New database aims to address lack of “global, quantified” information on avoided emissions.
Investment managers Mirova and Robeco, alongside 11 other financial institutions, have launched a call for expressions of interest (CEI) for the development of a globally accessible common database of avoided emissions factors to support financial flows to companies enabling decarbonisation.
Manuel Coeslier, Lead Expert, Climate and Environment at Mirova, told ESG Investor, that an avoided emissions database offers the possibility to understand the “right way” for investors to allocate capital to contribute to greater decarbonisation efforts.
He said that this understanding is “key to the energy transition” and offers possibility to differentiate actors based on their “true contribution” to these decarbonisation efforts.
“An avoided emissions database gives a dictionary to understand where you need to invest to contribute to decarbonisation,” he added.
Avoided emissions haven’t reached the level of usage expected, said Coeslier.
“We are now in a situation where we need a global consensus to calculate these emissions,.” he said.
“To avoid confusion and the risk of it being considered as a blackbox indicator, we need a global initiative to push for an [avoided emissions] database.”
Absence of data
Despite energy transition solutions being “mostly known”, there is “no global, quantified data available to compare decarbonised alternatives and support redirection of financial flows to companies enabling the decarbonisation”, according to a joint statement by Mirova and Robeco.
It underlined that unlike induced emissions that benefit from “strong methodological bases” through Life Cycle Analysis databases, avoided emissions are currently calculated in a “variable manner by different actors which jeopardises their credibility and prevents their use at scale”. Additionally, metrics are required to identify the contribution of company-level avoided emissions to global net zero objective contribution and to compare solutions.
Coeslier explained that avoided emissions is a useful metric as it uses the same unit as a carbon footprint of induced emissions in tonnes of carbon equivalent, which gives it the “advantage of being understandable”.
He also said the avoided emissions is useful metric comparing various solutions to the energy transition, as it can quantify their contribution to decarbonisation.
Lucian Peppelenbos, Climate & Biodiversity Strategist at Robeco, said: “Forward-looking metrics are key to increasing climate finance. This includes a credible measurement of avoided emissions. Transparency and a common methodology are essential, and we hope this initiative may contribute establishing this.”
A tool for all
The financial institutions involved in the CEI, including AXA IM, Impax Asset Management, PGGM and Railpen, have begun calculating avoided emissions to better understand how companies can contribute to climate change mitigation, according to Coeslier. The database would also add a reference scenario for the activity considered and be fully transparent, he said.
The new datasets for the avoided emissions database should be based on the following principles: Full life cycle analysis, as well as an attribution of avoided emissions across the entire value chain; precautionary principle with the least advantageous baseline scenario being selected to calculate avoidance factors; and transparency and access over the methodology for calculation of avoidance factors.
Coeslier said he expects the avoided emissions database to be very similar to existing lifecycle analysis databases that are accessible to all organisations that wish to calculate their carbon footprint.
He added that the database should be viewed as a tool that can be used by “every institution that is close to avoided emissions, providing avoided emissions directly, or investing in financing avoided emissions indirectly”.
Coeslier said he expects the new datasets to be established in Q1 2024, with a phased roll-out of the database by the end of next year.
Academic institutions, consultants, data providers and others can respond to the CEI before 16 July.
