Deutsche Bank Research has launched a new interactive web tool that uses big data and Natural Language Processing (NLP) to quantify the importance of environmental, social and governance issues, as well as other intangibles such as stock market information, human capital, innovation, brand value and management quality.

The new tool, labelled a-DIG, is the first product from a broader data initiative within Deutsche Bank Research called dbDIG, which looks to leverage alternative data and artificial intelligence (AI) to provide data-driven investment solutions.

The bank stated that the initiative reflects the increasing availability and importance of data, citing that by 2020, around 1.7 megabytes of new information will be created every second for every human being on the planet, with the number of smart devices set to pass 50 billion.

A collaboration with Dow Jones, the a-DIG platform uses data science techniques to sift through the web and annual results to analyse how stakeholders, employees, customers and suppliers perceive the company’s behaviour.

It then uses this information to quantify the company’s intangible assets, such as its corporate culture, reputation and ability to innovate, in order to help clients incorporate this into their investment approach.

Andy Moniz, chief data scientist at dbDIG, said he is obsessed with finding ways to measure whether environmental, social and governance news is material. “Academic studies suggest that investors underestimate sustainability issues until they materialise as positive or negative earnings surprises.

“In today’s service-based economy, most of the value of a firm comes from its intangible assets,” he continued. “Unfortunately, under current conservative accounting methods, companies cannot record the value of most of these assets in their financial statements as they are hard to measure. Investors know such non-financial information is valuable, but they have to look beyond a firm’s accounts if they want to incorporate this information into their investment decisions.”

The tool, which will initially monitor around 5,000 companies, was showcased at a launch event at Dow Jones’ London headquarters this week.

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