Recently, Boulder Colorado-based climate risk data provider, Entelligent announced the release of two new carbon data offerings — Smart Climate Carbon Accounting and Smart Climate Carbon Sensitivity. These new products are part of the company’s Smart Climate 2.0 data and analytic suite for asset managers and banks looking to manage climate risk and meet growing compliance requirements.
New Carbon Data Offerings
Entelligent’s patented Smart Climate methodology is disciplined in emphasizing top-down climate data as its primary input. Despite this fact, carbon accounting is an explicit requirement of the Taskforce on Climate-Related Financial Disclosures (TCFD) and most other climate risk frameworks. As a result, Entelligent has developed two carbon data products, which deliver a high standard of quality relative to comparable offerings. These products include:
Smart Climate Carbon Accounting: This is a direct feed of company-reported carbon data, necessary to report security-level Scope 1, 2 and 3 greenhouse gas emissions, a requirement of many climate risk compliance frameworks, including TCFD.
Smart Climate Carbon Sensitivity: This is a scoring model developed by Entelligent to bring greater financial relevance to carbon data. This score comprises two unique carbon KPI calculations: Breakeven Carbon Price reflects a company’s ability to pay a price on carbon while maintaining positive net income. Carbon Per Share (CPS) is the number of CO2-equivalent tons “included” in each share of equity.
Entelligent’s two new carbon accounting products include both company reported and estimated “greenhouse gas” (GHG) data for 9,000 global listed equities back to 2019. These estimates are calculated based on market capitalization. If total GHG is not provided, Scope 3 is not estimated. These products provide annual data, with monthly updates based on entity reporting dates.
Smart Climate 2.0
Entelligent’s new carbon data products are part of the firm’s newly released Smart Climate 2.0, which also includes the flagship T-Risk transition and physical risk score and the soon-to-be-released Smart Climate Value-at-Risk model and data service.
Smart Climate 2.0 was designed for asset managers and financial institutions seeking a consistent, replicable and accurate approach to measuring, managing and disclosing climate risk. It also built with TCFD’s recommendations and KPIs clearly in mind. In addition, Entelligent has continued to prioritize performance in rolling out Smart Climate 2.0.
Entelligent’s Smart Climate 2.0 – Expanded Capability Set
Entelligent’s Smart Climate 2.0 has been designed as a comprehensive climate risk management and compliance solution set, sufficient to meet the full requirements of the Task Force on Climate Related Financial Disclosures (TCFD). Smart Climate 2.0 marks a few key enhancements from its earlier data and analytics suite, including:
Physical risk: The T-Risk score now incorporates physical risk, as well as transition risk, based on integration of advanced data from integrated assessment models (IAMs). As such, it meets TCFD’s central requirement to monitor and disclose both aspects of climate change.
Carbon accounting and carbon sensitivity: As discussed above, Entelligent now offers two new derived carbon-intensity metrics that can be applied to meet different elements of TCFD’s framework, Smart Climate Carbon Accounting and Smart Climate Carbon Sensitivity.
Climate value-at-risk: Smart Climate VaR extends the traditional financial VaR calculation to incorporate climate-related risks and opportunities, measuring the potential financial losses associated with climate-related impacts on an investment portfolio. Smart Climate VaR meets TCFD’s call for integration of climate change risk management within a company’s overall risk management framework.
Our Take
In recent years, asset managers and financial institutions have been seeking a consistent, replicable and accurate approach to the problem of measuring, managing and disclosing climate risk. Many institutional investors have increasingly gravitated to the Task Force on Climate-related Financial Disclosure framework as a best-practice standard. Recognizing this, Entelligent designed Smart Climate 2.0, and its new carbon data products with TCFD’s recommendations and KPIs clearly in mind.
For all market participants, the bar has been set high. Whether their first priority is compliance, risk management, or opportunity discovery — all require metrics that are: financially material, standardized and comparable (across securities, sectors and regions), transparent, and replicable. Entelligent’s Smart Climate 2.0 metrics and analytic tools address these issues while also spanning all four pillars of TCFD’s framework: Governance, Strategy, Risk Management, and Metrics & Targets.
While Entelligent was one of the earlier entrants into the climate risk data and analytics arena, the firm initially lost mind share to some of its more aggressive competitors. However, with the company’s recent technology patents, new partnerships, capital raise and product releases, Entelligent looks to be making up for lost ground, and positioning itself as one of the key players in the climate risk data and analytics space.
For more news about alternative data, investment research, and investment related FinTech, click here to sign up for our free ResearchWatch Weekly newsletter, or click here to subscribe to our proprietary ResearchWatch news and commentary service.