DWS Group, the asset management component of Deutsche Bank, has taken a 2.68% stake in Arabesque S-Ray, an ESG-scoring firm headquartered in Frankfurt.
Financial terms of the transaction were not revealed.
The move forms part of Arabesque’s Series A financing round, which secured $20m.
DWS was joined by Allianz X, Commerz Real AG, and Land Hessen in the fundraising.
DWS CEO Asoka Woehrmann said: “Sustainability is at the core of what we do. We want to continue to deliver new solutions to our clients and make even better investment decisions for them in this paradigm-shifting era.
“Our investment in and cooperation with Arabesque S-Ray is another step for DWS towards taking a leading position in the field of sustainable investment.”
Arabesque’s S-Ray tool leverages machine learning and big data to monitor the sustainability of over 7,000 listed companies. The tool uses over 200 ESG metrics for the assessment.
With the fresh infusion, Arabesque plans to develop new ESG data products including S-Ray Real Estate, which will be designed to assess the sustainability performance of real estate objects using artificial intelligence (AI).
DWS is also in exclusive negotiations to take a minority stake in Arabesque’s AI Engine, which combines big data, machine learning, and computing to forecast stock price developments.
The two parties aim to further upgrade the AI Engine.
Arabesque CEO Andreas Feiner said: “The demand for ESG data and services is increasing exponentially.
“Our partnership with three of the leading financial institutions in Germany, together with the state of Hessen – with its focus on sustainability and technology – will enable us to meet this global demand from Frankfurt.”
The DWS/Arabesque deal comes the same week that MJ Hudson, an asset management consultancy, bought Spring Associates Responsible Investment Service, an Amsterdam-based ESG consultant.
CEO Matthew Hudson said there were grassroots and regulatory calls for more independent analysis of ESG factors. “The era of so-called “greenwashing” is at an end”.