Video: SESAMm Demonstrates New ESG Product at Finovate Fall 2022
September 29, 2022
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5 mins read
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Intro to SESAMm
Thank you very much, Greg. Thank you, everyone, for listening to this presentation. I’m Sylvain. I’m CEO and co-founder of SESAMm. SESAMm is an AI company. We extract billions of articles and messages from the web in order to identify critical insights related to financial institutions and corporates. We’re a team of close to a hundred people. And what we aim to show you today is our new product that helps financial institutions and corporates identify ESG controversies in the form of alerts on all of their investments, on all of their clients, and all of their suppliers.
So there are more than 23 million companies in the world right now. These companies are your investments, your suppliers, your clients, and no one is actually tracking them. Most of these companies are never tracked day to day. SESAMm’s solution aims at automatically identifying controversies on these companies and finding the critical information that you’re missing.
See a dashboard example
So let’s take a quick example first. Here we have dashboards where we analyze a company called Wirecard. Wirecard is a fintech company—German—that went bankrupt a few years ago due to a two billion fraud scandal. That company was heavily embedded into the financial sector, working with a lot of banks, a lot of corporates worldwide.
On our dashboards, we can immediately identify all of the key controversies and all of the key risks on the companies. And we have a score called a virality score that helps assess the severity of each ESG event so as to understand whether that company should be excluded from your list of suppliers, for example, or even discussed as a client.
SESAMm solution benefits
There are key benefits to providing this information and to the way that this product is brought to the market. First, SESAMm covers more companies than anyone else. We cover close to five million firms, whereas most ESG providers have coverage limited to 50,000 firms in total. In addition to that, we’re able to detect controversies in real time and generate daily alerts where normally a bank, for example, would have to go through that process manually and update it just a few times a year instead of receiving that live information.
In addition to that, as you can see on the demo here, we have information for more than 14 years of data. So anytime you onboard a new supplier, anytime you check for information—ESG information, on a new client, or on an investment—you’ll automatically be able to go back in history and understand whether that company was exposed to issues in the past.
Trusted by major financial institutions
SESAMm solutions are already adopted by major banks such as Raiffeisen or Nomura, for example, in this industry, major private equity firms such as Carlyle. And what’s interesting in this solution is that we’re seeing specific interests from commercial banks that are missing the solution in order to track ESG risk on their suppliers and their clients. And it makes sense. Most of these suppliers and clients are small firms, local firms that no one else is going to track. And AI is enabling us to automate the process of monitoring these firms and making sense of that data in real time.
SESAMm's solution in action
So now, let’s go to the second part of the demo. We want to take an actual life example. So let’s take a company like Twilio, for example. So you may know Twilio communications, API, messaging services, phone services, and the like. This company is a typical provider of banks or of financial institutions or any other corporates in the world.
So you see on the left, we immediately identify all of the information related to Twilio. And we can rank this based on negative sentiment so as to understand what are the key critical topics that I should care about and that I should evaluate before actually working with Twilio or in the context of already working with Twilio. We go through that process by handling more than 20 billion articles and messages from more than four million sources worldwide. So that’s an insanely large amount of information.
And on Twilio—say Twilio is one of your suppliers or one of your clients—we immediately identify a large controversy related to a data breach and cybersecurity issue, and we identified both in news but also in some of the specialized cybersecurity websites. In addition to that, we can go in even more granularity and look transparently at the content themselves, read the contents from the platform, and not just rely on a numeric rate saying that “Hey! This company is problematic.” We can actually read the underlying content and understand how the controversy emerged.
SESAMm solution benefits
So the key benefits and the real advantages of that solution is getting information immediately. You don’t have to wait for a due diligence for someone to check for someone to send a questionnaire to the company. You just type in the name, get the information in a few seconds wherever the company is, and however local that company is. It could be the most obscure company. And as you can see our system also covers many different languages, including Asian languages that are monitored automatically.
The second part is that we have access to millions of sources, including very industry-specific sources. I was mentioning cyberthreats. We also have access to NGO websites that identify these types of ESG issues in real time.
So this is really the information that is aimed at helping you monitor controversies and ESG events in just one place on any number of companies, public and private, whether they are your suppliers, your clients, or your investments. You can make sense of that data in real time using AI.
Presentation summary
I’ll finish this presentation a bit early, and we’ll actually bring the point to three calls to action. The first one is, first, please come to our booth. We’re actually on the left of the exhibit hall right when you come in. The second one is, please visit our website. It’s spelled SESAMm, sesamm.com, and you can get a free trial from the website. And finally, come talk to our amazing team with Dave and the rest of our team at our booth. And please ask us for a free POC—whether you’re a bank, an asset manager, or a fintech company—and help us help you track all of the ESG controversies on millions of companies.
Over the past decade, many organizations have improved their carbon footprints, from recyclable and biodegradable packaging and single-use plastic to planting trees and reducing their greenhouse gas emissions. However, some businesses and companies looking to boost their eco-friendly image without committing to serious changes and addressing environmental issues have been associated with false green marketing. We call this "Greenwashing."
What is Greenwashing?
Greenpeace and the Environmental Protection Agency define greenwashing as making false and misleading claims about a product's environmental benefits or practices, services, technology, or company practices. Greenwashing typically involves companies spending more money on advertising and marketing than on implementing sustainable business practices that minimize environmental impact. These false green claims can deceive consumers into believing that a product or company is more environmentally friendly than it is, leading to increased sales and profits. As a result, false advertising, misleading initiatives, and groundless claims have increased green investors' exposure to risks emerging from potential lawsuits from activist groups, image deterioration, and some heavy loss in assets invested.
Why is Spotting Greenwashing Important?
Greenwashing is a growing concern for investors as they look to make sustainable and responsible investments. Therefore, spotting greenwashing practices is important for these firms. Here's why.
The deceptive practices used by greenwashers can have significant implications for the integrity of investments made in what investors believe to be sustainably operated companies or sustainable funds. In other words, greenwashing makes it difficult for investors to distinguish between genuinely committed to sustainability companies and those merely making false claims about their environmental practices. As a result, investors may unknowingly invest in companies that are not as sustainable as they claim to be, which can harm their financial returns and the environment. Therefore, it's essential for investors to be aware of greenwashing tactics and to carefully research companies before investing in them to ensure that their investments align with their values and contribute to a more sustainable future.
What Are the Challenges to Detecting Greenwashing?
It's challenging to produce an accurate assessment of environmental, social, and governance (ESG) factors, which gives companies the opportunity to cover or hide ineffective and fake green initiatives. According to Regtank, some of the main challenges to detecting greenwashing practices are the following:
Lack of reporting standards: some investors believe that we haven’t universally agreed upon a set of standards to determine whether a product is ESG compliant.
Lack of transparency: greenwashing companies don’t disclose the specificities of their “green campaigns,” which makes it difficult for investors and consumers to fact-check and evaluate their sustainability claims.
Limited consumer awareness: false marketing strategies could be based on a combination of the consumer’s eco-consciousness and brand loyalty. As a result, consumers become less aware of the misleading strategies greenwashing companies use to sell their products.
Ultimately, these factors may contribute to the inaccuracy and limitations of ESG data and scores, which makes it easier for greenwashers to get away with their false marketing campaigns. Consequently, detecting greenwashing requires scrutiny of environmental claims made by companies and an understanding of the complex supply chains and manufacturing processes involved in producing products and services.
To learn more about greenwashing and have access to real-life case studies, download this comprehensive report:
How Does Artificial Intelligence Detect Greenwashing?
As greenwashing practices increase, activist investors, experts, journalists, and even the general public are spreading awareness of the issue using social media, news outlets, forums, and blogs, among other means. Recently, artificial intelligence (AI), particularly natural language processing (NLP), has proven to be effective in the early detection of greenwashing by analyzing vast amounts of qualitative data publicly available on the web. At SESAMm, for example, we apply our NLP capabilities to identify companies likely to engage in greenwashing practices by analyzing text in billions of web-based articles. Our data lake contains over 25 billion web–sourced articles, sourced from four million news, blogs, social media, and forum discussions on five million public and private companies in more than 100 languages. We run these articles through our AI platform tool, TextReveal®, and systematically craft reliable, timely, and comprehensive insights to detect greenwashing, generate ESG alerts, and identify related risks.
The Rise of Greenwashing
Greenwashing, the deceptive practice where companies claim to be more environmentally friendly than they actually are, has become a growing concern in recent years. By analyzing the frequency of web mentions of greenwashing over time, we can observe important trends and understand the factors contributing to this phenomenon.
Recent analyses indicate a significant increase in greenwashing mentions since late 2019. This rise aligns with a growing public awareness of the climate emergency and the increase in media outlets and social media accounts dedicated to exposing greenwashing. The number of mentions escalated from fewer than 200 to over 23,000 in the last quarter of 2023, highlighting the increasing scrutiny of corporate environmental claims.
A noteworthy pattern is the regular occurrence of spikes in greenwashing mentions during the third quarter over the past three years. This timing corresponds with the "pre-COP" periods, leading to critical international climate change management conferences. These periods see heightened discussions around sustainability, with increased attention on companies' environmental practices.
Figure 1: Greenwashing mentions over time.
Greenwashing in the Energy Sector
The energy sector, particularly the oil industry, has faced significant scrutiny regarding greenwashing. In this context, companies like Shell and ENI have been prominent due to the frequency of greenwashing mentions associated with them.
Figure 2: Examples of greenwashing mentions in the energy sector over time.
For Shell and ENI, the volume of greenwashing mentions has fluctuated, with notable increases in specific quarters. For example, Shell saw spikes in mentions during the second quarter of both 2021 and 2022 while experiencing a drop in the third quarter of 2022. ENI has faced similar fluctuations, often linked to legal actions and publicized environmental issues.
Shell's Greenwashing Mentions, ESG Risks, and Initiatives
Shell, a British multinational and prominent player in this sector, has faced considerable scrutiny for such practices. The company has experienced notable spikes in greenwashing mentions and has been involved in several ESG-related risks.
Figure 3: Shell greenwashing and ESG mentions over time.
Greenwashing Mentions
We can see an increase in greenwashing mentions in the first half of 2023. Around that period, Shell faced allegations and lawsuits concerning its environmental claims. The company was criticized for misleading U.S. authorities and investors about its energy transition efforts. Additionally, Shell faced public backlash for labeling fossil gas as 'renewable' while reporting record profits. A notable incident involved a shareholder suing Shell's executives over climate risks.
ESG Risks
Shell has faced several ESG-related risks, including legal challenges and pollution issues. In 2021, the company was sued by New York City over climate change-related advertising and filed an arbitration claim against Nigeria concerning a spill dispute. In March 2023, Shell faced another oil spill, this time in another region in Nigeria, Rivers State, and also saw institutional investors backing a lawsuit against its board over climate risks. The mid-2023 period saw Shell agreeing to pay $10 million for air pollution violations at a Pennsylvania petrochemical plant. Despite its net-zero pledge, the company announced plans to increase fossil fuel production.
ESG Initiatives
Despite its challenges, Shell has also engaged in various sustainability initiatives. In late 2021, the company announced plans to purchase power from the world's largest offshore wind farm. Mid-2022 saw a leadership change with the company's CEO stepping down as Shell aimed to align with its climate goals. The company also planned to deploy 10,000 EV chargers across India as part of its global strategy. In mid-2023, Shell committed to investing $10–15 billion in developing low-carbon energy solutions. Although the company abandoned its lower oil production target, it maintained its commitment to reducing emissions.
Shell's journey underscores the challenges of aligning environmental claims with real actions, emphasizing the importance of transparency and genuine sustainability efforts.
ENI's Greenwashing Mentions, ESG Risks, and Initiatives
ENI, an Italian multinational oil and gas company, has faced scrutiny for such practices. The company has experienced fluctuations in greenwashing mentions and has been involved in a number of ESG-related risks.
Figure 4: ENI greenwashing and ESG mentions over time.
Greenwashing Mentions
ENI's greenwashing mentions are fairly low. However, the company has been featured in discussions about greenwashing, especially with recent developments. In early 2022, the company faced criticism for inconsistencies in emissions data and greenwashing activities, as highlighted by the Sereno Regis Study Center. Greenpeace also criticized ENI for using the Sanremo Music Festival as a platform for greenwashing. In May 2023, ENI faced a lawsuit for allegedly lobbying and greenwashing to promote fossil fuels despite being aware of their environmental risks. Greenpeace sued the company, accusing it of knowingly contributing to climate change.
ESG Risks
Over the past 4 years, the oil giant's ESG risks have been few but not inexistent. ENI has encountered several risks, including legal challenges and pollution issues. In 2022, ENI's environmental strategy was deemed a failure, and concerns arose about a pipeline spill into the East Irish Sea. The company also faced legal actions in 2021, including an appeal against a court ruling in an illegal waste case and warnings from the Legality Network to reduce greenhouse gas emissions or face prosecution.
The company faced a lawsuit in early 2023 for allegedly having prior knowledge of the climate crisis. In another incident, a report found that ENI and Shell were responsible for significant pollution in Bayelsa, requiring a $12 billion cleanup.
Shell and ENI both face the challenge of balancing economic interests with environmental responsibility. Despite allegations of greenwashing and environmental risks, both companies have taken steps towards sustainability, such as investing in low-carbon solutions and renewable energy projects. Their experiences highlight the importance of transparency, genuine commitment to environmental responsibility, and the role of public scrutiny in holding companies accountable.
Greenwashing and ESG Investing
In sum, certain companies advertise their sustainability and green initiatives, while in reality, they are making false claims and practicing greenwashing, as evidenced by our analysis using SESAMm's AI and ESG reports. We use AI through TextReveal to generate alternative data for use cases, such as ESG and SDG, sentiment, private equity due diligence, corporate studies, and more. Our technologies can reliably ensure the credibility of ecological initiatives and serve global investment firms, corporations, and investors, such as private equity firms, hedge funds, and other asset management firms, to enhance their investment strategies.
Conclusion
In conclusion, the issue of greenwashing represents a substantial obstacle in the journey towards genuine environmental sustainability, misleading consumers and investors and diluting the efforts of genuine sustainable enterprises. Nevertheless, the emergence of advanced technologies such as Artificial Intelligence (AI) and Natural Language Processing (NLP) indicated a new era of accountability. Innovators like SESAMm are at the forefront, deploying these technologies to effectively unravel and counteract greenwashing practices. This empowers investors, asset, and portfolio managers to discern and align their resources with legitimately sustainable entities. The call to action is clear: a collective demand for transparency and responsibility is crucial.
Reach out to SESAMm
TextReveal’s web data analysis of over five million public and private companies is essential for keeping tabs on ESG investment risks. To learn more about how you can analyze web data or to request a demo, reach out to one of our representatives.
SESAMm is pleased to announce the appointment of David Platt to its Advisory Board. David has spent his career at the intersection of M&A, corporate strategy, and risk intelligence - most recently as Senior Vice President, Chief Strategy Officer at Moody’s Corporation, where he contributed to the diversification of one of the world's leading financial data companies.
During his twelve years at Moody’s, David helped architect the firm’s diversification into data, analytics, and technology-driven risk assessment. He oversaw more than 75 transactions valued at $9 billion, including landmark acquisitions in climate risk, cybersecurity, and private company data. Before Moody’s, he held senior M&A roles at Deutsche Bank, Bank of America, Citigroup, and Credit Suisse First Boston, advising on complex transactions and corporate strategy for global clients.
“Over the course of my career, I’ve focused on helping organizations scale by expanding into new markets, strengthening their strategic foundations, and building platforms that help institutions better measure, manage, and understand risk,” said David Platt. "SESAMm has built an impressive platform at the intersection of AI and risk intelligence, and I’m excited to support the team as they shape their strategy and scale the business globally.”
David’s appointment comes as SESAMm continues to scale its AI-powered risk intelligence platform and expand its global presence. His experience driving profitable and strategic growth initiatives and scaling data and analytics platforms will help guide the company’s strategic direction.
"David has sat on both sides of the table, as a buyer of data and analytics capabilities, and as a trusted advisor to some of the world's largest financial institutions," said Sylvain Forté, CEO and Co-Founder of SESAMm. "That perspective will be invaluable as we shape SESAMm’s strategic direction and execute our next phase of growth."
David is a CFA charterholder and has served on the boards of BitSight Technologies and ICRA, an Indian credit rating agency. He holds an MBA from the University of Chicago Booth School of Business.
Welcome to the latest article in our ESG Data Trends series. Today, we're turning our attention to the growing bike industry, specifically spotlighting Italy's Pinarello. Our aim is to illustrate how health-conscious and ecological trends, increased by the pandemic, have steered the world towards bicycles for both commuting and exercise. Pinarello, as well as many of its competitors, are private companies, which poses a particular challenge to analyze them in depth as the amount of data available is particularly sparse and harder to find. However, with the help of AI tools, this task becomes not only possible but also highly automated.
Bike Industry Trends: A General Overview
Long–term Momentum: Online mentions related to the bicycle market have exhibited a consistent upward trend since 2015, peaking in the last three years in the wake of COVID-19.
Figure 1: Bike market volume of mentions over time.
Government Initiatives: Notably, a spike in government investment in cycling infrastructure has paralleled the pandemic-induced behavioral changes.
Figure 2: Bike commuting VS. government focus on cycling infrastructure over time.
Type-specific Popularity: Among the various segments, E-bikes dominate online mentions, followed by mountain bikes and road bikes.
Figure 3: Bike market breakdown by type over time.
Digital Ecosystem: The digital facet of the trend reveals that sports data apps, especially those focusing on performance tracking, have gained considerable traction.
Figure 4: Sports data apps and their use mentions over time.
E-bikes: Riding the High Wave
E-bikes have captivated attention across the board. They are now deemed a convenient solution to commuting, more so after the pandemic. Geographically, Europe outperforms the US in E-bike mentions, with France leading the charge on urban bikes. Italy, on the other hand, showcases a stronger inclination towards road bikes.
Figure 5: Bike type regional breakdown.
The Pandemic Effect on Road Bikes
The road bike segment witnessed an unprecedented surge in mid-2020, corresponding with pandemic lockdowns. Major players like Specialized, Trek, and Canyon lead in online mentions, but Pinarello holds its ground with a stable and slightly growing competitive share.
Figure 6: Road bike market data share by competitor over time.
Consumer Preferences: Performance and quality emerge as the dominant positive attributes, whereas cost remains the primary consumer concern.
Attribute Sentiment: When analyzed based on sentiment, customization, and performance, score the highest, whereas cost ranks the lowest due to consumer complaints.
Figure 7: Road bike market attributes sentiment.
Case Study: Pinarello
Online Reputation Insights
The volume of online mentions for Pinarello has seen a steady climb, particularly after 2021. Quality and performance have risen as positive attributes, while cost remains a predominant negative sentiment, inflamed further by recent discussions about the brand's pricing strategy.
Figure 8: Pinarello attributes sentiment.
ESG Analysis of Pinarello and the Bike Industry
Low-risk ESG Profile: In general, the bike industry fares well in ESG evaluations. The risks usually center around social and governance aspects.
Social Risks: These primarily relate to product safety, with several recalls from various companies, including Specialized and Trek.
Governance Risks: Pinarello has faced patent infringement claims, while other brands like Giant have been accused of fraudulent behavior.
ESG Positive Impact Initiatives
The industry, by and large, is aligned with environmental sustainability goals. Trek stands out for its environmental initiatives and social opportunities, while Canyon demonstrates advances mainly in the environmental management of the supply chain.
As for Pinarello, the brand has undertaken ESG-positive initiatives, notably in environmental and social spheres. Product innovations like the Nytro E e-bike and high-performance 3D printed bikes signify their commitment to sustainable technology. Moreover, their partnerships and sponsorships aim to uplift local communities.
Navigating ESG Goals in the Bike Market
The bike market, led by brands like Pinarello, demonstrates significant strides in alignment with ESG goals. For private equity firms and asset managers, the value lies not just in financial returns but also in understanding ESG risks and opportunities that could influence long-term sustainability and risk mitigation.
How can SESAMm help you track ESG performance using AI?
We combined natural language processing with billions of textual web data related to the bike market to produce this analysis. Using NLP-powered models gives us an edge as we can extract ESG, SDG, and financial insights that aren’t necessarily obvious or easy to detect. These insights help investors make better investment decisions. SESAMm leverages AI and machine learning technologies to help you decipher and understand timely sentiment, trends, and ESG metrics on public and private companies to assist organizations in risk mitigation and profit generation strategies.
Reach out to SESAMm
TextReveal's web data analysis of over five million public and private companies is essential for keeping tabs on ESG investment risks. To learn more about how you can analyze web data or request a demo, contact one of our representatives.
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