ESG Investor’s weekly round-up of news on technology and tools in the sustainable investing sector, including GaiaLens, ISS ESG, Normative, DiligenceVault, Ledger8760 and Apex Group.
GaiaLens has launched a real-time, data-driven ESG scoring analytics platform for portfolios and stocks worldwide, aimed at asset owners, asset managers and pension trustees. The platform, which sources and scores unstructured, independent third-party data as well as more traditional self-reported data across all key ESG factors, is designed to help users fill data gaps, notably on social and governance issues, “and test the self-certified ESG claims of publicly-listed businesses”. According to the firm’s research, less than 10% of public companies currently provide key social and governance data, including statistics on gender and ethnic diversity on their boards of directors, despite growing evidence that greater diversity at senior levels contributes to higher share price performance and better risk management. For its social ‘pillar’, GaiaLens runs extensive data searches against three core themes and 45 features. Once all available structured and unstructured data is gathered, it is scored via its own proprietary algorithm. At each point of aggregation, GaiaLens can show the user where the numbers come from and allow them to drill down or drill up through its analytics system. At launch, GaiaLens has ESG-relevant data for approximately 16,000 public companies. All data is compiled, measured for consistency and transparency and scored in real-time equally across the E, S and G pillars. “As we get closer to EU Taxonomy deadline for reporting there will be a growing realisation that asset owners, asset managers and pension trustees do not have all the information they need to accurately assess firms’ ESG performance. As well as asking these firms to supply key ESG data they may also want to strengthen their scrutiny by accessing verifiable third-party data,” said Gordon Tveito-Duncan, Co-founder and Head of ESG Technology at GaiaLens.
ISS ESG, the responsible investment arm of Institutional Shareholder Services, has augmented its ISS ESG SFDR Principal Adverse Impact Solution with unadjusted gender pay gap data related to an assessment universe of around 8,000 companies, dependent on company disclosure. The solution was originally launched in April 2021 to enable financial market participants to comply with the EU Sustainable Finance Disclosure Regulation (SFDR) and report on Principal Adverse Impacts (PAIs), for products and portfolios distributed in Europe. ISS ESG provides automated portfolio reporting to facilitate SFDR compliance, including reporting against specific PAI indicators, as well as supporting clients in taking a data-driven approach to Level 1 qualitative disclosures, taking into account sustainability risks and addressing broader adverse impacts of their investments. The report also helps to justify the classification of financial products into Article 6, 8 and 9 under SFDR. “Incorporating unadjusted gender pay gap data into SFDR reporting requirements has hitherto been a particular challenge for affected financial market participants who are required to address this important area, under the regulatory framework. This latest enhancement allows ISS ESG clients to integrate data on all mandatory corporate PAI indicators,” said Dr Maximilian Horster, Head of ISS ESG.
Normative, a Stockholm-based provider of carbon emission accounting solutions, is launching a service to help companies use science-based offsets as part of their efforts to reach net zero greenhouse gas emissions. The service recommends “impactful” carbon offset projects based on tests designed to prove additionality and permanence, while avoiding double-counting and leakage. According to Normative, tree planting is less effective than commonly supposed because newly planted trees can take decades to capture high levels of emitted carbon. The firm has set up a carbon removal portfolio offering a range of science-led offsetting methods, including biochar, enhanced weathering, bio-oil, and CO2 mineralisation, which are vetted by independent third-party experts. “If you want to be a responsible business, you can’t just pay to offset your current carbon emissions and call it a day. To reach global net zero and mitigate the worst effects of climate change, businesses need to reduce their emissions as much as humanly possible, as quickly as humanly possible, then engage in high-quality climate investment to compensate for whatever’s left,” said Kristian Rönn, Founder of Normative.
New questionnaires from the ESG Data Convergence Project and the Asset Owner Diversity Charter are now available on DiligenceVault, a digital-first, due diligence technology platform for asset owners, allocators and fund managers. In addition, updated questionnaires from industry groups the Loan Syndications and Trading Association (LSTA), the Principles for Responsible Investment (PRI), and the Institutional Limited Partners Association (ILPA) are also now available on the platform. The Asset Owner Diversity Charter, an initiative created by the Asset Owner Diversity Working Group, is a formalised set of actions used by asset owners to monitor and improve diversity in the investment industry, via questionnaires completed by asset managers. The ESG Data Convergence Project is a collaboration between general partners (GPs) and limited partners (LPs) to streamline private equity’s historically fragmented approach to reporting ESG data to create material, performance-based, comparable ESG data from portfolio companies. GPs track and report six metrics from their underlying portfolio companies, beginning with calendar year 2021, and the data is shared directly with invested LPs by GPs and aggregated into an anonymised benchmark. In addition, DiligenceVault has also made available on its platform updated ESG and DEI-focused questionnaires from LSTA, PRI and ILPA.
Ledger8760, a US-based energy and emissions measurement platform, is partnering with four leading data centre providers to offer transparent and accurate emissions data to support customers’ sustainability strategies. The firm’s tracking tools provide accurate data on energy consumption, allowing data centres and their customers to identify and reduce their carbon emissions. According to a 2021 survey from Boston Consulting Group GAMMA, organisations have estimated a 30-40% error rate in their emissions reporting, largely due to data collection difficulties. By working with Ledger8760, Aligned Data Centers, Corscale Data Centers, Ascent and T5 Data Centers can measure their energy footprint hour-by-hour, observing variations in customer energy consumption, electricity generation, and sourcing. as well as if the energy is coming from renewable or non-renewable sources. This allows for inefficiencies in operations and infrastructure to be recognized and helps identify equipment that needs to be replaced. “Many data centres claim to be 100% green but until they are measuring 24/7 carbon intensity, it’s hard to back that up. Through our 24/7 tracking technology, we’re enabling leaders to be less concerned with data gathering and more concerned with change,” said Adam Kramer, CEO of Ledger8760.
Adams Street Partners, a global private markets investment manager with US$49 billion AUM, is using a real-time ESG data analytics solution from global financial services provider Apex Group to provide insights into underlying fund and private company investments. Apex’s ESG Ratings and Reporting solution is an analytics platform which securely processes multiple ESG data streams to provide tailored insights during investment and operational due diligence. Adams Street is also collaborating with Apex to develop a tailored impact data collection and reporting solution to monitor the future impact of investments. Adams Street, a signatory of the Principles for Responsible Investment since 2010, recently joined Initiative Climat International, an investor-led platform focused on climate action among leading private equity organisations, and the ESG Data Convergence Project, an industry initiative to streamline and harmonise ESG metrics. “Quantitative insights drawn from ESG data enhances our ability to identify opportunities and better understand risks,” said Yohan Hill, Director of ESG and Responsible Investing at Adams Street. “Adams Street is actively accelerating its ESG expertise as we work to develop new investment and reporting capabilities.”