Utility to expand coverage following proof of concept launch at COP28, intended to support UNFCCC’s Recognition and Accountability Framework.
The Net Zero Data Public Utility’s (NZDPU) proof of concept and a public consultation, both unveiled at COP28, are core to creating transparency for company-level climate data, the initiative’s product lead told ESG Investor.
The NZDPU is designed as an open, free, and centralised data repository that allows all stakeholders – including investors – to access businesses’ and financial institutions’ key climate transition-related data, commitments and their progress toward those commitments.
The NZDPU proof of concept introduces the basis for scaling accessibility to entities’ direct (Scope 1) and indirect (Scope 2 and Scope 3) greenhouse gas emissions and reduction targets. Users can also access the utility’s initial set of features and functionality.
Simone Kramer, Head of Product at the NZDPU, said that the proof of concept represents a “significant milestone” toward achieving the Climate Data Steering Committee’s (CDSC) “vision” for a global repository for climate transition-related data.
“Building connectivity between global stakeholders is an essential element of increasing access to high-quality, comparable climate transition-related data, and the support received at COP28 demonstrates stakeholders’ eagerness to collaborate to make this a success,” she added.
David Harris, Head of Sustainable Finance Strategic Initiatives and Partnerships, London Stock Exchange Group (LSEG), said data underlying climate commitments is currently “still not good enough” and performance despite reporting having “improved hugely” over the last decade.
LSEG is a member of the NZDPU’s Technical Advisory Board, a group formed to consult on the technical development of the utility.
Feedback and further expansion
A public consultation on the NZDPU will run until 1 March 2024, offering stakeholders an opportunity to provide feedback to inform future development. Feedback is being sought on the utility’s features, functionality, data model, and use cases, as well as areas of further work to improve private-sector climate data.
Mara Childress, the CDSC’s Secretariat Lead, said public input is “critical” for aligning the NZDPU’s future development with stakeholder needs and will be “carefully considered” by the committee.
She also noted that the timeline for implementing enhancements and addressing areas of further work will be decided after the public consultation closes.
In September, global non-profit disclosure platform CDP announced a strategic collaboration with the NZDPU to “accelerate access” to core climate data. As part of the pilot, just under 400 companies submitted information through CDP.
LSEG’s Harris said that the NZDPU will soon see some limited increases in data fields such as carbon offsets. “It’s an area which is more nascent than the others in terms of corporate reporting about how they’re using offsets, and what types,” he explained. “At the moment, carbon offsets are more difficult to include in the utility, but there is a desire to see if we could include that data.”
“Ultimately, we think climate data should be at the same standard as financial data. It should have the same availability and reliability,” Harris said. “Until we have that, the NZDPU provides an effective mechanism to achieve it.”
Kramer also said that the NZDPU aims to expand its amount its user testing in 2024, including a greater variety of users such as corporations.
Climate disclosure requirements currently vary across jurisdictions, with some already having incorporating the recommendations of the Task Force for Climate-related Financial Disclosures, while others are due to adopt disclosure standards drafted by the International Sustainability Standards Board.
The United Nations Framework Convention on Climate Change (UNFCCC) is currently developing a Recognition and Accountability Framework (RAF), following a call at COP27 for the secretariat to ensure greater accountability of voluntary climate commitments non-state actors.
The RAF is focused on net zero pledges from non-Party stakeholders and aims to improve transparency and maximise the credibility of climate action pledges, plans and transition progress. It is set to serve as a standardised template for organisations to submit their net zero pledges and transition plans for publication in the Global Climate Action Portal (GCAP).
The NZDPU is being developed on the recommendations of the CDSC and is designed to be integrated with GCAP. Kramer said that the NZDPU is “working closely” with the UNFCCC with a view toward future integration, including alignment with UN jurisdictions and accessibility requirements.
“Incorporating the NZDPU into GCAP will support increased integration of private sector targets and progress within the UNFCCC stocktaking and recognition processes,” she added.
Earlier this year, the Task Force on Nature-related Financial Disclosures conducted a high-level scoping study to explore and evaluate the case for a global nature-related public data facility. This facility would be a nature equivalent of the NZDPU, making data more freely accessible enabling the tracking the commitments and progress of companies.