As investors continue to grapple with the complexities of carbon emissions reporting, it is becoming clear that artificial intelligence will play a key role in improving the quality of core data.
Issues with reliable and consistent emissions data prompted $330 billion US pension fund Calstrs to postpone publication of its 2023 carbon emissions report last month after discovering significant data issues It became clear.
In Asia Pacific (APAC), New Zealand Super is already thought to be using one of the more advanced climate management approaches, but even the company has been forced to limit its reporting to: has been done. “As we rely on external data and external data providers,” the controls at the time of data generation include risks related to lack of data integrity, unverified data sources, and the complexity and judgment involved in obtaining emissions data. there is. ”
Australian climate scientist Ben McNeill said: asian investors The first challenge in analyzing your company's emissions is to ensure you are using the right datasets for scope 1, 2, and 3 reporting.
“The reality is that we still don't have satisfactory data sets. It's difficult for companies to invest the time and money to understand their carbon footprint. Even now, 80% of publicly traded companies worldwide, or 5 Mansha has not reported anything.”
When it comes to Scope 3, which relates to a company's supply chain emissions, only about 1% of companies report on it in a meaningful way, McNeil said. “Then when you look at the private market, obviously no one is doing that, so there's a huge gap.”
NZSuper reports that in 2022 and 2023 it was able to collect data from entities representing approximately 8.4% of the fund's private holdings by value.
data analysis
The potential for artificial intelligence to process complex datasets on emissions and their climate impacts, thereby helping model climate risk for portfolios, is attracting the attention of large asset owners in the region. 5 years ago,
Mr. McNeil co-founded Emmi Solutions, a technology company focused on helping financial institutions understand how future carbon constraints will impact carbon transition risks.
“There are ways to evaluate each aspect of emissions data, and by using various techniques in machine learning, we can optimize which carbon models work best,” he said. Ta.
michael wirsch
vision super
Australia's Spirit Super uses Emmi to analyze private market exposures such as infrastructure assets and real estate.
“We take financial data from investments and disseminate future climate scenarios to analyze how that translates into portfolio risk,” McNeil said.
“We can give them different outcomes, like 1.5 degrees, 2 degrees or 4 degrees, so they can take action to protect their portfolio. ”
Reporting goals
“Vision Super's CIO Michael Wirsch said: asian investors His investment team is currently exploring the use of AI to improve carbon reporting.
“One of the issues that is very difficult to address is the systematic under-reporting of emissions, and this is a problem,” Wilsch said.
Singapore technology company STACS has established a platform to power the Monetary Authority of Singapore's Greenprint ESG Registry, among other things. According to managing director Benjamin Soh, advances in AI have played a pivotal role in strengthening ESG management over the last year, enabling companies to comply with looming ESG regulations.
Soh said data quality remains the biggest challenge.
“When we founded, we realized that there were many gaps in Asia. Rather than assigning quotes and agents, we negotiate with upstream companies and collect data directly at the source. We have endeavored to attribute data to disclosures made by the companies themselves. All data points that reach us come from legitimate sources.”
One way these technology companies are looking to capture more data points is by partnering with specialized AI solution providers. One of his companies, Eugenie.ai, is based in California and has developed an emissions tracking platform that combines satellite imagery with data from machinery and processes. AI analyzes this data to help companies track, track and reduce emissions by up to 30%.
So said the application of AI in sustainability efforts is expected to expand significantly.
“We need technology to help us because the scale of the problem is so large that literally thousands of companies are going to need to do things that have never been done before.”
NZ Super is monitoring developments closely, saying it will “consider new methodologies as part of the review and update of the next carbon reduction targets.”
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