In recent times, Environmental, Social, and Governance (ESG) factors have become increasingly important to investors and funds. With the rise of socially responsible investing, many investors are now looking beyond financial metrics and taking into account non-financial factors such as climate change, human rights, and corporate governance.
This is where Sanctify’s ESG AI tool comes into play. The tool uses artificial intelligence to analyze companies based on ESG criteria, helping investors to make more informed decisions. In this blog post, we will take a closer look at how Sanctify’s ESG AI tool could have helped you foresee the bank turmoil in the US, which has affected financial markets globally.
So, how could Sanctify’s ESG AI tool have predicted this collapse? One crucial factor to consider is the governance parameter. Governance refers to the system of rules, practices, and processes by which a company is directed and controlled. A company with strong governance practices is more likely to be transparent, accountable, and have the best interests of its stakeholders in mind.
Sanctify’s ESG AI tool analyzes companies based on 11 different governance metrics (27 ESG metrics in total), such as “Business model resilience”, “Business ethics” and “Systematic risk management”. By analyzing these metrics, the tool can identify companies that may be more prone to corporate governance failures, such as conflicts of interest or insider trading.
In the case of SVB, Silvergate and Signature bank, the governance parameter had dropped significantly since late December. This means that Sanctify’s ESG AI tool would have flagged both banks as potential risks to investors. If investors had been paying attention to the governance parameter, they would have been able to act early and mitigate the impact of these banks collapsing.
Furthermore, by using Sanctify’s ESG AI tool, investors can also identify companies that are performing well on ESG metrics. This can provide an opportunity for investors to invest in companies that are not only financially sound but also socially responsible and environmentally sustainable. This has also proven to be a successful strategy to pursuit also from an economic perspective, as these companies have yielded a higher return.
In conclusion, the collapse of these banks serves as a cautionary tale for investors to consider non-financial factors such as ESG criteria. By using Sanctify’s ESG AI tool, investors can make more informed decisions and avoid potential risks. The governance parameter, in particular, is a crucial factor to consider when analyzing companies, as it can provide insights into a company’s transparency, accountability, and ethical practices – which reflect in market performance.