This Week’s Tech and Tools News: ICE Launches Suite of Corporate Bond Climate Indices 

ESG Investor’s weekly round-up of news on technology and tools in the sustainable investing sector, including ICE, ACX, ESG Book, MSCI and Pathzero.  

Intercontinental Exchange Inc. (ICE), the US-based market operator and data services company, has announced the launch of a suite of corporate bond climate indices. The indices are part of the ICE ESG Bond Index Family, supporting the increasing demand for responsible and sustainable investing. ICE’s corporate climate index leverages 23 of the firm’s corporate bond benchmarks to create 138 climate indices, with many labelled as Paris Aligned and Climate transition benchmarks. For each benchmark, ICE has created six climate variants using different screening and carbon metrics combining to target a reduction in the aggregate of constituent’s carbon emissions to net zero by 2050. Varun Pawar, ICE’s Data Indices Head, said: “This new suite of indices brings together several of ICE’s strengths – its leadership role in fixed income securities and global environmental markets, experience creating innovative sustainable benchmarks and ability to deliver products that match investors current and future needs.” 

AirCarbon Exchange (ACX), a global carbon trading platform, has hosted the first trades of the recently launched Global Emission Reduction contract (GER). The GER aims to become the global reference price for the voluntary carbon markets (VCMs). The Net Zero Markets-created contract went live on ACX on 17 June and traded at between US$7.23-$7.60 a tonne, with the Dorjee Sun-led Bioeconomy being one of the first buyers. The GER is tailored to tackle some of the problems within VCMs by consolidating the price of carbon into a single price. By combining standards, jurisdictions, project types and vintages into a single price, through four sub-contracts that maintain price differentiation for harder to reach projects such as long-lived removals, the GER aims to boost liquidity and transparency in the VCM sector. The four sub-contracts consist of the Base, Forestry and Prime Carbon Contracts and the Carbon Capture Contract. William Pazos, ACX’s Managing Director and Co-Founder, said: “The GER is a key innovation in order to streamline carbon trading. It provides a clear price of carbon which will, in turn, unlock investment into climate mitigating activities globally.” 

ESG Book, the sustainability data and technology provider incubated by Arabesque, has announced the closing of a US$35 million Series B funding to build a major new ESG data platform. The funding round was led by Energy Impact Partners (EIP) and includes Meridiam and Allianz X. The capital will be used to advance ESG Book’s technology capabilities, enabling clients to meet sustainability requirements and accelerate the company’s expansion. The ESG data and services market is estimated to grow to US$5 billion globally by 2025 and the Series B investment will be used to encourage the adoption of ESG Book’s platform and allow the company to further expand into new product areas. Dr Daniel Klier, ESG Book’s CEO, said: “ESG Book is disrupting how sustainability is integrated and measured on a global scale by using next-generation technology that makes ESG data accessible, comparable and transparent. By partnering with three of the world’s leading sustainability-conscious investors, EIP, Meridiam, and Allianz X, we are excited about the next chapter of our company’s growth as we scale ESG Book’s platform and services worldwide.” 

Index, analytics and data provider MSCI has announced a strategic partnership with Carbon Risk Real Estate Monitor (CRREM), which specialises in identifying properties at risk of stranding due to expected increases in building codes, regulation, and carbon prices. The partnership will boost MSCI’s emission intensity data and decarbonisation pathways analysis, enabling real estate investors to better manage and assess transition risk. It will see two CRREM pathways incorporated into the MSCI Climate Value-at-Risk (VaR) model and increases the number of transition risk pathways for MSCI’s real estate users from 15 to 17. The CRREM data also improves climate calculations within the MSCI Real Estate Climate VaR model when actual carbon emissions disclosures are unavailable. Oliver Marchand, MSCI’s Global Head of ESG and Climate Research & Development, said: “Integrating data and methodology from CRREM further expands the information available to real estate investors using Climate VaR, so they can set climate goals, report on progress, measure risk over the long term and push towards net zero.” 

Australian SaaS-based company Pathzero has announced the launch of Pathzero Navigator, a data-driven portfolio alignment tool. The tool provides private investors with an initial PCAF-compliant estimate of their financed emissions and is designed to aid investment firms prepare for upcoming regulatory requirements and align their portfolios and activities with the Paris Agreement’s goals. Pathzero Navigator requires companies to upload key portfolio data which is then used by the tool to deliver an instant assessment of total emissions and the attributable financed emissions in the portfolio. Further analysis can then identify climate risk ‘hot spots’ to focus attention focus to the secots or emission sources with the greatest importance in the portfolio. Private investment firms StepStone Group, Antler and Carthona Capital will test the tool through a limited pilot programme opened by Pathzero to select investment firms. Carl Prins, Pathzero’s Co-Founder and CEO, said: “Pathzero Navigator is specifically designed to cater to asset managers regardless of where they are on their climate journey, providing an easy ‘on-ramp’ for taking a risk-based approach to addressing the climate related financial risk in their portfolios.” 

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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