Data Defense in Sustainable Investing

24 Pages Posted: 1 Nov 2019

See all articles by Ashby H. B. Monk

Ashby H. B. Monk

Stanford University - Global Projects Center

Marcel Prins

APG Asset Management

Dane Rook

Stanford University

Date Written: October 22, 2019

Abstract

Alternative data (alt-data) is becoming an increasingly powerful tool that investors can use to incorporate sustainability considerations – e.g., environmental, social, and governance (ESG) factors – into their decision-making. But alt-data must be used responsibly. Failure to do so can expose investors to novel forms of risk, some of which are fueled by fast-evolving technology, such as advanced machine-learning algorithms. In this paper, we explain and dissect these risks, and discuss how they create a need for investors to play data defense: that is, adopt organizational postures and processes that recognize how data can become a liability, as well as an asset to the organization. We outline the essential elements of strategies for data defense, and explore how investors can analyze their own organizations’ data-related vulnerabilities. Our hope is that these insights serve as encouragement for investors to more responsibly and effectively use alt-data in their future operations – both in pursuing sustainability objectives and in general.

Keywords: adversarial trading, data management and governance, greenwashing, institutional investment, sustainability data, technology

JEL Classification: O30, G23, M15

Suggested Citation

Monk, Ashby H. B. and Prins, Marcel and Rook, Dane, Data Defense in Sustainable Investing (October 22, 2019). Available at SSRN: https://ssrn.com/abstract=3474072

Ashby H. B. Monk

Stanford University - Global Projects Center ( email )

United States

Marcel Prins

APG Asset Management ( email )

Gustav Mahlerplein 3
Amsterdam, 1082 MS
Netherlands

Dane Rook (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

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