Carbon Impact

From Carbon Footprinting to Climate Risk Management

05 juin 2020

Carbon emissions are one of the most developed datasets to be used in investment analysis. They are crucial inputs for ESG data models, carbon footprinting and climate risk assessments. In this report we discuss the properties and quality of carbon emissions data – both reported and estimated.

The challenges relating to ESG data are well rehearsed: disclosure levels, reporting standards, time consistency, time series, auditing, materiality and aggregation – to name a few. Indeed, from this perspective, carbon datasets can be considered more mature than others, as some of these challenges are already being addressed by established organisations like the WRI, CDP, SBTi and many others.

Nevertheless, given the importance of carbon data in our investment process we decided not to use carbon estimates provided by third-party data vendors – not least on account of the significant discrepancies which exist between data from different providers. In this report we address some of the challenges relating to inconsistent and missing disclosure and present our solution: the creation of a broad-based time series of carbon emissions covering all our equity holdings and most of our bond holdings.

As we continue to further integrate ESG information into our investment processes, we are going back to basics by looking at carbon emissions data as a key component of ESG datasets. Carbon footprinting is an established yet limited use case for carbon data. Therefore, we employ complementary analytical tools based on our carbon data and estimation model that allow us to look ahead and to assess climate-related risks and opportunities more comprehensively. Through this integration we can design investment solutions like our Carbon Impact strategies that help provide the capital to bring about the transition to a zero-carbon economy.

Please read our Carbon Impact Quarterly report here.

Carbon Impact