Blog Digital Twin

Digital Twin - Investment Portfolio: ESG Simulation Impact

Investment banks and investors face increasing pressure to incorporate environmental, social, and governance (ESG) factors into their decision-making - digital twins and data analytics can play a crucial role in helping them navigate this complex landscape.

For example, data analytics can help investment banks identify companies that are exposed to climate risks, and assess the potential financial impact of these risks on their portfolio. Digital Twin and data analysis can also be used by companies that are leaders in ESG performance to incorporate these investors into their investment strategies.

We can gain deeper insights into the ESG risks and opportunities associated with investments, and simulate the impact of different scenarios on your portfolio performance.
This graph represents the impact of a good management and investment decision on the environment in the republic of Lithuania - we see that an increase in wage funds of employees and city budget expenditures had a positive impact on pollution and CO2 emission in long term that drove to its decrease. An increase in city budget expenditure, investing in e-mobility, in companies that prioritize renewable energy, sustainable agriculture, or waste reduction helps reduce greenhouse gas emissions, conserve natural resources, and promote biodiversity - and increasing wage funds give people the ability to use this e-mobility, transport or buy more electronic vehicles.

These could be applied for asset management as well, finding insights and making decisions after the monitoring and analysis of these assets. An example of one of the portfolios was a chain of supermarkets - a mismanagement of these supermarkets had a negative impact on the environmental indicator. Once we analyzed this case, we've found the reason: it was due to the use of a lot of paper to print the checks. The hypothesis was that making special discount cards for customers (cards, which give discount, but customers can receive only an electronic check) will lead to reduction in the consumption of paper, which is majorly made from trees - and that will result in betterment of environmental indicators.

This has indeed worked.

That’s a part of how Digital Twin helps to make good investment decision - and with management that considers ESG factors, investors can not only achieve financial returns but also contribute to a more sustainable and equitable world.