March 4, 2020

Big Data and AI’s Role in ESG Investing

Last month we included a guest blog from Rhonda Brauer, and we’re excited to bring another post from Rhonda to you:

Since my last guest blog on the sustainability reporting frameworks, UK-based Aviva Investors published a thoughtful inhouse article on “Climate data:  Seeing through the fog”, as part of a larger climate-related series.  Many of us interviewed for this article agreed that required, not voluntary, reporting would be the best solution to the problem of not having comparable, relevant and transparent corporate ESG disclosures.  The article goes on to explore how “big data” — which is too complex to be analyzed using traditional processing applications — and artificial intelligence (AI) could help solve this problem in the interim, particularly when applied to climate change and similar issues.

Highlights include:

Although the use of satellites, sensors and big data analytics to measure emissions and inform investment decisions is just beginning, much of the data and computer programmes that make it possible exist and are constantly improving.

Whether to measure direct emissions from factories, across a company’s supply chain, or at a country level, an increasing number of options are emerging including mobile data, big data analytics from online sources, satellite measures and data available from a plethora of sensors scattered around the world.

This type of approach allows analysts and researchers to find and assess relevant data that does not feature in companies’… disclosure reports… through scraping (compiling information from online and offline sources) and crawling (using programmes to search across online sources)… Using AI to sort and analyse the mass of information gathered could make sense of it without deploying armies of researchers.

One cited example of how big data and AI can help reduce carbon emissions:  Deforestation can now be predicted and detected through digital solutions, which form the basis for proactive action through monitoring and improving agriculture, reforestation and peatland restoration.

The article also includes examples of data gleaned from government satellites that make their data public versus commercial satellites and drones, how such data can be used and influenced by both equity and debt investors to inform financial decisions and to better detect “greenwashing” or manipulation of data, gaps that remain when using such data, how investors can play a critical role, and how companies should be using similar analyses for their business models.

Annual Meetings: Planning for COVID-19 Developments

In case you missed it, here’s something I blogged yesterday on our Proxy Season blog:  This memo from Davis Polk walks through some of the things you might want to think about if you’re worried about the COVID-19 coronavirus and how it might affect where or when you hold your annual shareholders’ meeting.  The memo looks at these considerations in context of SEC proxy rules and Delaware law.  With COVID-19 developments moving quickly, the memo is timely and helpful because someone is bound to ask what your plan is in case you need to move the meeting location, etc.

For those that have already mailed the proxy statement:

In the event you have a last minute change in your meeting location or date, the memo discusses whether you would need to re-mail the proxy statement – the answer is “no” except for special circumstances described in the memo.  Even though you likely wouldn’t need to re-mail the proxy statement, the memo says you should disclose the change as soon as possible by issuing a press release and filing the press release with the SEC as supplemental proxy materials.

For those that are still working on your proxy statement:

If you’re still working on your proxy statement and haven’t mailed it yet and you’re considering the possibility of a last minute change in venue or date, the memo suggests disclosing the possibility of a change in your proxy statement but says a change to the proxy card itself is likely unnecessary.

I often worried about what we would do if our meeting venue was suddenly unavailable, not to mention worries about technical snafus and our team had back-up plans “just in case”.  To help you prepare and hopefully avoid any annual meeting surprises, here’s a reminder to visit our “Checklists” Portal – especially this one on “Annual Meeting Surprises.”

Virtual Meetings

A few weeks ago, I blogged about things to consider if you’re thinking of holding a virtual annual meeting.  Maybe interest will pick up but again, it’s not for everyone.  If you want to look into this further, here’s another comprehensive resource about virtual meeting considerations sent to us from the folks at Veaco Group.

Also, it has been reported that in advance of Apple’s shareholder meeting last week, Apple warned those planning to attend to take extra health and safety precautions due to the ongoing development of COVID-19.

Really? SEC Cancels Another Open Meeting

It happened again, the SEC has cancelled an open meeting scheduled for today about proposed changes to rules on private offerings. Broc blogged last fall about how the SEC was cancelling open meetings on what was turning out to be a regular basis. Unclear what led to the cancellation this time, maybe a Commissioner is unavailable at the last minute or perhaps the Commissioners will take action in seriatim and still get something done, we’ll see and stay tuned!

– Lynn Jokela