Nomura, a global financial services group, has begun research to determine sustainability bonds — based on the UN Sustainable Development Goals (SDGs) — using natural language processing (NLP) technology in collaboration with Sony Computer Science Laboratories, Inc. (Sony CSL).
The move is significant because it signals a step change in the way that sustainability bonds are determined, which historically have been through more manual methods and often leveraging ESG data from third-party ESG ratings firms.
Growth in sustainability bonds has been soaring in recent years. By the end of 2021, sustainability bonds will likely reach $1 trillion for the first time ever. New issuance of green, social, sustainability and sustainability-linked bonds from corporations and governments worldwide has already topped $575 billion so far this year, according to data compiled by Bloomberg.
In 2019, Nomura brought to market Nomura-BPI SDGs, a sub-index to the Nomura Bond Performance Index, which includes green bonds, social bonds and sustainability bonds (SDG bonds).
The new research project will assess how bond funds are used to achieve the SDGs by using NLP to analyze issuers’ publicly available information, such as prospectuses and sustainability reports. Details on the NLP technology are expected to be announced later this year through seminars.
Founded in 1988, Sony CSL has shifted its computer science research focus to broad impact areas such as systems biology, econophysics and artificial intelligence. Several of its ‘Global Agenda’ projects aim to address the SDGs; for example, the Synecoculture and OES projects, which seek to leverage technology and automation processes to improve agriculture and electricity issues, respectively.
Nomura has been embracing and advancing sustainability since 1925, according to the firm’s website under the heading “Drive Sustainability.” Specifically, the company’s mission is “To help create a truly enriched society through our expertise in the capital markets. As a leading financial services group, we recognize the important role we have in resolving environmental and social issues such as climate change and widening social inequalities. We believe that role is to help build a sustainable world through our business.”
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