The International Finance Corporation (IFC) has on Tuesday announced the release of MALENA, a tool powered by artificial intelligence (AI) to transform environmental, social, and governance (ESG) analysis for emerging markets.

Developed by IFC environmental, social, and corporate governance (ESG) experts, MALENA uses over 15 years of emerging markets data and natural language processing to distill complex, unstructured ESG information into actionable insights for sustainable investments, IFC said in a statement.

According to the statement, investors in emerging markets face ESG data shortages because of limited disclosure regulations and missing coverage by data providers.

By simplifying the extraction of meaningful ESG insights from dense reports and news, MALENA enables transparent and speedy decision-making to support sustainable investments.

It is noted that MALENA allows users to upload a document to the site and view outputs like greenhouse gas emissions, gender data, and sentiment insights.

Users can rapidly process vast amounts of text, identify over 1,000 ESG terms, and predict sentiment with 91% accuracy.

This might mean, for example, that an asset manager considering investment in a company, could put 600 pages of the company’s annual reports and policies into MALENA and quickly see that “fraud” is a frequent term used in those documents.

The asset manager could drill down into the uses of that word in the original documents for more context, which might help frame a discussion with the company’s leadership around governance controls.

Or, in another scenario, a project investor seeking to finance a port might feed relevant environmental and social impact reports into MALENA and see that the term “vulnerable groups” is unusually frequent. This might guide next steps, such as stakeholder engagement around the site.

With $4 trillion needed annually to meet the UN Sustainable Development Goals, IFC said MALENA can help drive investment by making ESG data analysis more accessible and efficient.

“MALENA is more than a technological advancement; it’s also a catalyst for sustainable investment in emerging markets,” said Emmanuel B. Nyirinkindi, IFC’s Vice President of Cross-Cutting Solutions.

“By equipping investors and analysts with this tool, we’re enhancing their ability to make informed decisions and contribute to meaningful, sustainable development.”

“Making MALENA publicly available to everyone aligns with our vision of fostering responsible investment practices. Its accessibility as a global public good demonstrates our ongoing commitment to bridging data gaps in emerging markets,” he added.

It is noted that Amundi partnered with IFC to shape the MALENA solution.

MALENA was tested by Amundi and New Development Bank as well as an export credit agency and a capital markets regulator.

The Danish International Development Agency, South Korea’s Ministry of Economy and Finance, the Facility for Investment Climate Advisory Services, and other donors supported MALENA’s development.

IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets.

The organization works in more than 100 countries, using its capital, expertise, and influence to create markets and opportunities in developing countries.

In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises.

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