As the 2022 United Nations Climate Change Conference wraps up, governments and, by proxy, companies are charged with fulfilling new recommendations, especially for non-State entities to commit with integrity to Net-Zero. COP27, as the conference is also called, is the time and place where we claim as a united society at the world's center to make change for the better.

But COP27 is over. Now what? Do we go back to business as usual? Do we wait and see if we stick to any of these new agreements? Or worse, do we say we'll make changes but fall short of making those changes?

I say no. We can do better, and here's why…

We need to talk about climate change

Climate change effects are more than global warming. Global warming consequences include:

• Rising sea levels
• Stronger and more intense hurricanes
• More droughts and heat waves
• Longer wildfire seasons
• And more

Why do I bring these up? Because all of these effects will impact your business in one way or another.

For example, did you know that the Rhine River, one of Europe's major rivers, is suffering from drought? Water levels are so low that barges are limited, and it's disrupted river cruises because levels are currently 38 centimeters below the minimum required.

The same goes for the Mississippi River in the U.S. The Mississippi River has dropped to the lowest levels they've ever been in 34 years, driving up shipping costs. This challenge is also a big deal because the river carries 92% of agricultural exports.

Also, in the past year, damaging hurricanes and typhoons have damaged infrastructure in South Korea, South Africa, China, Japan, and the U.S., to name a few countries, affecting crops, manufacturing operations, supply chains, and much more across the globe.

I could go on about how each effect influences enterprise, but the bottom line is climate change is bad for business. And supporting companies that enable climate change is also bad for business, which brings us to the topic of environmental, social, and governance (ESG) measures.

We need to talk about ESG

ESG has become mainstream since the UN shared a report in 2006, a joint initiative by a group of financial institutions to develop policies and guidance on how to better incorporate ESG issues in securities brokerage services, asset management, and associated research functions. This introduction has helped industries establish goals through:

• Managing ESG risks
• Anticipating regulatory action or accessing new markets
• Contributing to the sustainable development of their societies

However, with ESG policies come ESG data challenges. For example, ESG measuring, its data, and how companies report them are inconsistent. ESG data providers deal with "data gaps" differently, so their approaches can lead to discrepancies. And as ESG data becomes available publicly, how ESG data providers interpret the data varies, too.

We need to talk about greenwashing

In simplest terms, greenwashing occurs when a company misleads its stakeholders, investors, and consumers about its environmental practices, specifically by communicating positive environmental performance contrary to its actual, less flattering execution.

On the surface, you might think, "What's the big deal? We all exaggerate, right?" But as sustainability awareness among investors and eco-conscious customers grows, so has their scrutiny over business conduct to disclose information about a company's performance and its "environmental-friendly" products. Their scrutiny, coupled with the growing number of companies reporting their environmental footprints, reveals that many companies misreport and publish information about their ecological impacts, which regulators consider misleading or deceptive.

How do we know? Let's take a look at greenwashing mentions by industry.

We analyzed greenwashing mentions in web data. On the X-axis, we list the industries. The Y-axis measures the ratio of greenwashing mentions by N° of companies per industry (N=1166 companies) since 2015; this extraction method corrects sampling bias. Each industry is defined by a significant sample of large- and mid-capitalization-sized companies in developed countries.

This greenwashing mention chart clearly shows that the Energy industry has the highest ratio of greenwashing allegations. While many fossil fuel companies claim to be transitioning into clean energy, most mentions link these companies to advertisements and campaigns that don't align with the Paris Agreement goals. In contrast, fossil fuel companies are growing their carbon-intensive operations and products. It's a concerning trend because according to The Intergovernmental Panel on Climate Change (IPCC) report, "Climate Change 2021: The Physical Science Basis.", the data shows that emissions from fossil fuels are the primary cause of global warming, contributing up to 91% of global carbon dioxide emissions in 2018 as an example.

Second, on this chart is the Financial industry. It has fallen short of its commitments to climate action while continuing to finance fossil fuels. According to eMarketer, financial institutions have allocated $4.6 trillion for fossil fuels while promoting sustainable finance and supporting global energy transition.

Further, the mentions volume has grown year over year since 2015—when it was almost zero—to more than 1500 present day.

Clearly, this greenwashing problem is getting worse. So what can we do about it?

We need to talk about a solution

We don't have any control over what companies will do to fulfill their agreements, but we can understand their ESG data better and make better investment and portfolio decisions.

How? With AI.

AI, specifically natural language processing (NLP) algorithms, help us read billions of news articles, forums, and web text and extract unstructured data for analysis. With SESAMm's TextReveal®, we can see an entity's ESG controversies or events in near real time, providing a unique perspective to ESG data and details, filling the data gaps more accurately.

So when Company A reports on its ESG goals, we can help verify if the results are accurate and find any potential controversies that didn't make the report. We also don't need to wait until ESG reports come out; we can extract this data from the web on an as-needed basis. Moreover, we can look at all types of companies across the globe, public or private. As long as web data exists for an entity (or concept), we can analyze it.

My final thoughts

COP27 might be over, but our agreements and commitments carry on. We have an opportunity today to make a positive difference toward climate change while still maintaining profits. In fact, I think we can be even more profitable if we support green and sustainable initiatives.

I'd like to hear your thoughts; feel free to reach out on LinkedIn and share them with me.

About Alexandre Tiesset

Alexandre Tiesset is the Head of ESG at SESAMm. He's worked in finance for seven years in various ESG-related roles, such as Credit Analyst, Sustainable Investing Specialist, Index Product Specialist, and more. He holds a Master of Science degree in Finance and Financial Analysis. His passion lies in the intersection of finance and general knowledge and making new connections.

Reach out to SESAMm

SESAMm is a leading NLP technology company serving global investment firms, corporations, and investors, such as private equity firms, hedge funds, and other asset management firms, by providing datasets or NLP capabilities to generate their own alternative data for use cases, such as ESG and SDG, sentiment, private equity due diligence, corporation studies, and more.

To learn how you can generate NLP-enhanced ESG data for your firm, or to request a demo, reach out today.

METZ, LORRAINE, FRANCE, March 22, 2023 – SESAMm, a rising fintech company, announced today the opening of a new business location in Singapore. The expansion into Singapore marks a significant milestone for the company as it seeks to extend its reach and tap into the thriving Southeast Asian market.

The new location will be the company’s first business residency in Southeast Asia, where private equity, public equity, and asset management are ripe for solutions focused on alternative data sources, particularly those sourced with NLP solutions. Singapore will serve as a hub for the company’s regional operations, driving growth through new business development.

“We are thrilled to expand into Singapore, a move that represents a significant milestone in our growth strategy,” said Sylvain Forté, SESAMm CEO. “Singapore is a key financial center in the region, and our presence here will allow us to serve our existing clients better and tap into new business opportunities.”

Recently, SESAMm closed its Series B2 round with €35 million from France and U.S. investors along with Singapore-based venture capital firm AFG Partners, a firm that recognizes the significant growth and potential in the region.

“As a fund backed by investors from the financial services sector, AFG’s specialization and our unique network of investors and ecosystem partners provide a platform for global fintechs to scale regionally across Asia,” said Ivan Ong, Principal at AFG Partners. “SESAMm’s proven traction in international markets positions it well to enter Asia, and we see clear strong appetite from financial institutions and corporates to adopt their solution. We look forward to scaling the business across Asia with them,” said Ong.

The new location will support employee growth, with plans to expand the team in the coming months. Singapore business will be led by Thibaut Gunsey, Head of Sales—Asia, who brings nine years of financial-industry experience to the company.

“I am excited to broaden my role within SESAMm at such a pivotal moment in its growth,” said Gunsey. “Our Singapore office will allow us to better serve our local clients and regional growth, and tap into new business opportunities. I look forward to leading the local team and working with new clients to achieve their business goals.”

SESAMm’s expansion into Singapore comes as the company continues to experience strong growth. The company’s focus on innovation and customer service has earned it a reputation as a leading player in the fintech industry.

About SESAMm

SESAMm is a leading NLP technology company serving global investment firms, corporations, and investors, such as private equity firms, hedge funds, and other asset management companies. SESAMm provides datasets and NLP capabilities to generate alternative data for use cases, such as ESG and SDG, sentiment, private equity due diligence, corporate studies, and more. With access to SESAMm’s massive data lake, comprised of 20 billion articles and messages and growing, its clients can make better investment decisions. With offices in Metz, Paris, Tunis, London, Tokyo, New York, and soon, Singapore, the company is well-positioned to serve clients across the globe.

For more information about SESAMm and its products and services, please visit sesamm.com.

Media contact:

Jorge Alvarez
Chief Marketing Officer
press@sesamm.com

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.

How did FTX collapse?

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:

Breaking news

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.

First domino falls

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.

Other dominos follow

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.

Things get worse

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.

Fallout

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.

FTX and SBF web data analysis

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:

• How did the public web react to FTX’s collapse?
• Could we have seen red flags before the news broke?
• What was FTX’s collapse’s effect on the cryptocurrency market’s sentiment?
• Is it possible to evaluate cryptocurrency exchange companies’ ESG risks and opportunities?
• Was FTX’s collapse unprecedented? If not, what does web data tell us about that?

FTX and Sam Bankman-Fried mentions analysis

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.

Sam Bankman-Fried ESG risk analysis

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.

FTX and crypto market web data analysis

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.

Centralized vs. decentralized crypto exchange platforms

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.

FTX not the first exchange collapse

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.

Is FTX’s collapse a warning for investors?

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.

Reach out to SESAMm

For a deeper analysis of FTX’s collapse and access to all charts and supportive-article links, reach out to a representative today.