CEO Sylvain Forté demonstrates TextReveal’s® latest features applied to supply chain and risk analysis on the main stage of FinovateEurope 2023 in London. He also presents a quick use case on the latest Silicon Valley Bank fallout.
Discover how TextReveal can help automatically analyze millions of companies based on web content at SESAMm.
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In a landmark move for sustainable finance, the UK government has announced plans to regulate ESG (Environmental, Social, and Governance) ratings providers. The Financial Conduct Authority (FCA) will soon be tasked with overseeing these firms, marking a major shift from the current hands-off approach. This development comes amid growing concerns about the inconsistency, opacity, and influence of ESG ratings on investment decisions.
The regulatory gap in ESG ratings is clear when compared to traditional credit ratings. Credit rating agencies (like S&P, Moody’s, and Fitch) operate under strict regulatory oversight and well-defined methodologies, which is one reason their assessments tend to be closely aligned. In fact, one study found the top credit agencies’ ratings are 99% correlated, whereas ESG ratings from different providers showed only about 60% correlation. In practice, that means two ESG raters might disagree as wildly as “AAA” vs “BBB” for the same firm in the same period. By contrast, it’s rare to see such divergence in credit ratings because that industry has long been supervised and standardized.
Absent regulation, ESG ratings have been opaque and inconsistent. Regulators and market watchdogs have likened the ESG ratings arena to a “Wild West” in need of a sheriff. An environment “unregulated and opaque” where even companies with poor environmental track records can sometimes score surprisingly well. The lack of transparency in how ratings are determined makes it hard for investors to trust what an ESG score truly reflects. This opacity not only fuels skepticism but also raises the risk of greenwashing, where unsustainable companies might hide behind inflated ESG scores.
New oversight aims to bring transparency, consistency, and trust to ESG ratings. Authorities around the world are now stepping in. For instance, the UK government has introduced legislation to bring ESG rating providers under the Financial Conduct Authority’s remit. Similarly, European regulators (ESMA in the EU) and others in Japan and India are moving toward tighter standards. The consensus is that ESG ratings need basic guardrails, much like credit ratings, to ensure they are rigorous, reliable, and free of conflicts of interest. As one analysis noted, if a credit rating agency were to suddenly downgrade scores at the scale we’ve seen with ESG re-ratings, regulators would have intervened immediately. Treating ESG ratings “similarly” to credit ratings in terms of oversight is increasingly seen as necessary to prevent nasty surprises (read: unexpected discrepancies) and to maintain market stability.
Regulation can address several issues: it can mandate clearer methodological transparency, require disclosure of rating drivers, and enforce governance standards (for example, to manage conflicts of interest if a rater also offers paid consulting). All of these steps would help investors and companies finally peek behind an ESG rating. In other words, examine the underlying factors, rather than taking scores at face value. Ultimately, effective regulation should turn ESG ratings from a black box into a more consistent, credible tool for decision-making.
Under the new legislation, any ESG ratings provider serving UK clients will be required to obtain authorization from the FCA. These firms will need to disclose their methodologies, manage conflicts of interest, and maintain proper governance controls. The regulation is designed to align with international recommendations, such as those from IOSCO, and mirrors similar efforts already underway in the EU.
The goal is to bring greater transparency, comparability, and accountability to a market expected to grow significantly in the years ahead. The FCA plans to consult on specific rules later this year, with implementation expected to phase in over time.
Bringing ESG ratings under regulatory oversight could be a turning point for sustainable investing. With consistent standards and greater clarity on how scores are determined, investors can better understand the rationale behind ratings and compare them more effectively. It could also reduce the risk of greenwashing by forcing providers to show their work.
Of course, some concerns remain. Smaller ESG ratings firms may struggle with the cost of compliance. Others worry that regulation could stifle innovation or lead to market consolidation. But broadly, the move has been welcomed by investors and industry groups as a necessary step toward improving trust in ESG data.
As global regulators push for greater alignment, the UK's framework could help shape a more transparent and robust ESG ratings ecosystem - one that better serves both capital markets and long-term sustainability goals.
Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.
November 11, 2022, FTX, a $32 billion cryptocurrency exchange company that many believed would “change the world,” filed for bankruptcy. This news shook the crypto and financial communities, compelling many to debate the future of the crypto market and its platforms.
You could say that FTX’s collapse began before the news broke, but here’s a summary of events as The New York Times and ABC News details:
In early November, CoinDesk, a crypto publication, broke the news on a leaked document from FTX. The balance sheet showed that the hedge fund run by Sam Bankman-Fried (SBF), Alameda Research, held a substantial amount of FTT tokens. In short, SBF had set up Alameda (his trading firm) and FTX (his exchange firm) in such a way that if one unit experienced trouble, such as dropping cryptocurrency prices, the other experienced it, too.
By the way, FTT is used for various functions, including traders’ payment of operation fees. Also, by the way, Changpeng Zhao, Binance’s Chief Executive, sold his stake in FTX to SBF in 2021, partially with FTT. So, “due to recent revelations,” Binance (Zhao) announced on November 6, 2022, that it would sell its FTT tokens.
Traders responded; they hurried to pull funds out of FTX out of fear, and FTT’s price fell. Meanwhile, FTX processed withdrawal requests over three days, amounting to an estimated $6 billion. The liquidity crunch was upon it.
Then, on November 8, Binance said it would bail out FTX. But on November 9, Binance backtracked and announced in a Tweet that it would not “as a result of corporate due diligence,” while also citing regulatory investigations and reports of mishandled funds.
The next day, November 10, the Securities Commission of the Bahamas froze FTX’s assets, citing the public statement about potentially “mishandled” and “mismanaged” customer funds. On November 11, FTX filed for Chapter 11 bankruptcy protections, and SBF resigned as CEO. John J. Ray III—famously known as the CEO who headed the infamously known energy company, Enron, through its collapse in the 2000s—replaced SBF on November 17.
Today, FTX faces federal investigation for securities laws violations based on a report by The Wall Street Journal regarding FTX lending customer deposits to Alameda Research for liabilities, of which the company’s top executives were aware. Investors have suffered loss, traders have suffered loss, and the greater crypto community and regulators are asking questions.
News about FTX’s collapse generated tons of web data for us to scour. With this data, here’s what we aimed to find out:
Web public sentiment for FTX and SBF was consistently positive until Q1 of 2022. As mentions volume increased, their sentiment polarity decreased (Figure 1). The mentions spike for both in November when CoinDesk broke the news. Likewise, polarity dips into the negative range for both.
Definition: Polarity represents the aggregate of positive and negative sentiments (opinions or reviews) on a company. A 0 score means there is as much positive as negative sentiment expressed. The dotted and dashed lines represent sentiment in the following charts.
Looking closer at Q1 (Figure 2), we find that mentions affecting sentiment increased for FTX and SBF during this period. What are the mentions about, and why did they affect polarity negatively?
It turns out that SBF is linked to other keywords—we call these co-mentions—and between January 2022 and November 2022, SBF/withdrawal co-mentions (Figure 3) spiked in July when SBF defended Terra Luna’s founder, who was accused of peddling a Ponzi scheme.
If withdrawal co-mentions brought up possible reasons why SBF and FTX experienced dips in sentiment, what other co-mentions could give us more insight? How about donations, SEC, and U.S. elections?
Bankman-Fried has exhibited patterns of making political statements, attempting to influence crypto regulations, and donating funds before elections. It should be no surprise that SBF’s co-mentions with C-level unethical practices yield additional data.
Note: To see the co-mentions with unethical practices chart, contact a SESAMm representative today.
Corporate governance stands out when evaluating SBF’s ESG risks, but his social risks are nothing to ignore either.
Two areas of governance risks to note are money laundering and board of directors (Figure 5). Money laundering as a co-mention has been an issue as early as February 2022, but it became a bigger issue in October. These risks may be popping up due to allegations of manipulating the price of the APT token and a securities violations probe.
Note: To see the social risks over time chart, contact a SESAMm representative today.
If you’ve read this far, you by now get an impression of FTX and SBF, from mention volume to sentiment analysis and ESG risk. But how did FTX’s collapse affect the overall cryptocurrency market? Let’s find out.
In comparing the sentiment polarities for FTX and the crypto market from January 2021 through November 2022 (Figure 6), the sentiment for crypto remains relatively steady despite FTX’s sentiment taking a hit.
When comparing other cryptocurrency exchanges to FTX (Figure 7), sentiment polarity for them is hardly affected, except Binance, because of its connection with FTX. Oddly enough, eToro experienced a boost in sentiment, possibly because of its core values around openness and transparency, the fact that they’ve been around since 2007, its early compliance with regulations (i.e., AMF, FCA, ASIC, BaFin, and ACPR), and that it also proposes investing in stocks and ETFs, a contrast to most other crypto market exchanges. Bitfinex has its own issues, so its dip in sentiment might not be correlated.
At this time, FTX’s ESG risks based on the mention volume are only surpassed by Bitfinex (Figure 8), which its risks are based on many other reasons we won’t get into in this article.
Note: To see a comparison chart of social and governance risks for each exchange, contact a SESAMm representative today.
FTX’s collapse also affected sentiment around the centralized vs. decentralized debate. Since October 2022, sentiment for centralized exchange platforms, such as FTX and its competitors, has fallen (Figure 9).
Likewise, the mention volume for self-custody has more than doubled in the last couple of months (Figure 10). Although centralized platforms offer quicker and easier access to crypto trading, traders are considering complex but more secure options such as crypto wallets and keys because, like banks, centralized exchanges can do what they will with cryptocurrency while it’s in their possession. With self-custody, owners are in control.
Note: To see additional charts, such as competitive data share for crypto wallets, contact a SESAMm representative today.
Believe it or not, FTX was not the first crypto exchange to collapse. In 2014, Mt. Gox—the biggest crypto exchange at the time—lost half a billion dollars worth of Bitcoin due to a hack. How did Mt. Gox’s collapse affect sentiment for the crypto market then? The short answer is: It didn’t.
Figure 11 shows that while Mt. Gox’s sentiment polarity fluctuated, even reaching negative territories, the sentiment for the crypto market remained relatively stable and positive.
Our analysis is that investors should treat cryptocurrency exchanges like any investment opportunity. Do your due diligence and monitor your portfolio with tools like SESAMm’s TextReveal®.
As for the cryptocurrency market, data shows that sentiment for it remains level and positive. We speculate that cryptocurrency and centralized exchanges are here to stay. However, based on historical data and current news, we suspect conversations about crypto regulations to increase.
For a deeper analysis of FTX’s collapse and access to all charts and supportive-article links, reach out to a representative today.
ESG reporting is no longer just a compliance requirement; it is now essential for structuring and managing ESG data to anticipate risks and adjust strategies. ESG platforms go beyond generating reports—they must provide actionable data to inform decision-making, much like financial tools. The emergence of regulatory frameworks such as CSRD is accelerating this transformation. With a rapidly expanding market, how do you choose the most suitable solution for your organization?
An ESG software solution is designed to help companies structure, analyze, and improve their non-financial performance. It centralizes ESG data collection, automates analysis, and ensures compliance with current regulations. As legal requirements become more complex and data quality remains a significant challenge, these tools play a key role in ensuring reliability, traceability, and transparency. Advanced features, often powered by artificial intelligence (AI), facilitate data extraction, consolidation, and interpretation, enabling companies to manage their sustainability strategies efficiently.
By integrating these functionalities, ESG software ensures compliance and supports a proactive approach to managing risks and opportunities related to sustainability.
Here are some leading ESG software solutions and their features:
A top-tier solution for financial institutions, investors, and large firms. It integrates AI-powered tools for data collection, analysis, and compliance verification.
Ideal for: Investors and enterprises with >1,000 employees
Key focus: ESG reporting, impact measurement (Carbon Footprint, Biodiversity), ESG risk evaluation, compliance
Strengths:
Sami
A comprehensive ESG and decarbonization solution with a climate and CSRD module, launched in 2024. It combines software, consulting support, and training.
Ideal for: SMEs / mid-sized enterprises
Key focus: Carbon footprint, life cycle analysis, CSRD compliance
Strengths:
Novisto
A SaaS platform that optimizes ESG data collection, analysis, and communication.
Ideal for: Investors and large enterprises (CAC 40)
Key focus: ESG reporting, compliance
Strengths:
Greenomy
Specialized in regulatory reporting, built around the EU Taxonomy and CSRD requirements.
Ideal for: Mid-sized and large enterprises (CAC 40)
Key focus: ESG reporting, compliance
Strengths:
Sweep
A modular ESG platform suited for industries like retail, consumer goods, and manufacturing. It offers four modules: Climate, Finance, Supply Chain, ESG-CSRD.
Ideal for: SMEs, mid-sized firms, and large enterprises (CAC 40)
Key focus: Carbon footprint, ESG reporting, sustainability strategy
Strengths:
IBM Envizi
IBM’s ESG software suite covers ESG data management, carbon footprint tracking, and CSRD reporting.
Ideal for: Investors and companies of all sizes
Key focus: Carbon footprint, ESG reporting
Strengths:
Tennaxia
A historic ESG and HSE (Health, Safety, Environment) solutions provider with 20+ years of experience. Acquired Traace in 2024 to strengthen carbon footprint and CSRD compliance capabilities.
Ideal for: SMEs, mid-sized firms, and large enterprises (CAC 40)
Key focus: Carbon footprint, ESG reporting, HSE
Strengths:
Apiday
A hybrid solution that combines an ESG platform with consulting partners for double materiality analysis.
Ideal for: Investors and mid-sized firms (CAC 40)
Key focus: ESG reporting, impact measurement, compliance
Strengths:
Zei
A flexible ESG platform that unifies all market frameworks. Its modular approach (Evaluate, Manage, Align) simplifies compliance and performance enhancement.
Ideal for: SMEs, mid-sized firms, and large enterprises (CAC 40)
Key focus: Carbon footprint, ESG reporting, compliance
Strengths:
Novata
A SaaS platform designed for private equity investors and portfolio companies. It centralizes ESG data collection and analysis with advanced scoring and benchmarking tools.
Ideal for: Investors and mid-sized firms (CAC 40)
Key focus: Carbon footprint, ESG reporting, compliance
Strengths:
ESG software solutions provide major benefits in compliance and strategic management. They improve data processing, ensure reliable reporting, and enhance decision-making with consolidated ESG performance insights.
Find the ESG reporting software that matches your needs.
ESG software can no longer be limited to a simple reporting tool; it must be fully integrated into your strategy. To make the right choice, it's essential to define your project in advance: What functional, organizational, and geographic scope should the solution cover? Do your needs relate to compliance, strategy, impact improvement, risk analysis, or value chain data collection? Do you have clear governance in place to deal with sustainability issues?
In addition to functionalities, we need to assess the full range of customer services that accompany the solution. Does the provider offer a robust support team integrated into the license? Does it have partners capable of facilitating deployment, enriching your data, or providing strategic support? Integration with your information systems is also a key criterion, and security should not be overlooked. Check that the vendor applies high standards of data protection and service continuity.
Clearly defining your needs and objectives and evaluating these criteria will enable you to choose an ESG solution that is truly adapted to your organization.
Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.
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