This Week’s Tech and Tools News: MSCI Launches Climate Action Index

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

Data, analytics and research services provider MSCI has announced its new MSCI Climate Action Indexes in a bid to help investors looking to invest in companies making progress towards emission reduction targets. It is aimed at equity investors who want an index with exposure to all sectors of the economy and favour a bottom-up index selection approach based on both current and forward-looking climate indicators. The new suite of equity climate indexes will consist of companies taking measurable steps to tackle their emissions. The indexes are also aligned with the Glasgow Financial Alliance for Net Zero’s (GFANZ) recommendations on addressing real-economy emissions reductions. Melissa McDonald, MSCI’s Head of ESG and Climate Indexes, said: “This launch demonstrates our ongoing commitment to ensure that investors have the information and tools they need to develop portfolios that meet their net zero commitments, integrate climate considerations and fulfil their investment objectives.” 

Bloomberg has increased its carbon emissions dataset to cover 100,000 companies. It includes company-reported carbon data and estimates based on either a machine-learning smart model or Bloomberg’s newly developed industry-implied model – the latter of which includes a Partnership for Carbon Accounting Financials’ (PCAF) reliability score. Bloomberg applies estimation techniques, drawing on over 800 data points to estimate Scope 1 and 2 emissions with historical data going back to 2010. Last year, Bloomberg also released Scope 3 estimates for oil and gas, metals and mining, and services industries, using a methodology combining a bottom-up model with a top-down machine-learning model. If there is not enough data available to apply these machine-learning smart models, the estimate automatically reverts to using Bloomberg’s new industry-implied model, which uses peer emissions and sales data to estimate a company’s emissions. Brad Foster, Bloomberg’s Head of Enterprise Data Content, said: “To date, limited and inconsistent corporate disclosure of these emissions has posed a significant challenge; our expansion of this dataset will help to address these gaps so clients have actionable information to identify climate related opportunities and risks.” 

Zurich-based ESG data science company RepRisk has launched a new biodiversity risk tool, RepRisk Geospatial Analytics. Created in partnership with the Integrated Biodiversity Assessment Tool Alliance, the new dataset identifies the proximity of extractive sector projects to key biodiversity areas and protected areas. The tool aims to facilitate biodiversity risk assessments for market practitioners and assist in solving common pitfalls around quality and availability of both biodiversity and proximity data. Alexandra Mihailescu Cichon, RepRisk’s Executive Vice President of Sales and Marketing, said: “RepRisk Geospatial Analytics not only brings clients in step with emerging frameworks like TNFD but empowers them with the most cutting-edge technology and the world’s most comprehensive ESG dataset. It’s time for financial markets to integrate biodiversity risk considerations into their decision-making processes.” 

Pathzero, an Australian environment consultancy firm, has introduced the Pathzero Navigator, its first interactive tool for estimating financed emissions in private markets. The tool will assist firms in measuring, reducing, offsetting and reporting their carbon emission. The Navigator, which was pilot-tested by firms including StepStone, Antler and Carthona, supports firms as they prepare for new regulatory requirements and track their Paris-alignment. It enables private market investors to obtain an overview of their financed emissions, providing an assessment of the total emissions and attributable financed emissions in the portfolio. Further analysis then identifies climate risk ‘hot spots’ within the portfolio. Carl Prins, Pathzero’s Co-Founder and CEO, said: “Pathzero Navigator is specifically designed for asset managers, regardless of where they are on their climate journey, giving them the tools to take action to comply with the global emissions reporting standards while upholding fiduciary duty and improving their brand image.” 

The International Emissions Trading Association (IETA) is launching the Climate Action Data Trust (CAD Trust), a decentralised metadata system that can link, aggregate and harmonise all major carbon market registry data. The platform, which is due to go live in early December, is a joint initiative led by IETA, World Bank and the Singaporean government, alongside a variety of other governments and public and private organisations. It will provide an open-source metadata system to share information about carbon credits and projects across digital platforms, easing future integration of multiple registry systems. CAD Trust uses distributed ledger technology to create a decentralised record with the goal of avoiding double counting, increasing trust in carbon data and enhancing climate ambition. Dirk Forrister, IETA’s President and CEO, said: “The Climate Action Data Trust will serve as a public good, providing an accessible, decentralised and secure digital infrastructure that can be used by all participants in carbon markets – acting as an invaluable tool for market communication, trust and transparency.” 

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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