Report calls for better levels of corporate disclosure through regulatory mandate, improved coverage and quality of data products, and greater data comparability.
There are “significant gaps in the quality“ of climate-related data and information, which putting at risk investors’ net zero strategies, a new report from the Principles for Responsible Investment (PRI) has claimed.
To address a “disconnect” between investors’ needs and current product supply, the report called for better levels of corporate disclosure through regulatory mandate, improved coverage and quality of data products, and greater data comparability, achieved through consensus on common definitions “and agreement on sector and geographic pathways”.
The PRI said data providers should extend coverage beyond listed equities and corporate bonds, also calling for enhanced data transparency, including greater disclosure of methodologies, data and assumptions used for assessing climate change governance, as well as any reasons for uncertainty over emissions estimates and related methodologies.
To help investors understand future emissions risks more accurately, data providers should offer products that analyse the credibility of firms’ emissions targets, the report added, as well as the alignment of business strategies with emissions reduction targets.
The PRI also recommended that data providers collaborate with investor-backed net zero frameworks to develop methodologies that enable investors to report on portfolio- and/or fund- level real-world emission reductions and net zero alignment.
Although the report acknowledged certain issues were caused by the quality and availability of underlying corporate data “some gaps are attributable to the data products themselves and wider gaps in the marketplace”.
Research conducted for the report by Chronos Sustainability included a review of the requirements of 17 investor-led net zero and climate change frameworks and initiatives, a review of 62 climate data products, provided by 19 data providers, and interviews with 16 institutional investors around the world about their climate data needs.
Read more articles like this on Regulation Asia’s sister publication, ESG Investor.