Diana Rose, head of ESG research at Insig AI, spoke to Shanny Basar about working at the “pointy end” of making a difference, using artificial intelligence and machine learning to develop environmental, social and governance (ESG) data, and following an unconventional path to a career that fits her sense of purpose.
Suffragette Emily Davison said “deeds, not words” and Diana Rose, head of ESG Research at Insig AI, has lived up to this principle. Rose studied English Literature as an undergraduate, then achieved an MSc in Environmental Technology, and now works for a company which uses artificial intelligence and machine learning to develop a database of machine-readable corporate ESG documents for asset managers.
She stated that Insig AI is focussed on applying expertise to solve one small piece of a very big challenge around ESG data, and complementing what else is out there in the sustainable investment ecosystem.
“We are trying to move the needle by understanding the limitations of ESG data today and play a part in the evolution of what it will look like tomorrow, next year, in five years’ time, in 10 years’ time,” Rose say. “This is a long-term journey, and we plan to play a part in the future of sustainable investment.”
Insig AI specialises in artificial intelligence and natural language processing, and applying AI in emerging and innovative spaces. Rose described the firm as really good at managing and modelling complex data, and building infrastructure that is solid, robust, transparent, and auditable.
Therefore, ESG was a natural space for the firm to enter as there is so much potential for improvement in the integrity of the data. Investors need help in managing all the data from ESG ratings agencies, identifying what good data looks like and where there are gaps.
“Leaders in this space are looking to go beyond relying on a score and want to develop proprietary models and approaches that are more granular and unique to their strategy, and we help with that,” adds Rose. “We aggregate different data sources into models that enable investors to develop their own views and lenses on what’s important to them.”
Insig AI’s ESG Research Tool supports investors with granular insights from source documentation so that stewardship dialogue can be contextual, strategic and meaningful according to Rose. She believes that sustainable investment should not be about just dumping companies that are lagging, but a journey for improvement through accountability.
As a result, Insig AI’s mission is to provide better information, evidence, transparency, and ultimately agency to those who have the power to make big decisions on where money flows, by providing technology to help humans make better-informed decisions in a confusing environment.
At the same time, corporates are grappling with the demands of both investors and the ESG ratings agencies, while also running a business to create long-term value. Rose said that if a business feels at the mercy of chasing metrics all the time, they can get distracted from their core strategy. Just having more data points is not always going to help users see the wood for the trees, so companies need to collect the right metrics and communicate in the right way to the right people using quantitative and qualitative evidence.
“We help them understand the space, filter through vast amounts of information, understand what good looks like in their sector or industry, and shift from being reactive to proactive and strategic,” she says. “We see a trend of a growing mountain of disclosure, and it will have to get more streamlined over time if it’s going to function.”
The challenge in ESG is that the metrics do not always tell the full picture and can actually be misleading in isolation according to Rose, so there will always be a place for qualitative assessment of the narrative that wraps a metric.
“This is a huge challenge that introduces subjectivity, so we’ve designed our tools to make that process manageable, consistent, and transparent,” she says.
ESG backlash
There has been a growing backlash against ESG investing, particularly in the US, and concerns about greenwashing. Rose believes a certain amount of skepticism is healthy, especially as the field is in its infancy, so practitioners need to always question their methodologies and watch out for unintended consequences. Her opinion is that there will be a lot of change in the next few years and new, and improved, ESG models will emerge out of these challenging times.
“We are playing in a complex space with competing forces, but I’m stubbornly optimistic that sustainable finance is here to stay and can be effective,” Rose says. “An ESG bomb exploded and now the dust is settling. It went off without proper guardrails and without the right regulation and accountability and we are still catching up.”
Insig AI’s approach is to stay agnostic to the different ESG frameworks, and neutral towards the other data providers, and build a model that will be able to evolve along with the conversation. Rose maintains that finance and the flow of capital are critical to the sustainability agenda, with COP27 as a reminder that high-level international policy alone will not solve problems.
“Top-down regulation is important and at the other extreme, as individuals we have voting and consumer influence,” she says. “I see it that the levers of the financial sector and power of business sit in the middle and probably hold the greatest potential for transformation.”
Career
Before joining Insig AI Rose had been working in sustainability for about 14 years and the company approached her about using technology to help solve some of the challenges in ESG and sustainable investment. She notes, “Given my background, I saw it as a new frontier and a really exciting opportunity to cross technology with finance in a way that I hadn’t necessarily planned.”
Rose admitted that she was initially slightly hesitant about the scale of the challenge in a very competitive space but ultimately, believed that the team seemed like great people who were really good at what they did.
“I felt we would be embarking on an adventure,” Rose adds. “The firm’s technology and wide experience in asset management, combined with my ESG subject matter expertise is an interesting combination.”
In the lead-up to meeting Insig AI, Rose had done some “soul searching” and a mentor asked her to write down about what she wanted from her career. As a result, she realised that she wanted to be at the “pointy end” of making a difference, and the innovation and excitement of Insig AI felt like a good fit.
Her role began as internal facing, building out Insig AI’s ESG framework to map to all the leading frameworks and capture the essence of their metrics. This framework was the basis for training the AI natural language processing (NLP) models so they can filter sentences and find data relevant to issues such as climate change, water or human rights. Once the team was happy that the models behaved as an ESG analyst would expect, Rose’s role became more external facing to build relationships with clients, tailor solutions to their needs and provide ESG subject matter expertise that wraps around the tech.
Looking back on her career, Rose is grateful that she persisted in finding a career that fit with her sense of purpose. After obtaining a degree in English literature, Rose took a couple of years of “quite hard soul searching” to work out that she wanted to work in sustainability. She found an MSc at Imperial College London in Environmental Technology and got a last-minute place on the course which is designed for people from different backgrounds to transition into a sustainability career. At the time, Rose was the first English graduate to be accepted.
“Needless to say, it was a demanding course, but I enjoyed every moment and was recruited straight into environmental and water consulting at Atkins, got my technical grounding and never looked back,” she adds.
Her Master’s thesis was on sustainable investment and how to measure environmental and social performance in smaller businesses in a ‘pre-ESG’ world so Rose feels like she has come full circle. She would encourage people to consider working in sustainability whatever their academic or career background, as the field has exploded in terms of careers and opportunities and needs a variety of thinking and skill. The path was not conventional or planned, but Rose thinks this helps her offer advice to others as they work this out for themselves.
She says, “I think the finance sector can be a bit daunting to an outsider, but I think there is merit in bringing a different perspective and a bit of disruption, particularly at this point in time for ESG.”
Diversity
In November 2022 Insig AI published data highlighting that 14 of the 20 financial services companies in the FTSE 100 had a higher-than-average gender pay gap.
Insig AI looks at disclosures around forms of diversity, including gender as well as emerging themes such as disability. At a macro level, the ‘big data’ gives a snapshot of who has been talking about these issues and for how long, which allows investors to see who is ahead of the curve, who is just starting to join the conversation, or not engaging at all. Then investors can monitor what companies are actually doing and, ideally, start holding them to account.
“The aim of our approach is to present company disclosures, so they are more available to drive better informed discussions and accountability,” says Rose. “The problem with social metrics is that they are notoriously difficult to quantify, and you need to read between the lines to determine their strategy over 5 or ten years to reach equality-related outcomes.”
Rose continued that for any industry and for any form of diversity (not just gender) to thrive, there needs to be a thoughtful talent pipeline and culture of recruitment and opportunity without discrimination. For example, there is a preconception that finance has a culture that is not healthy for women and she expects it will have to work to change that image if it wants to keep recruiting and retaining good women.
However, Rose stated there is strong female leadership in sustainable finance, and she has met some pioneering women. She says, “There is evidence to suggest that having female leaders is key to sustainable transformation and the disruption that requires, so I’m really curious to see what the next few years will bring.”
She has met several inspirational women who have had a strong influence.
“In my eyes, they are respected as leaders because they believe in the value of their contribution, have strong boundaries and are not apologetic about their female qualities,” Rose adds. “This isn’t always easy to uphold, but my advice to women, whatever career they choose, is to trust that their feminine qualities are valuable.”
Not all her role models are women and her advice is to allow mentors into your life and let them offer different perspectives on ‘success’. Looking back at how pivotal mentors have been both professionally and personally, Rose now tries to pass on some of that experience by volunteering as a mentor, especially to others forging careers in sustainable finance.
Reflecting on her own path, Rose says it is okay to feel fear and self-doubt as it helps keep people grounded, humble and human – as long as they can recognise when it is holding them back. One example from Rose’s own experience is that she had a fear of public speaking which was getting in the way of taking opportunities that she wanted.
She trained as a yoga teacher and had to stand up and teach a class which helped her overcome her self-consciousness and self-doubt. Her definition of success is that it is a feeling that a professional career is aligned with an inner purpose.
“It is key for me to balance my professional ambitions, achievements and work ethic with family, friends and other interests in a healthy way,” Rose notes,. “In my mind that balance is ‘success’, although I may well not achieve it all the time.”
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