HSBC recently unveiled a new global Index that utilizes advanced technology to assess a company's ESG (Environmental, Social, and Governance) credentials and its potential for positive financial outcomes. Developed by Arabesque AI and powered by ESG Book's data, this Index aims to monitor the performance of over 1,000 globally traded company stocks that are expected to experience financial gains through enhancing their ESG risk.

Yasin Rosowsky, co-founder and VP of engineering at Arabesque AI, explains that their analysis of historical data reveals that investing in stocks with strong ESG momentum yields higher annual returns compared to S&P global benchmarks. In simpler terms, companies transitioning towards more sustainable business practices tend to generate better financial results.

ESG Book calculates the ESG score for each stock in the Index by utilizing natural language processing to extract relevant information from publicly available sources on a daily basis, including ESG-related news and NGO data. Every six months, Arabesque AI computes the "ESG momentum score" to assess whether each stock has improved its ESG credentials. Investors will have the opportunity to invest in various products that track the Index, allowing them to allocate capital towards companies that are actively improving their ESG performance.

Patrick Kondarjian, global head of sustainability for markets & securities services at HSBC, states that the HSBC ESG Risk Improvers Index empowers investors to access stocks that exhibit ESG momentum, which serves as a valuable indicator of future financial performance. This approach distinguishes itself from traditional ESG investment strategies that solely focus on high ESG ratings without considering recent improvements or deteriorations in a company's ESG credentials.