A consortium led by French and Dutch asset managers is progressing towards setting a global industry benchmark for quantifying greenhouse gas emissions averted through low-carbon solutions. This follows their appointment of two consultancies to create a specialised database.
Mirova, a Paris-based subsidiary of Natixis Investment Management, together with Rotterdam-based Robeco, have engaged Bearingpoint’s I Care and Quantis to construct a global compendium of factors for greenhouse emission avoidance. This database is intended to provide a standardised and transparent methodology for calculating emissions averted by green or low-carbon solutions.
Guillaume Abel, Mirova’s Deputy Chief Executive Officer, described the venture as a significant advancement, aiming to invent ”a new global market standard aimed at increasing the comparability and transparency of avoided emissions estimates”. This instrument will assist firms in determining the carbon footprint of assets managed on behalf of institutional clients.
Making it easier for investors
“This innovation will allow investors to better identify and value companies that contribute positively to the decarbonisation of the economy and are therefore well positioned to create value in a world in transition,” Abel said in a statement.
European and international regulations increasingly mandate that companies and their investors broaden their greenhouse gas emissions scrutiny. This extends beyond direct emissions to encompass those of suppliers (termed ‘scope 2’) and estimated indirect emissions, or ‘scope 3’. Discussions are also underway regarding ‘scope 4’ emissions, which would encompass the entire value chain, including emissions attributable to a company’s clients and end-users.
The asset managers advocate that a universally endorsed standard, underpinned by a database, would represent “a major step forward for many economic players”. In the financial sector, this initiative seeks to yield transparent and comparable estimates of emissions averted by financed activities, guiding investments towards the most effective decarbonisation solutions based on their geographical location.
‘Missing piece of the puzzle’
“Avoided emissions are the missing piece of the puzzle when it comes to facilitating transition finance,” said Lucian Peppelenbos, climate and biodiversity strategist at Robeco, “At a global level, much more capital needs to go into climate solutions. This metric can help to direct capital flows towards companies that provide the most effective climate solutions.”
This collaboration also includes Edmond de Rothschild, Natixis, Lombard Odier, Caisse des Dépôts, Comgest, Man Group, and Sienna Investment Managers, with a collective asset management exceeding two trillion dollars.
I Care and Quantis, both environmental consultancy firms, are spearheading the database development. I Care, a subsidiary of BearingPoint, will initially focus the database on 80 distinct low-carbon solutions like biomass energy, recycled plastics, and low-carbon concrete. The project’s first phase, expected to conclude in the year’s final quarter, aims to establish 9,600 unique avoidance factors. All partners in the initiative, so not just the companies and the financial institutions but also the consultants, software developers and data providers will be required to calculate their avoided emissions.
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