This Week’s Tech and Tools News: Northern Trust Aims to Ease ESG Workflows

ESG Investor’s weekly round-up of news on technology and tools in the sustainable investing sector, including Northern Trust, EDS, Nature4Climate, Capital for Climate, Qontigo, Verra, Pachama, Mubadala Investment Company, ACX and ACA Group. 

Financial services firm Northern Trust and New York-based Equity Data Science (EDS) have developed a new ESG workflow solution which will enable investors to more rapidly access and share ESG information. The ESG digitised data aggregation tool leverages data science to boost transparency, efficiency and collaboration amongst investment teams, as well as allowing investors to analyse and measure decision-making across the investment lifecycle. Specific features of the solution include automated capture of ESG data from market and specialist vendors, including unstructured data sets that identify potential ESG issues, integration of vended data elements and ESG-related data workflow tools. Paul Fahey, Northern Trust’s Head of Investment Data Science, said: “We know that implementing ESG is a top concern for our clients. This [solution] enables more efficiency and transparency for investment teams and helps clients streamline their data and reporting processes.” 

A report by climate finance experts Nature4Climate and climate investment platform Capital for Climate predicts the nature tech market will grow to US$6 billion by 2030. The current nature tech market size is approximately US$2 billion, with the term encompassing any technology that can be applied to enable, accelerate, and scale-up nature-based solutions (NbS). Global public and private flows of capital to NbS currently average US$133 billion per year, the report said, estimating that investment levels need to increase four-fold in real terms by 2050 for the world is to meet its climate change, biodiversity and land degradation targets. The report predicts investment in nature tech will accelerate, providing bankable benefits for those who protect, restore, and manage natural systems, ecosystems, and landscapes. Lucy Almond, Nature4Climate’s Chair, said: “We need nature-based solutions to provide 30% of the mitigation required by 2030 in order to keep our global climate and nature goals in reach. The application of technology to NbS makes sense, both for the sake of the planet and financially, since an estimated US$44 trillion of economic value relies on nature.” 

Global indices and analytics provider Qontigo has licensed the STOXX PSBC China A ESG Index to Postal Savings Bank of China (PSBC). The index applies an ESG score, exclusionary screens, and incorporates Qontigo’s quantitative portfolio construction tools. The STOXX PSBC China A ESG Index selects from the largest 300 securities in the STOXX China A 900 Index, targeting a portfolio with a strong ESG profile compared to the broader market, while maintaining similar risk characteristics. Companies that are determined to be non-compliant with the UN Global Compact Principles, or involved in controversial weapons, tobacco or thermal coal, are not eligible for selection. Rick Chau, Qontigo’s Asia-Pacific Managing Director for Sales, said: “The STOXX PSBC China A ESG Index efficiently addresses the objective of enhancing the portfolio’s ESG profile, without generating excessive risk, turnover or sector biases. We foresee the index to become a benchmark for ESG performance among the country’s largest companies and to facilitate investor stewardship.” 

Verra, a US-based carbon emissions crediting programme, and California-based climate-tech company Pachama, have partnered to pilot test a digital monitoring, reporting, and verification (DMRV) platform. The platform looks to harness remote-sensing to measure forest carbon and is the first operational platform of its kind. The remote sensing pilot is set to begin before the end of the year, with findings from the pilot informing guidance for future DMRV platforms. Diego Saez Gil, Pachama’s CEO, said: “We’re delighted to introduce tools to the carbon market that will deliver standardised, high-integrity, digital carbon accounting for nature-based projects at a fraction of the time and cost of traditional methods. In the near future this could allow tens of thousands of landowners and project proponents worldwide to rapidly access finance to protect and restore nature, all while ensuring strong additionality, permanence and verifiability of the carbon credited.”  

Emirati sovereign wealth fund Mubadala Investment Company has acquired a stake in AirCarbon Exchange (ACX), a global exchange for voluntary carbon markets (VCMs). ACX is a global environmental commodities exchange that uses distributed ledger technology within a traditional commodity trading construct, leveraging blockchain architecture to create securitised carbon credits. The strategic stake acquisition looks to support ACX’s establishment of the first fully regulated carbon trading exchange and carbon clearing house in Abu Dhabi. Badr Al Olama, Mubadala Investment Company’s Executive Director of UAE Clusters, said: “ACX is set to be an important player within the international sustainable finance ecosystem, supporting the growth of environmental commodities, especially in light of the ongoing impact of climate change globally. This transaction will strengthen the UAE’s competitiveness on the world stage, while driving forward a future-focused sector that is vital to the UAE’s decarbonisation journey.”  

Financial consultancy ACA Group has certified an exchange-traded fund (ETF) as carbon neutral under its plant-based innovation certification. The VegTech Invest Plant-based Innovation and Climate ETF is the first ETF that ACA has certified as carbon neutral, based on the positive impact of replacing animal products with plant-based innovation solutions. ACA’s carbon neutral certification is designed for mutual funds, ETFs, separately managed accounts (SMAs), portfolios, and other investment products to help meet growing market demand for assessments of innovations that are looking to reduce emissions and support ESG and impact goals. ACA reviewed a variety of lifecycle analyses, which quantify the typical emissions reduction associated with converting from beef to plant-based meat, implementing green vertical farming, investing in plant-based products and innovations, and making other transitions to a plant-based industry. Luke Wilcox, an ACA Group Partner, said: “New investment approaches are seeking ground-breaking solutions that address the global food and material supply system that work toward stabilising food insecurity and reducing greenhouse gas emissions. We are proud to highlight ACA’s expanded offerings in certifying the fund as carbon neutral.” 

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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