Mirova, an affiliate of Natixis Investment Managers dedicated to sustainable finance, along with Robeco and a group of 11 financial players, launch a call for expressions of interest (CEI) to develop a global database of avoided emissions factors and associated company-level avoided emissions.
The energy transition requires moving away from carbon activities and proposing decarbonized alternatives. Although these are mostly known, there is no global, quantified data available to compare them and support the redirection of financial flows to companies enabling decarbonization.
Estimates of the investment required to meet global net-zero emissions by 2050 range from USD 109-275 trillion. Much of this investment will be in so-called “climate solutions”, such as renewable power generation, electrified transportation, and green buildings. Whilst investment is needed across the board, the incremental contribution of the investment to the low-carbon transition is dependent on the location and the type of investment.
More and more companies now communicate their scope 1, or direct, CO2e emissions and we see an increase in the amount of data about estimated indirect emissions, scope 2, and scope 3. Metrics are needed, however, to identify their respective contribution to the global net zero objectives and compare solutions. One such measure is avoided emissions, sometimes referred to as “scope 4”. Unlike induced emissions that benefit from strong methodological bases, avoided emissions are calculated in a variable manner by different companies, which jeopardizes their credibility and prevents their use at scale. This was recognized recently by the G7 who called for the private sector to work together to develop an international standard.
That is why today, a group of financial institutions, spearheaded by Mirova and Robeco, come together through a call for expressions of interest to enable:
- The creation of a globally accessible common database of avoidance factors (Batch 1).
- The estimation of emissions avoided by companies over a wide investment universe of listed companies first, resulting from the application of the avoidance factor database on the activity data of the companies concerned (Batch 2).
The new datasets should be based on the following principles:
- Full life cycle analysis as well as an attribution of avoided emissions across the entire value chain.
- The precautionary principle with the least advantageous baseline scenario is selected to calculate avoidance factors.
- Transparency and access: the methodology for the calculation of avoidance factors should be transparent.
“The financial sector plays a key role in driving the economy towards net zero emissions globally. To this end, clear and comprehensive information on companies’ true contribution to the global net zero objectives is essential. This includes a robust measurement of avoided emissions. As a mission-driven company, Mirova seeks to continuously improve its approach and drive the market towards more ambition and transparency. That is why we are very proud to be at the forefront of this initiative.”
Manuel Coeslier, Lead Expert, Climate & Environment at Mirova.
“The net zero transition is a massive opportunity for investing in climate solutions and emission mitigation technology. Robeco is implementing investment strategies that focus on this opportunity, but at a global level climate finance is six times lower than what is required. Forward-looking metrics are key to increasing climate finance. This includes a credible measurement of avoided emissions. Transparency and a common methodology are essential, and we hope this initiative may contribute to establishing this.
Lucian Peppelenbos, Climate & Biodiversity Strategist at Robeco.
”Responses to the call for expression of interest are expected to be put forward by the 16th of July 2023. Academic institutions, consultants, and data providers are all welcome.
