The brains behind the ESG analysis startup Act Analytics will be joining Morningstar-owned Sustainalytics, according to an announcement.. Known in the technology startup and venture capital world as an acquihire, the half-dozen members of the Act Analytics team will be joining the ESG ratings and analysis company Sustainalytics by the end of October.
Act Analytics founder and CEO Zachary Dan will take on the role of director of digital innovation at Sustainalytics.
“Sustainalytics provides an incredible environment for us to innovate and advance technology in the ESG space,” Dan wrote in a statement to WealthManagement.com. “I am very excited about the data-driven ESG insights we will deliver.”
For readers unfamiliar with Act, the firm’s main platform was built from the ground up for retail financial advisors and wealth managers to help them have value-based conversations with their clients.
It uses a proprietary ESG scoring methodology and algorithm that attempts to remove a lot of the complexity found in tools currently available to advisors and was priced at $250 per advisor per month.
In December, Dan and his team launched a News Analytics tool that uses real-time, natural language processing to identify companies in news stories and calculates an ESG ranking based on the information.
Under the hood, the algorithm identifies subnarratives, analyzing grammar, topics and calculating sentiment based on 10 ESG categories. Scores range from 0 to 100, with zero being the most negative and 100 being the most positive.
It is the thinking and expertise for applying natural language processing and machine learning behind this tool and the full Act platform that Morningstar/Sustainalytics acknowledged it was after in bringing the team on board.
Conspicuously absent was any mention of Act’s current products and intellectual property.
Many advisors first heard of the firm and its platform through its participation in the 2020 season of fintech accelerator competition ScratchWorks.