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Sustainability

A new path through the climate data jungle

Published on by Tim Nixon

Understanding climate performance is not easy. Many major emitters report different kinds of data, with some including their own emissions, but not those of their supply chain. Some of the largest global emitters are not transparent at all. 

Believe it or not, most of the emission data which is available now is at least 12 months out of date, and is self-reported by industry with varying levels of auditing and assurance. Measuring and managing the climate challenge in particular, and sustainability performance in general, requires new data tools.

Reports and rankings

New reports and analyses are helping to find a pathway. Using peer-reviewed estimates for missing data, custom reports like this focus on the fossil fuel sector are adding new insight by filling in data holes for major emitters.  Other reports like this one from CDP use models to correlate carbon intensity with financial risk.  What most of these reports also do is allow for ranking by level of emissions over time, or level of financial risk according to a model designed for investors.

Figure 1. Global 500 Top 20 emitters

Global 500 Top 20 Emitters
Source: Thomson Reuters “Global 500 Greenhouse Gases Performance 2010-2015-2016 Report”

These types of analytics built around the traditional data sources are a big help in understanding and acting on the trends over the previous 5 to 10 years.  What they don’t do as well is help us understand what has happened more recently, and whether it is significant in the overall landscape of performance.

New real-time views

Excitingly, new tools are emerging which help us with a more real-time view.  Hendrik Bartel, CEO of TruValue Labs, a new data mining company based in San Francisco offers one version of this new paradigm.   To augment the traditional data landscape, TruValue provides a real-time view on performance which is created by scouring thousands of text sources daily for new developments, and then algorithmically’assigning a quantitative measure of the severity or seriousness of the development for a given company.

“We are working to enhance the power of the regulatory and investor community, so that they can understand in real time what might be happening with the performance of key actors in their marketplaces”.

Focusing on climate, one example is Mitsubishi Motors.   Traditional data is available on its performance through 2015.  In May 2016, as news started to break of regulators’ concerns with Mitsubishi’s emissions reporting, the story was picked up and ranked in real-time by computer algorithms and AI (Artificial Intelligence)  for severity, immediately providing insight on relative performance to the investor community.

Figure 2. Real-time ESG performance

Source: Thomson Reuters Eikon
Source: Thomson Reuters Eikon

Another example of this new insight comes with companies which do not disclose their emissions, which is still a significant percentage of total global emitters.  As more and more sources of information emerge on non-disclosing firms, such as satellite, energy use and supply chain output, it will be increasingly difficult to hide performance.

“Imagine how this performance view improves as more and more data is captured by the rapid increase in the number of data sensors (cameras, internet of things etc.), citizen journalists, investor inquiries, regulatory and consumer demands”, says Bartel.

Revolution in the jungle

We are in the midst of a big data revolution which will change the game on climate transparency, and allow significantly better management of sustainability performance.  The consequences are clear.  Real-time transparency and deeper understanding of ESG performance is happening now.  Firms who chose to lead in this arena by being more transparent and aligning with global policy goals will find an increasing opportunity to shine through these new investor tools.  A new path is being cut through the climate data jungle.

First published and adapted from an article in Responsible Investor


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Global 500 Greenhouse Gases Performance 2010-2015
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