How Wangari's products might redefine financial intelligence and sustainability-related opportunities
Or how to equip financial professionals with deep technological capabilities and lucrative green investments
Wangari’s founding ethos is that sustainable businesses need way more capital. On the flip side, businesses that are harming the planet and have no meaningful plans for a transition to sustainable are still receiving significant amounts of cash.
This might sound like a manifesto for Greenpeace. At Wangari, however, we aim to bring value to every stakeholder — nature, investors, financial institutions, employees, and more — by means of good old cash. We aim to do this by leveraging our technological edge and building world-class products for financial institutions.
All over the world, frameworks and regulations are being developed to help businesses and financial institutions quantify sustainability. The reports that follow these frameworks are a new and unique window into the operations and functionings of many businesses.
Sustainability reports are often called non-financial or extra-financial data. On the other hand, almost every action of a business has financial consequences. The effects may play out after a certain time. For example, a business that has polluted a river might be forced to clean it up a few years after the act. Sampled over a large enough dataset, however, these financial effects are measurable and predictable.
This has huge consequences for financial forecasting and, ultimately, for business valuations. Several studies already show that businesses that perform well in sustainability-related metrics also have strong financial performance. This is very interesting for investors because they can potentially earn more return on their investment if they prioritize sustainable businesses.
Being able to incorporate all this non-financial data into traditional financial forecasts is the logical next step for investors. Wangari intends to build the technology to achieve this.
Three products to push the frontiers of finance
Within the financial world, there are two groups of institutions that heavily rely on financial modeling: investors, and financial data providers. Examples of investors are asset management companies, banks, insurance firms, pension funds, university endowments, family offices, and more. Financial data providers are firms like Bloomberg, Refinitiv, Morningstar, FactSet, and others.
Overall, the investment industry needs to keep up with the fast-paced developments at the intersection between sustainability and finance. Investors have enough to do with their day-to-day activities, and cannot be expected to sift through volumes of new regulation on top of this.
Wangari Modelist
Our primary product helps investors incorporate sustainability-related findings in their financial modeling workflow. The end goal is to build an add-on for Excel and similar platforms which helps include insights from sustainability data with just a few clicks. This, however, might not be available until early 2025.
In the meantime, investors will be able to gain access to lists of insights for each industrial sector or sub-sector. These lists will indicate, for each sector or sub-sector, how strongly each sustainability-related performance variable correlates to each financial performance variable. An indication of time lags between these two variables and the statistical significance of each correlation will also be given.
We plan to make these lists available by spring or summer 2024. All information coming from these lists will also be incorporated in the Excel add-on. Clients who adopt the lists early might be able to benefit from more attractive prices for the Excel add-on when it becomes available.
Wangari Intellect
Some financial institutions do not keep their modeling efforts in-house and would rather gain access to the business valuations, rather than calculating them themselves with an Excel add-on. In parallel to assessing correlations between sustainability-related and financial performance variables, Wangari will be assessing the influence of sustainability on business valuations.
These valuations, alongside other important financial variables, will be available for a number of businesses in a variety from spring 2024. The number of analyzed businesses will grow over time. Clients who buy data points early might obtain attractive prices for data about other businesses that get added in the future.
Wangari Publishing
This newsletter was created in order to help industry professionals keep up to date with the newest developments in the industry and here at Wangari. Professional investors can benefit from a free subscription, or upgrade to paid in order to receive every post in its full length, receive occasional exclusive posts, and get access to the Wangari community. Clients of Wangari Modeling or Wangari Intellect are automatically part of the community and get all posts of Wangari Digest for free.
Beyond Wangari Digest, we plan to publish research papers in collaboration with academic partners. We might also add other forms of educational content in order to help investors push the frontiers of the industry.
How we are building these products
We have set lofty ambitions for ourselves. Nevertheless, we believe that our previous experience has equipped us for the task. Our expertise ranges from finance to particle physics, and from AI to computer science. It comes from our time at leading research institutions like CERN and Sorbonne Université, as well as at big players in the financial industry.
We aim to build out our products over time, starting with businesses whose data is abundant and easy to access, and then working our way down to businesses that disclose less data in less places.
Public equities
Public reporting data is easy to get. We will start extracting the relevant data points from these reports using custom-built agents from Large Language Models (LLMs), such as ChatGPT and others. From mid-to-late 2024, we intend to include other publicly available data as well, such as earnings calls or press statements. These reports are too long and too numerous for any number of analysts and will therefore be analyzed by using LLMs, transcription AI systems, and computer vision technology.
Private equity
In recent years, the investment industry has seen many pioneering approaches for sustainability. One striking feature is that many of these approaches have been developed by private equity.
The dynamics in private equity are very different than those when trading in public markets. Nevertheless, we might be able to use our models at Wangari to help private equity funds make investment decisions and manage their portfolios. Products regarding private equity likely will not be available before 2025.
Loan data
Loans are, once again, a different pair of shoes than equities and follow different market dynamics. Nevertheless, our background in insurance might help assess risks regarding loans for public or private firms. Products of this type will likely not be available before 2025 either.
Our goal: Moving trillions to fuel a more sustainable future
All these products and technologies have one thing in common: Their purpose is to help investors spot opportunities they might have missed otherwise, and thus direct more capital towards sustainable businesses.
With our strong technological and financial footing, and our suite of products that should empower investors to make decisions that truly benefit all stakeholders, we hope that we can indeed move substantial amounts of money toward a more sustainable and prosperous future.
Let’s do the right thing. Together.