by Safa Rahim, MA candidate in International Affairs, former intern at 4IP Group
ESG has been identified as one area where one-size fits all investment strategies do not work. Therefore, it is unrealistic to suggest that a single set of metrics and one methodology will meet the needs of the entire investor universe (The Economist,2019). The challenges lie in both the collection and the analysis of ESG data. One way to mitigate these challenges identified by experts is by the use of Artificial Intelligence or AI. AI allows investors to collect and analyse information more efficiently than before. AI has the power to identify key data for investors seeking sustainable investments by filtering essential data that investors lack.
enable the processing of data in addition to specialised features like
analysing the tone of text using ‘sentiment analysis’. Sentiment analysis, also
commonly known as opinion extraction, opinion mining, sentiment mining and
subjectivity analysis looks at the use of natural language processing and text
analysis techniques to systematically identify, extract and quantify subjective
information and attitudes from various sources. The sentiment could be related
to the financial health, credit risk, business dealings, growth expectations
for employee satisfaction. The inclusion of AI into investing patterns
increases “intelligent investments”.
The year 2020 saw some of the most
innovative platforms launched in the ESG sector. For instance: Climate Action 100+, an investor-led
initiative has been developed to ensure regulatory compliance in order to
mitigate the evils of climate change.
Another such platform developed in 2020 was the Arabesque S-Ray Temperature Score, which is a unique new metric
that measures the extent to which corporations across the world are
contributing to the rise in global temperature.
Forbes anticipates the investors to integrate anticipatory regulatory changes
as well as the risk perceptions in sustainable investment into their decision
making with the help of technology, resulting in the rise of ‘intelligent ESG
These new technologies are to create a trend as more investors around the world
are seen to align the objectives of their companies with the objectives of the
Paris Agreement in 2021. This is particularly the case as companies will have
to make radical changes to their portfolios or face a drastic reduction in the
sectors that are qualified for investment.
Regions like Europe have already developed comprehensive roadmaps in the form
of the Green Deal, and in justifying what type of investments should be encouraged.
The infrastructure sector surprisingly lags behind the
public equity and fixed income sectors in
ESG presence, despite the fact that infrastructure sources are
responsible for over 60% of
Global Greenhouse Gases. According to the UN PRI, the
challenges for integrating ESG metrics into clean infrastructure investment
Difficulty weighing the value of different environmental and social
outcomes across regions and investment horizons. For example, how does one determine whether it is more valuable to
mitigate a unit of greenhouse gas emitted in Germany in 2020 versus
electrifying a village in Rwanda in 2025?
Difficulty applying a consistent rating framework across unique
investments. There are no standardized
ESG metrics for the infrastructure sector.
to ensure that the anticipated benefits are realized.
Urban Matrix One is the first company to use explainable Artificial Intelligence to
attempt to solve these problems. They use unique data sets and algorithms to estimate and monitor environmental, social,
and economic outcomes for global infrastructure investments. They allow
investors to customize their priorities and compare the value of different
environmental and social outcomes. They enable
investors to monitor the environmental, social, and economic returns of their
investments in real time.
They believe these tools will allow asset managers to capitalize on institutional and retail dollars
devoted to ESG strategies and put this capital to work creating a more
I have written “PPPs , the road to the SDGs?”
to fill a gap in the existing PPP
literature. On the one hand, quite a few theoretical or academic books on PPPs
are available. They provide a general view on the purpose and the mechanics
that drive PPPs and as such represent a must-read for all those that are
looking for a general introduction to PPPs. On the other hand, a wealth of articles and
case studies describe successes (more often than failures) of PPP projects.
What is largely missing is how you go from the
principles of PPPs to the completed project. In other words, what are the
challenges and difficulties that the PPP practitioner has to cope with and
should overcome to succeed? As we all know, PPPs are complicated, and if there
existed somewhere a cemetery of the good PPP ideas that never came to fruition,
this place would be more crowded that the world of the living projects.
Considering the difficulties of PPPs, the places where PPP practitioners can
share experience and gain real life useful advice are surprisingly few. This is
by the way the background that led to the creation of the World Association of
PPP Units and PPP practitioners (WAPPP); another avenue for a developing
country PPP Unit is to take advantage of technical assistance projects or
capacity building plans which are mostly funded by donors. The limitation to
these programs is that they take time to get implemented and their schedule
does not necessarily coincide with the immediate issues a PPP Unit is faced
with. The end result of all these is that it is difficult for a PPP unit
officer or a policy-maker to get immediate responses to very concrete issues
arising from the will to undertake the design and rolling-out of a PPP program.
“PPPs, the road to the SDGs?” is an attempt
to fill this gap. I have tried in this book to put on paper my experience as a
PPP adviser to PPP units that extends over several continents and many years. By nature, this is not a handbook with a
systematic approach; it is also not a collection of case studies. It is rather largely
based in a pragmatic way on collected essays and reports that were written at
the request of clients and beneficiaries to address their immediate needs. It
contains general considerations and contributions, sector issues as well as
practical description of a range of tools that are central to the everyday life
of a PPP unit. This variety of contributions can be of interest not only to PPP
units management and staff, but also to public officials, and more broadly to a
wider audience interested in PPPs, such as corporations willing to better
understand the reasoning behind the PPP units decisions, NGOs that need to
assess PPP projects, journalists and the general public. To my knowledge this
type of insider material is practically never made public.
Geoffrey Hamilton , head of PPP program at
UNECE, said in his foreword to the book that
“I sincerely hope this work […] will
help its readers to implement more and
better PPP projects that will serve the interests of those most at needs.” Somewhat similarly, Ziad Hayek, President of
WAPPP, asserts that “I am convinced that this book will add a significant contribution
to our shared efforts in promoting and developing successful PPPs”.
The paradox is that the countries that most
require PPPs in view of their infrastructure
deficit and scarcity of public capital, are also the countries where the challenges to successful PPPs are
the most difficult to overcome. The international community should scale up its
effort, not necessarily with more money but with more experience sharing,
practical capacity building and mutual support. The book is intended to support
these efforts with a true and honest approach that manages expectations and
provides guidance all along the way of the project cycle.
In this WAPPP, APMG hosted webinar, panelists discuss the impact of the COVID-19 Pandemic on PPP projects and programs, how to deal with its repercussions, offer lessons learned, and share opportunities that might come out of the pandemic I had the pleasure and honour to be one of the panelists; I tried to explore the fall-out of the crisis on PPPs at various time horizons, considering the turnng point that we are facing.
This presentation was a collaboration between #WAPPP World Association of PPP Units and APMG. Over 180 participants followed the session.
The presenters were :
David Baxter, International Development Consultant, PPP Navigator
Marc Frilet, Concession and PPP Expert, Frilet Société d’Avocats
Natalia Korchakova-Heeb, Managing Director, SDG.17 Consulting GmbH
Thibaut Mourgues, Co-Founder and Managing Partner, 4IP Group Sàrl/LLC
Naresh Bana, F.I.E., M.I.M.A., M.I.P.W.E. Bana, Chair of WAPPP Editorial Board
Michael Dallas : Director APM Group (Host)