ESG Investor’s weekly round-up of news on technology and tools in the sustainable investing sector, including NatureAlpha, Verdantix, Solactive, Minerva Analytics, Euronext, Joulea, and Clarity AI.
Nature and biodiversity analytics company NatureAlpha has joined the alliance of organisations collaborating on the Integrated Biodiversity Assessment Tool (IBAT), to provide asset owners and asset managers with access to key global biodiversity information. IBAT is an alliance between the United Nations Environment Programme, the International Union for Conservation of Nature, BirdLife International, and Conservation International, which hosts and maintains three key global biodiversity datasets. Interest in IBAT, a “technologically innovative solution” where data have been integrated into biodiversity and nature metrics for use by investors, is expects to rise following agreement in the Global Biodiversity Framework, which encourages large and transnational companies and financial institutions to regularly monitor, assess and transparently disclose their biodiversity risks, dependencies and impacts. Ed Ellis, Business Manager for IBAT, said: “Our collaboration with NatureAlpha ensures that biodiversity data are more widely available to a sector, which will be crucial in helping protect and restore nature for current and future generations. Financial institutions will now be able to access synthesized biodiversity information including maps, providing decision-makers with access to critical nature-related information at the site level.”
Verdantix, a London-based research and advisory firm, has forecast a five-fold increase in spending on carbon management by the finance industry. A report by the firm predicts that banks, insurers, private equity and investment managers will spend as much as US$256 million on specialist software by 2027. This would mark a significant jump from the sector’s spending last year of US$51 million, and would see financial services account for almost a fifth of total investment of US$1.49 billion on carbon management software. The report said financial services businesses require specialist software to track data and estimate Scope 3 carbon emissions stemming from their portfolio firms, with the 2022 Task Force on Climate-Related Disclosures status report finding 43% of financial institutions rating Scope 3 GHG emissions as a ‘very difficult’ recommended disclosure. Verdantix anticipates fastest growth for the EMEA region and sees it overtaking North America as the biggest global market by 2025, being worth more than US$650 million two years later. It also expects strong growth in technology, media and telecommunications firms’ spending on carbon management software, primarily driven by net zero pledges and competitive pressures.
German index provider Solactive has acquired ESG research, stewardship support and proxy voting agency Minerva Analytics. The acquisition looks to enable Solactive and Minerva Analytics to provide their 500 entity-strong global client base with proxy voting and stewardship oversight services as well as ESG indices, benchmarks, research and data. Solactive, active in the ESG solutions field and ranking third globally in 2021 in ETF launches incorporating ESG considerations, said acquiring Minerva Analytics would “strengthen the firm’s commitment to innovation within sustainability”. Steffen Scheuble, CEO of Solactive, said: “An explosion of interest in improving responsible investment practices over the last few years has been driven by both regulatory demands and increased client attention. In particular, clients are keen to diversify their sources of input and intelligence to improve outcomes. We believe this trend will only accelerate and we look forward to our continued close collaboration with Minerva as it cements its position as one of a handful of truly global and objective sustainable stewardship services and ESG research and data providers.”
Euronext, a pan-European stock exchange and market infrastructure provider, has launched the CAC SBT 1.5° index, which will invest solely in companies within the SBF 120 Index – the 120 most actively-traded stocks listed in Paris – that have emissions reduction targets approved to be in line with the 1.5°C goal of the Paris Agreement. The CAC SBT 1.5° index looks to respond to the growing demand for sustainable investment tools. The index is designed to facilitate the adoption of mainstream ESG investment approaches by institutional and private investors while providing a strong focus on climate change considerations. It incorporates negative screening and norm-based exclusion filters applied in accordance with the UN Global Compact Principles, as well as exclusion screening for companies involved in unconventional oil & gas, coal, controversial weapons and tobacco activities. It is composed of companies that have defined clear targets to reduce greenhouse gas (GHG) emissions in line with 1.5°C, which have been validated by the Science Based Targets initiative (SBTi).
Atlanta-based software platform Joulea has launched software to reduce carbon emissions and energy costs in commercial buildings. The software provides an assessment of all building systems and external factors to lower and track carbon emissions, streamline reporting and compliance, optimise day-to-day building system performance and reduce overall portfolio energy costs. Joulea’s technology applies aerospace product lifecycle management techniques to create a commercial building’s digital energy twin. Industry standards for energy efficiency are exceeded using Joulea’s model to monitor all systems for opportunities to manage and improve efficiencies. Additionally, the firm targets corporate and governmental energy benchmarks, so building owners and operators can improve environmental sustainability at each property and across their entire portfolio. Ramtin Motahar, Joulea’s Founder and CEO, said: “Our technology takes a holistic approach by monitoring how all building systems and external factors interact so we can identify improvement opportunities and reduce operating costs.”
Clarity AI, a global sustainability tech platform, and London Stock Exchange Group (LSEG) business Refinitiv have partnered to develop a new SFDR Reporting Tool for Investors. The SFDR Reporting Professional tool will assist LSEG’s customers complying with the Sustainable Finance Disclosure Regulation (SFDR) through accurate reporting of 20 mandatory and optional fields. SFDR Level 2 requires financial institutions to disclose the ‘Principal Adverse Impacts’ their investments have on social and environmental issues. The new tool will leverage data coverage of over 50,000 companies, complimented by LSEG’s comprehensive range of reported data on ESG, fundamentals, funds and sovereigns. Clarity AI’s analytics will also combine LSEG’s reported financial and ESG data with Clarity AI’s modelled and controversies data, providing customers with more complete data coverage. Clarity AI has also extended its partnership with European financial market solutions provider Infront. The firms first partnered in 2021, which saw Infront integrate ESG risk scores for over 50,000 companies, 320,000 funds, and 400 governments into its display products. Under the renewed partnership, Infront will onboard Clarity AI’s full suite of ESG data, boosting the data granularity on offer to its clients.