by Debra Walton, Executive Vice President, Chief Revenue Officer at Refinitiv
Can good data help to create a fairer and more inclusive world? Last week at Davos I was struck time and again by the sense of urgency around the issues of the environment. There’s a clear consensus that the time for words is over, and the time to act is now.However, it’s important not to forget that while the issues of environment are pressing, we have yet to declare victory on the issue of inclusion (the ‘S’ in ESG). At the Thomson Reuters Foundation panel ‘Putting Purpose into Practice’, we focused on the theme of Inclusive Economies. I was heartened by the unanimous view of the panel that we need to prioritize diversity and inclusion within governments and companies, in order to accelerate progress against the broader ESG agenda.There is still work to be done, and it’s through good data that we’ll see real progress being made.
Data and the ESG conversation
One of the questions I was asked on the panel was: ‘How do you see data playing a focal role in framing the ESG conversation, and putting purpose into practice?’ To answer that, it’s beneficial to understand that Refinitiv has been actively engaged in the issue of ESG for more than a decade, since we first began collecting ESG data. Today we use 400 metrics to benchmark over 7000 companies which account for over 70% of global market cap.Why is ESG data so important? It provides a benchmark.Without a solid dataset, no one knows what good looks like. Data provides a benchmark, allowing companies and countries to see how they’re doing compared to their peers. Our Sustainable Leadership Monitor, launched at the World Economic Forum 2019, is a data-driven app that uniquely aggregates financial and ESG data to analyze the long-term orientation of companies. We believe that if you can’t measure it, you can’t manage it!
At this year’s forum, we announced the launch of the Future of Sustainable Data Alliance, where Refinitiv will work with influential global bodies to monitor sustainable finance through data.Companies are paying attention to ESG, more than ever before. Whereas in 2013 only 60% of publicly listed companies reported on the gender diversity of their boards, today 100% do. Unfortunately, that reporting has shown that we still have a long way to go- today women only account for 18% of boards globally. I’m very proud that Refinitiv, having made a pledge to achieve 40% representation of female executives by 2020, has achieved this goal.The ESG data we provide can be used in many ways. It’s interesting to note that we can see a correlation between high performing companies and diverse boards- looking at our Diversity and Inclusion index, more diverse companies outperformed the MSCI world index by 7% over the last two years.
Investment advisors are taking note as well. Most are already responding to the demands of investors, particularly Millennials, who are twice as likely as older generations to demand ESG investment strategies. Blackrock CEO Larry Fink gave the clearest indication of the increasing importance of sustainable investment with the publication of his open letter before the start of Davos, and from my conversations throughout the forum, it’s clear that the industry recognizes that we are at a turning point. I’m confident that it will be through data that we will enable the industry to make this shift.
Tackling the challenge of digital inclusion
The other topic that I was asked to address on the panel was digital inclusion and bias in AI. As I’ve written previously, data bias occurs either through data quality or when the humans designing the algorithms and models behind the data allow their biases, unconscious or not, to affect the output of the data. This manifests itself in many ways, for example, in mortgage screening we’ve seen cases where wives are given less credit than their husbands despite exemplary credit scores, or bias in resume screening, where entire demographics get screened out due to poorly constructed algorithms.At the WEF IBM policy lab session on Trust in Innovation, IBM CEO Ginni Rometty made a great point about how we need to regulate the use case, and not the underlying technology. Facial recognition provides a great example of this- most of us love the convenience of having facial recognition unlock our phones, but we have serious concerns when this same technology is used to monitor public places. In the same way, we need to examine the individual use cases for data, and use technology to improve the quality of the data we’re generating.
Another challenge is the sharing of data, with financial criminals often hiding behind the veil of data privacy. Over a year ago we announced our alliance with WEF and Europol; this public-private partnership is helping to enable the sharing of data between financial institutions. Ultimately, data rights are at the heart of this debate, and tools such as AI, machine-learning and natural language processing are key in helping us to refine the tools we use to collect, systematize and understand this data.At one point during the panel, I made the point that data is really what’s going to turn good intent into measurable action. I’ve left Davos feeling inspired and energized by the collective desire I’ve seen to address the challenges we face, and I’m looking forward to making real progress on these issues in the days and weeks ahead.
LinkedIn blog post: https://www.linkedin.com/pulse/how-you-lead-your-teams-put-purpose-practice-debra-walton