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The Connector Podcast - Pioneering Sustainable Finance: How Matter's Innovative Analytics Blend Impact and Performance with Niels from Matter
Can sustainability and finance truly coexist without sacrificing one for the other? Find out as we sit down with Niels, the visionary co-founder and CEO of Matter, a Denmark-based fintech company revolutionizing sustainability data analytics. Niels' impressive journey from the United Nations to co-founding Matter provides a unique perspective on how to mobilize capital for sustainable development. Listen as he shares how Matter bridges the gap between financial performance and real-world impact, offering a comprehensive view that aligns with internationally recognized frameworks like the UNSDGs and the Global Compact.
Unlike traditional ESG providers, Matter goes beyond assessing financial risks to understand the broader impact of companies on society and the environment. Niels explains how a combination of company-reported data, external information, and sentiment analysis delivers meaningful insights for institutional investors, asset managers, and pension funds. If you're passionate about the intersection of finance and sustainability, this episode is packed with valuable information on how innovative data analytics are paving the way for a more sustainable future. Tune in to hear how Matter's pioneering approach is setting new standards in assessing sustainability and real-world impact.
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Koen Vanderhoydonk
koen.vanderhoydonk@jointheconnector.com
#FinTech #RegTech #Scaleup #WealthTech
Welcome to the Connector Podcast, an ongoing conversation connecting fintechs, banks and regulators worldwide. Join CEO and founder Cohen van der Hooydonk as you learn more about the latest available trends and solutions in the markets.
Speaker 2:Welcome to another podcast from the Connector, and today I've got with me Niels from Matter. Niels, can you explain who are you and what is Matter?
Speaker 3:Hi Koen, thank you so much for having me, and it's a pleasure to be here. I am Niels. I'm co-founder and CEO of Matter. We are a fintech company based in Denmark and we provide sustainability data analytics for institutional investors banks, asset managers, pension funds and the likes and I live in Copenhagen with my wife and my cat, and that's about it.
Speaker 2:That's about it and what inspired you to found a company such as Matter. To found a company such as Matter.
Speaker 3:So in what almost seems like a previous life these days, I worked for the United Nations here in Copenhagen and I worked for the United Nations in New York where, among other things, I was working on climate financing and trying to mobilize capital for sustainable development objectives. One of the things that was difficult at the time was to try to mobilize capital from the very largest institutional investors, and we had this idea that if we created a pension plan or investment plan entirely based on sustainable investments, there would be a demand for that. So we did that, basically my co-founder, emil and myself. I moved back to Denmark and we set up a shop. We launched that in 2018 2018 but also, over time, realized that a lot of other investors other pension funds as managers were interested in, basically at the time, the tools we built for internal use to try to understand stability of a mutual fund or an etf investment portfolio, and over time, the company's focus shifted towards providing data analytics for others, and we've been doing that for the past four or five years, and here we are.
Speaker 2:Yeah, nice, thank you very much. And because you guys are very much specialized in measuring real world impact, right, can you elaborate a little bit what makes you special as a esg sustainability data provider?
Speaker 3:so so sort of historically, the way we understand esg is very much through the lens of the financial risk to a company.
Speaker 3:So not necessarily understanding what is the impact that a company has on the world of the communities, the society outside of its source, but what is the risk of an investor of incurring some sort of financial loss by investing in that company because the company is not capable of managing its environmental, social governance related risks.
Speaker 3:So that is sort of the very traditional way of viewing things. Where the company is is at the center of the stage and we're looking at what does this mean from a financial risk perspective. We try a little bit to take the other route and try to understand not only what is the financial risk to an investment in the company but what is also the company's own influence and effect and impact on the world around it, and try to get a solid understanding of what is, of course, both those risks and what is the impact that the company has for different lenses. Basically, so both understanding from a social perspective, from environmental performance et cetera. That has always been what we've been trying to do and that's been the background for what we set out to do with Matter.
Speaker 2:So you could say that every data that you provide it's proven data.
Speaker 3:Or can you?
Speaker 2:track back.
Speaker 3:If I may say it like this so we provide quite different range of different data points, right so, ranging from sort of company reported, audited data points in some instances where we're trying to understand sort of the company's own perspective, or does a policy exist here, yes or no? Or what is the annual emissions to water or waste, or carbon emissions, et cetera. That would be one type of data points. We also take in information and insights from a range of external sources of information to be able to get sort of an outside perspective on how a company or, in other instances, a sovereign issuer of debt is performing under the ability criteria and typically measured against internationally recognized frameworks such as UNSDGs or Global Compact or whatever else those sort of somewhat academic, somewhat difficult frameworks are actually termed. And then again we use a range of other data points. We also use sentiment analysis of media sources and a ton of other insights to try to get sort of a full perspective on how company is performing.
Speaker 2:Well, a couple of months ago actually last year it was the AFMA that came up with a whole document or a market information piece where they said there's too many data providers in the market. I'm talking about the asset management space, and I think you guys managed to stand out of that, and some even say you're the next generation of data providers, especially when it comes up to ESG data.
Speaker 3:But is this predominantly because of technology, or what is the reason why they say that it's probably a combination of a few things right, so in sort of in a traditional sense, there is the difference between whether we view sort of the the main objective of esg, so to speak, is to understand the financial risk that companies run, or whether it is to understand the influence companies and sovereign actors has on societies and the world around them. Basically, basically.
Speaker 3:That is really one sort of distinction. Another one is probably also in terms of technology. Obviously, a lot of things have happened in the recent years, and a big part of the opportunities that present themselves to us is, of course, also borne by being able to gather and structure information and data around company performance in a more optimized way than was possible a few years ago. And finally and I think that is maybe one of the things that really has changed since we started the company just over the last five years is how automated and how data-driven sustainability analysis has been, for what we usually joked was the least automated and least digitized part of investment management.
Speaker 3:Um, so a lot of things has happened and and there's also, yeah, um there's certainly also sort of a technology angle to that. There's also other perspectives and having in terms of sort of too many data sources available, and one of my traditional views is that there is almost always an overflow of information in the financial sector. So the difficult part is really to make sense of that and sort of to find out which type of information, data, which sources to use and structuring all of that. So I would understand why, sort of from an asset management perspective, you'd think there is an overflow of information and perspectives.
Speaker 2:Is it not about accuracy and reliability and liability both very close to each other? If you think about it, it's also very much around that.
Speaker 3:I think there's, of course, two different discussions. But from a data perspective, ensuring transparency and sort of a traceability back to the origin of the source of data information is, of course, key and something that is very much baked into the solutions that we provide to clients, because that is key to us and where sort of traditionally there's been a direction towards building fairly complex ratings and rankings of companies, built from hundreds of granular data points.
Speaker 3:Our approach has been almost the opposite to try to provide all of the underlying components as granular data to clients and then help our clients form their own perspective. And in order to do that, in order sort of to preserve, um, in order to preserve, basically, um, yeah, our clients confidence and trust in what we do.
Speaker 2:Of course, then providing the underlying source information is very key to what we do yeah, what could you describe as to be your typical customer, because you mentioned a lot of different data points, but what would be a typical customer?
Speaker 3:There's not one typical client. We service a range of different institutions. We service platforms that helps, for instance, retail investors navigate sustainability. We help professional asset managers, we help hedge funds, we help asset owners, we help pension funds and investment consultants alike.
Speaker 3:I think at the core of what the users within those companies are trying to achieve is to understand at a few clicks the sustainability of their portfolios, make changes based on that and report the results of that portfolio to clients, to beneficial owners or to someone else that is sort of at the core of it. And then I think we are also lucky to service a range of clients that are pretty ambitious in what they do with sustainability and really want to sort of create and build products that set the bar pretty high on sustainability, and anything from fairly small and very focused hedge funds here in Copenhagen, such as Qblue, to global asset managers such as BNP Paribas Asset Management. So it's hard to sort of pinpoint one specific type of client.
Speaker 2:But at least one type that I heard was asset managers, I'm sure then we talk about SFDR. Is that something that you also help to comply with?
Speaker 3:Yes, we do. Of course. That's been a big driver for a lot of our clients over the past couple of years trying to understand and make sense of and report against the criteria in SFGR. It's something we've built and have had for a few years now Solutions around helping clients, of course, both understand the PAIs and obtain data on that across their risk portfolios, but also to help them build somewhat automated solutions to also provide sort of the qualitative reporting that they need.
Speaker 2:Well, thanks for sharing that as well, niels. I'm always very curious in these type of podcasts to actually reveal a little bit of the future. Is there a glimpse you can give us what we can expect? New futures? Improvements that matter, yes there's.
Speaker 3:I wish there would be a point where we'd say, okay, we're done, this is a perfect product, um, now there's nothing more to do and there's nothing new to launch, right? Fortunately, that's not. Not the way the world works, um, and that's not where we are just yet. So, um, there's plenty of improvements to come. What we are looking at right now with quite a bit of intensity is helping our clients understand the physical risk related to nature risk and climate change, their investments. That is up next on the agenda. We've launched a variety of new options already this year around natural capital, around temperature scores, around value at risk, but physical risk is up next. And then also an intense focus on updating more company-reported data and building more transparency to our platform.
Speaker 2:Well, maybe that brings me also when we think about the future. A lot of things are happening within the sustainability space. There is macroeconomic situations, there are political strains that are happening. What do you see as potentially happening over the next decades in terms of sustainability on a global scale?
Speaker 3:That's a very big question.
Speaker 3:I think we've seen very, very rapid improvements in our field over the last five years.
Speaker 3:Now, on a sort of a global level, we're facing a little bit of backlash with anti-ESG movements, but I think that's going to change again.
Speaker 3:What is going to be the key driver and what?
Speaker 3:I think that's going to change again?
Speaker 3:What is going to be the key driver and what I think is most interesting is that the amount of data that is publicly available, or at least available in the public domain, to be gathered and structured for investors, is multiplying these years, and especially sort of the emergence of location data and satellite data will make some of the data that is somewhat opaque today and based on estimations a lot more precise in the coming years and make it both easier for investors to analyze performance but also to make decisions.
Speaker 3:I think that's one of the things I'm most excited about, and then also very excited to see the professionalism you see in ESGG, in listed equity and fixed income today, some of that also taking place in other asset classes, in private equity or venture capital, and the same goes for the technology that underpins it today. So at least those are sort of some of the key criteria. A final thing that I think will be interesting to see is there has been some criticism of the divide between sort of the pledges that are being made towards ESG-enabled investments and then the actual outcomes. So whether that actually leads to any changes, and hopefully with more accurate data, with more accuracy and with more attention in decision making and investment decision making especially.
Speaker 3:Hopefully we see a lot more outcomes um than than sort of the pledges we've been used to. So I think those will be the main points at least I am from from somewhat of a mix of personal, little and sorry, a personal and professional perspective in the coming years from a professional perspective.
Speaker 2:You actually see in the latest suggestions around sfdr that one of the suggestions is to apply the the rating on every investment, not only in article eight and nine. I think that would be a very nice way forward, but that's done. A personal view, I would say. But, um, hey, I'm sure that that a lot of people are very interested in this topic and even more interested to get in touch with you. And since we already at the end of our podcast, how do people contact you, niels?
Speaker 3:There's a lot of ways. The easiest thing is probably just to reach out and find me on LinkedIn Niels Fiebeck Jensen, which of course is a slightly difficult Danish last name. I'll put it in the comments. But, that's it. Obviously, reach out to Matter on our website as well, or to Matter directly. Then you'll be in touch with our team as well. I think those are the main social media platforms I happen to be on and also on email.
Speaker 2:Great, there you'll see all the details. Thank you very much. Then, the only thing that's left is to thank you for your contribution in our podcast and thank you to the audience. Thank you very much, nils. Thank you bye, bye.
Speaker 1:thanks for listening to another episode of the connector podcast. To connect and keep up to date with all the latest, head over to wwwjointhekonnectorcom or hit subscribe via your podcast streaming platform.