Sustinbest Utilizes AI for ESG Evaluation... Launches 'Sustin Repi'

Sustinvest, a proxy advisory firm and ESG (Environmental, Social, and Governance) rating agency, announced on the 18th that it is developing a real-time ESG reputation risk measurement model using artificial intelligence (AI).

Jung Seok-oh, head of research at Sustinvest (professor of statistics at Hankuk University of Foreign Studies), and senior researcher Jung Da-som stated at a press conference held at Lotte Hotel in Jung-gu, Seoul, that through 'Sustin REPi,' investors can recognize major companies' ESG-related issues and risks.

Sustin REPi is a daily ESG reputation risk measurement model developed by Sustinvest using AI deep learning. It analyzes news articles and collects and classifies major incidents and events affecting companies' ESG reputations, then trains the system accordingly.

Head of research Jung explained, "We expect to develop a chatbot system that goes beyond simply classifying documents to comprehending their content and extracting the information users want to deliver," adding, "It will be like a Sustinvest version of ChatGPT."

The ultimate goal is to evolve beyond internal use at Sustinvest to become an ESG information delivery platform.

Researcher Jung added, "Because ESG deals with non-financial data, it is difficult to quantify the data, and analyzing and collecting materials takes considerable time. Introducing AI can reduce the time and minimize human subjective intervention, thereby improving objectivity and transparency."

They expect that with faster data processing speeds, the evaluation cycle, which currently occurs monthly, quarterly, or semi-annually, can be shortened so that investors can quickly recognize companies' ESG risks on a daily basis and immediately reflect them in investment decisions.

Oh Seung-jae, executive director at Sustinvest, said there are considerable misunderstandings about ESG in Korea and that systematic thinking is necessary to evaluate ESG.

He cited the activist fund 'Engine Number One,' which acquired shares to urge oil and energy company ExxonMobil to improve its climate change response strategy, saying, "ESG cannot be understood by looking only at the included stocks; various investment strategies must be examined."

He also added that the U.S. Republican Party's anti-ESG policies should not be overinterpreted as they reflect domestic political interests, and that the diverse ESG evaluation standards among institutions should not be artificially consolidated but rather compete in the market to determine superiority.

Executive director Oh stated that the financial authorities are expected to announce ESG evaluation standard guidelines as early as this month, emphasizing, "It will be a self-regulation, not an administrative regulation, conducted in a way that respects the market."

Ryu Young-jae, CEO of Sustinvest, said, "In Korea, ESG has suddenly gained attention over the past two years without sufficient discussion, research, or expert development, causing much confusion," and emphasized, "As we have strived for the past 17 years, we will continue to do our best for the development of Korea's ESG evaluation market."

This content was produced with the assistance of AI translation services.