the entire process.

“The implementation of AI technology is once again demonstrating our ongoing commitment to assist and support our business partners in delivering value and speed to market,” said Ron Harrison, Global Design Officer, Marriott International. “It delivers value to owners while upholding quality, and represents a core part of our larger technology strategy within Marriott’s global design process.”

Enhanced owner experiences with high-resolution, ‘fly-through’ 3D tours

Using BIM technology and prototyping, high-resolution 3D Virtual Reality environments can be created faster than any other technology currently available. Another attractive advantage of using BIM technology — an elevated experience, with virtual ‘fly-through’ tours of the proposed hotel, with visualizations of every design element shown in detail. This allows hotel owners to view in real time their entire hotel without having to wait for manual design renderings or construction.

One of the fastest-growing segments in Marriott’s brand portfolio, the seven Select Service Brands offer travelers the quality of international brand names at moderate price points. These innovative, trailblazing brands are characterized by their affordability and signature fuss-free service. Select Service brands comprise Fairfield by MarriottCourtyard by MarriottFour Points by SheratonAloftMoxyElement and AC Hotels. In 2020 alone, more than 50% of new hotel deals signed were in the select service brand category, underscoring the strong demand from owners for this segment that caters to mid-market consumers. The introduction of Marriott’s latest proprietary solution is expected to continue to drive interest for this brand category given shorter design project cycles.

“Marriott’s proprietary BIM design package is well underway,” said Ralph Frehner, Vice President, Design Development Operations Asia Pacific, Marriott International. “To date, BIM design solutions for our Moxy brand for guestrooms and public spaces including kitchen are 100% completed and ready to be leveraged for owners. Our Courtyard and Fairfield BIM solutions for rooms are more than 70% ready, and we expect the gradual finalization of other Select Service brands’ solutions across 2021.”

SOURCE Marriott International Inc.