Investors turn to raw data over ratings in ESG alpha hunt

Firms are using data on product returns and employee welfare to pick winners

Product returns are not usually a factor in socially responsible investing. But with more conventional approaches that rely on environmental, social and governance (ESG) scores looking increasingly dated, some quant firms are combing novel datasets, such as textual information on product returns, for more granular investing signals.    

Technologies such as natural language processing can be used to extract meaning from text documents, making it possible to identify and test previously unseen