AP1, Arabesque to Develop new Human Rights Score

    Stockholm (NordSIP) – On October 2, Arabesque announced that Swedish state pension fund AP1 will be using its proprietary ESG data tool, the S-Ray. Arabesque and AP1 agreed to collaborate on developing a new score, using the S-Ray, which will help assess the performance of companies based on the UN Guiding Principles on Business and Human Rights (UNGP Score).

    The new human rights measurement will also rely on the expert advice of Shift, the leading center of expertise on the UNGPs. According to these Guiding Principles, endorsed by the UN HUman Rights Council in 2011, companies are expected to identify the impacts their business may have on people from a human rights’ perspective. They are to work in priority to avoid the most severe issues, and to remedy actual impacts. Finally, the Principles aslo prescribe that companies measure and communicate how effective their efforts have been.

    In a comment to NordSIP, Maria Mähl, Partner and Head of Nordics at Arabesque Asset Management said: “I’m excited about AP1 embracing and contributing to the next generation of ESG assessment and investing through tools like our Arabesque S-Ray® which uses a quantitative approach in combination with big data and machine learning. We are beyond whether or not ESG should be integrated. It is now all about the quality of the ESG data.”

    “The UNGP score is the first of its kind,” she explains. “It will be the first time such a score is integrated into the investment process, and the first time a rules based, systematic method using big data and machine learning will help assess company performance on the UNGP. The scalability in this automated approach paves new ways in supporting both companies and investors, as well as holding them accountable. As always with quantitative models, the quality of the data is of utter importance. We are working with Professor Ruggie and Shift who will provide their subject matter expertise and ensure data quality.”

    “This joint initiative with AP1 is a first of its kind in the investment universe,” says John Ruggie, Professor in Human Rights and International Affairs at the Harvard Kennedy School of Government, and author of the UN Guiding Principles on Business and Human Rights. “Virtually every element within the “S” in ESG is directly or indirectly related to Human Rights, yet few in the investment community have recognized that fact. This joint initiative combines the subject matter expertise of Shift, whose board I chair, and the superior technical capacity of Arabesque S-Ray® to provide specific information on human rights factors as well as a more robust ‘S’”.

    Nadine Viel Lamare, Head of Sustainable Value Creation at AP1 said: “Arabesque S-Ray® is a welcomed addition to the other ESG databases that we already use. To get daily rating updates is particularly valuable. S-Ray also provides us with a score on Global Compact preparedness which we have been looking for. We now look forward to develop another score together with Arabesque that will help us and other investors identify salient human rights in our portfolios.”

    Photo by Sharon McCutcheon from Pexels

    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA is Editor-in-Chief for NordSIP and Managing Director for Big Green Tree Media. She has 18 years of experience in the asset management industry in Stockholm, London and Geneva, including as a long/short equity hedge fund portfolio manager, and buy-side analyst, but also as CFO and COO in several asset management firms. Aline holds an MBA from Harvard Business School and a License in Economic Sciences from the University of Geneva.

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