ESG Investor’s weekly round-up of news on technology and tools in the sustainable investing sector, including 2DII, RMI, Nasdaq, Clarity AI, ISSB, Integrum and Accenture.
The 2° Investing Initiative (2DII), an independent non-profit think tank, has transferred the stewardship of its Paris Agreement Capital Transition Assessment (PACTA) to US-based sustainability non-profit RMI. 2DII first launched the PACTA framework in 2015, introducing the concept of measuring the alignment of financial portfolios with climate goals. PACTA has been used by more than 3,000 financial institutions in 50 countries, and has been used to assess more than 30,000 portfolios in the last two years. Under the stewardship of RMI, PACTA will remain a free, independent and open-source tool and the firm will invest in scaling up the usability and applicability of PACTA in investment decision and reporting requirements. Brian O’Hanlon, RMI’s Managing Director for Climate Finance, said: “By investing in PACTA, we can help bring its valuable insights to more decision makers around the world. Tools such as these are critical to our mission of accelerating the financial sector’s transition to climate alignment and the financing of a just, equitable, and secure net-zero future”. With the transfer of PACTA to RMI, 2DII intends to focus on the incubation and further development of its current suite of research programmes. The think tank also launched a climate stress test simulation game in partnership with the University of London’s SOAS Centre for Sustainable Finance. The game allows users to simulate different choices and strategies around the design of climate-related stress tests and scenario analysis. The game is intended to be a capacity building tool for financial institutions, supervisors and central banks. The game will be further developed and enhanced with funding from the UK Partnering for Accelerated Climate Transition (PACT) programme, which is funded by the UK government. It will be used by around 30 Columbian pension funds and banks in September 2022.
Global exchange operator Nasdaq has acquired Montreal-based ESG monitoring service Metrio to help accelerate and better position Nasdaq to provide end-to-end ESG monitoring, reporting and analytics capabilities to European and North American clients. Over the last decade, Nasdaq has developed a range of ESG-focused technologies and solutions, including ESG advisory services for investor relations professionals, carbon marketplace Puro.Earth, and ESG workflow and reporting platform Nasdaq OneReport. The acquisition, which is expected to be concluded in mid-June, aims to demonstrate Nasdaq’s commitment to helping clients manage ESG data to provide greater transparency to and make better decisions for their stakeholders. Michael Bartels, Nasdaq’s Senior Vice President of IR & ESG Services, said: “We expect current and prospective clients to benefit from a flexible platform that collects, measures and analyses corporate sustainability data, as well as generates investor-grade reports in real-time, which can be adapted for and shared with multiple stakeholders.”
Global sustainability technology platform Clarity AI has announced its sustainability data is being utilised by the world’s largest asset manager BlackRock in preparation of its reporting requirements under the EU’s Sustainable Finance Disclosure Regulation (SFDR). Clarity AI’s SFDR coverage includes more than 49,000 companies and its capabilities allow for portfolio aggregation and multi-asset look-through to nearly 250,000 funds. BlackRock will leverage Clarity AI’s data to facilitate reporting on Principal Adverse Impact indicators, a set of specific ESG metrics mandated by the EU as part of the second part of the regulation, which imposes more granular sustainability disclosure obligations for asset managers. Rebeca Minguela, Founder and CEO of Clarity AI, said: “As part of our comprehensive sustainability tech kit, we are uniquely positioned in the market to deliver everything required for regulatory reporting, including SFDR, EU Taxonomy, UK Taxonomy, TCFD and MiFID II.”
As part of the Value Reporting Foundation’s (VRF) consolidation into the IFRS Foundation’s International Sustainability Standards Board (ISSB), the governance and development of the VRF’s Integrated Reporting Framework (IRF) and Integrated Thinking Principles (ITP) will now be overseen by the International Accounting Standards Board (IASB) and the ISSB. The IRF aims to accelerate the adoption of integrated reporting globally, improving the quality of information available to investors and enhancing accountability and stewardship. The IFRS Foundation will now undertake an engagement programme to outline how the IRF will be used by the IASB and ISSB, as well as advocating for the use and development of ITPs. In a joint statement, IASB Chair Andreas Barckow and ISSB Chair Emmanuel Faber said: “We are convinced that the IRF drives high-quality corporate reporting and connectivity between financial statements and sustainability-related financial disclosures which improves the quality of information provided to investors. Therefore, we strongly recommend the continued use of the IRF and the ITPs underpinning it.”
Software company Integrum ESG has launched a new SFDR Compliance Tool to map and assess the alignment of asset managers’ sustainability-labelled and EU-domiciled funds against the EU’s Sustainable Finance Disclosure Regulation (SFDR) Principal Adverse Indicators (PAIs) and the EU Taxonomy environmental objectives. By uploading their portfolios to the dashboard, asset managers will be shown whether it can be classified as Article 6, 8 or 9 and why. Each of the portfolio holdings can also be assessed against each mandatory PAI. Shai Hill, Integrum ESG CEO, said: “Many asset managers have already ‘self-classified’ funds they manage at Article 8. This is usually because they have adopted policies for the fund that promote environmental and social characteristics. But an Article 8 or 9 fund also needs to have assessed every one of its holdings against 14 PAIs – so that a regulator can consider the extent to which any investment may be undermining the EU’s environmental and social objectives. It’s a detailed and tedious job – but that’s why we have created this tool that does it for [the asset managers].”
Tech companies Accenture, Microsoft and Avanade have expanded their partnership to help organisations tackle climate change challenges. They will initially focus on delivering solutions to help organisations transform their products, operations, services and value chains to accelerate the transition to net zero, before later expanding focus to broader ESG challenges. The investment will be in the co-development of innovative solutions and offering carbon emission reduction advisory service to businesses, speeding the transition to new energy sources and reducing the wastage of finite resources such as food, water and raw materials. Pam Maynard, Avanade’s CEO, said: “The world is at an inflection point where organisations are expected to play an active role in addressing sustainability issues. Now more than ever, technology is key to accelerating ESG goals and enabling organisations to be sustainable through continual change.”