ESG: environmental, social, governance. These factors have been reshaping the economy as we know it. Environmental issues don't only affect our quality of life, and in some instances completely endanger them, they also have huge financial implications. The cost of climate-related disasters reached $650 billion between the years 2016 and 2018. This number is only getting worse as the years go on, especially when considering what the COVID-19 pandemic did to the global economy. And so, due to the financial implication environmental issues have, more and more governments, companies and businesses are focusing on living up to ESG standards. If you're a manufacturer, your green procurement, renewable energy, carbon footprint, and ESG reporting are crucial; if you're in finance, you should be including different ESG metrics like ESG market analytics, ESG risk assessment, ESG compliance, and ESG portfolio management to manage your investment processes; if you're in government, you need to assure environmental planning, government compliance, enforcement and monitoring, and financial programs. But compliance to the different ESG standards is challenging; the ESG driven methodologies require wide-scale, accurate, updated, and fine-grained ESG information which is difficult to obtain since relevant data is scarce, fragmented, and inaccessible to investors and analysts.
Viridian, an Israeli startup, is helping to mitigate these challenges with their ESG centralized information platform. It is aimed to bridge crucial information gaps with strategic sustainability programs of industrial companies, the financial sector, and governments.
Viridian uses big-data analytics capabilities designed for ESG financial best practices, offers real-time monitoring and alerts engine using AI and ML, has a customizable user interface to best fit existing work processes, and has access to thousands of high-quality ESG related data sources from financial, government, social, news, GIS, commercial, and academia alike.
In a conversation with Geektime, Viridian’s CEO and co-founder, Ori Ofek, gave us some more insights as to why he and the team at Viridian got started in the ESG space.
Though the founding team at Viridian didn't have any background in ESG, sustainability or environmental activism, they started the venture with the idea to make an impact and participate in the global battle against climate change and the environmental crisis. Ofek said to us “Ever since my children were born, my perception of responsibility has changed. Looking at my 3 amazing, beautiful children, I could not have stood by, while the world in which they will be living is so heavily threatened. The notion of the potential catastrophe which my children and the world would have to face remained as a constant source of worry in my life”.
If it worked for the intelligence sector, it should work for the environmental one
About ten years ago, Ofek was given the opportunity to partake in a mission of highly skilled innovators within the Israeli intelligence community to reinvent and rebuild a strategic transformative campaign to tackle the most challenging national security threats, through advanced intelligence methodologies, big data, and AI technology. After he witnessed how that campaign played out and the radical effect that technology, data, and AI had on such a complicated domain like national security, he decided that his next step would be to take the most advanced methodologies along with technologies he and his team at Viridian would create and find the way to apply them to the most pressing challenge humanity faces: the environmental crisis. “I had a strong belief that if played correctly, technology and data can be a game-changer in this battle.”
Since climate change and the environmental crisis is a harsh and complicated systemic problem that involves societies, politics, media, science, and economics, addressing it must cover multiple areas. All powers in play, be it governments, the public, academia, the industrial sector, the financial sector and so on, must be considered. As Ofek explained, “What we see nowadays is a systemic movement – public awareness affects governments and industrial companies; governments are passing laws and regulations which affect the industrial and the financial sector; the financial sector transfers funds and affects the industrial sector; and so on. All the pieces of the puzzle are highly important, and each plays a significant role.”
“At Viridian, a key phenomenon we have identified regarding this complicated turbulence is that many players have started to acknowledge the risks we as a society are facing ahead, be it physical, financial, business, or regulatory. They are thus making commitments to incorporate environmental and societal considerations within their business models. This doesn't mean that everyone has suddenly become raving environmentalists, rather it means that the systemic drivers, such as market and public trends, regulatory actions, and financial incentives, are pushing the pivotal players towards making change.”
The case for finance
Let’s take the example of the financial sector. In today's capitalist environment, the financial sector has the potential to affect all other sectors, so it plays a key role in the environmental movement. In finances, climate and environmental risks are translated into material business and financial risks, which is a source of concern for financial institutions worldwide. So, this sector specifically must adapt quickly and start incorporating environmental considerations within financial processes as aspects like climate risks, emerging regulations, legal risks, market trends, and corporate environmental performance impact investments heavily. Essentially, ESG must be incorporated into asset management, risk assessment, credit ratings, and due diligence processes to both avoid any financial collapse but also to stay in the competitive financial game. Ofek explained that the problem that most of these financial institutions are running into is that they do not possess the required global environmental, ESG and climate data required for analysis, assessments, and considerations. Moreover, obtaining such data turns out to be a challenge far beyond their reach, as global environmental and ESG data is extremely fragmented, scattered, inconsistent, and hard to process. This is where Viridian comes in.
Using their cutting-edge, wide-scale global data targeting and gathering methodologies, coupled with their big data technologies and advanced analytics and AI engines, Viridian can collect the most valuable and accurate information from thousands of data sources worldwide and structure them into a wide-scale unified ESG and environmental “knowledge graph”. This graph helps guide users in incorporating ESG into their companies; it bridges the gap between their customers in the financial, governmental, or societal sectors and the wide ocean of relevant ESG information and analytics which are crucial for the new economy.
They enable easy access to wide-scale ESG data within a company’s analysis workflow; analyzes GHG emissions, pollution, hazardous materials by company and sector; inspects ESG compliance, violations, and current and evolving regulations, identify geographical risk factors with wide-scale GIS information; offers real-time alternatives on controversies and risk factors within one’s portfolio; and reduce due diligence data gathering cycles.
What’s more is that Viridian is a highly flexible analytics platform, supporting constant modifications of data sources, data domains, analytics, modelling and presentations, as requirements evolve. This is perfect for the sustainable investment and climate risk assessment fields since they are constantly developing. “With our multi-source, multi-purpose architecture, we support endless types of data and data sources, from government and commercial to media, academia, and GIS. The endless types of analytics and models that we support are delivered to our customers as the most effective, actionable insights for their processes.”
Essentially, with their military-grade, wide-scale data gathering capabilities, companies and institutions get a lightweight SaaS platform that is easily accessible everywhere. Their technology and methodology are especially useful for the complicated domains of the ESG and environmental economy sectors.
Climate change becoming increasingly more worrisome as each day passes; more and more people are doing their part to try to make a change, whether that's eating less meat, or biking to work instead of driving. Ori Ofek and his team at Viridian are no different; they too are taking the steps to make such change. They hope that their platform will help companies, businesses, governments, and institutions make ESG conscious decisions. Mor Assia and Shelly Hod Moyal, Founding Partner and Co-CEOs of iAngels who invested in Viridian expressed that they are “passionate about investing in teams with huge dreams that are going to change the world for the better and are thus excited to have led Viridian’s seed round” which raised a total of $3.5 million. The Kompas Fund also took part in the seed round. Talia Rafaeli, General Partner at Kompas expressed that her firm understands the role that ESG, and specifically sustainability data, will be playing in the decision-making processes of corporations and manufacturers going forward. They are excited to support Viridian on their journey.