Estimated emissions data not reliable

19 November 2020
| By Jassmyn |
image
image
expand image

Investors and institutions looking to mitigate climate change through analysing green data need to be aware that estimated third-party emissions data is 2.4 times less effective in identifying worst emitters compared to reported data, according to Research Affiliates.

Research Affiliates Global Advisors partner and head of research – Europe, Vitali Kalesnik, said in an online webinar that while estimated data was better than nothing, it was large ineffective in identifying green companies in brown sectors. Brown sectors were those that had firms involved in environmentally destructive forms of activity.

Kalesnik said estimated data largely reflected only industry and size information and was ineffective in identifying green companies in brown sectors.

However, while reported data had the best quality in terms of providing greenhouse gas (GHG) emissions and comprised of around 50% of data, it had issues such as self-reporting bias and the fact that there was no single standard.

“Our results debunk the belief that third-party estimated emissions are a satisfactory substitute for direct observations,” he said.

“We call for an international regulatory initiative for mandatory reporting of GHG emissions data. We advocate for adoption of single reporting standard for the current data and ongoing investment projects (for the forward-looking estimates), and emissions estimate audits to ensure the accuracy of the data.

“In the interim, investors should provide incentives for companies to report their emissions.”

Kalesnik noted that there was no evidence that forward-looking information was useful regarding future changes in emissions and said there was a large prevalence of “cheap talk” and that investors should stay away from this kind of data.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

11 months ago
Kevin Gorman

Super director remuneration ...

11 months 1 week ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

11 months 1 week ago

Westpac has delayed its rate cut forecast, aligning with its peer NAB’s outlook on the likely trajectory for the Reserve Bank of Australia’s cash rate....

4 hours ago

The government’s adjustment to the Future Fund’s mandate could set a dangerous precedent, warns an economist, raising concerns that it may pave the way for problematic fu...

3 hours ago

The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remain...

5 hours 51 minutes ago