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Broad Environmental Data Guides an Insurer’s Journey to Net Zero

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Broad Environmental Data Guides an Insurer’s Journey to Net Zero

       

The Client:

A European-based insurance company serving clients around the world




Users:

A cross-company team representing numerous functions

Getting ahead of climate risk requires that companies have a detailed understanding of their carbon footprint and underlying sources of emissions, as well as forward-looking metrics on physical and transition risks. Physical risks refer to hazards related to more frequent and extreme weather events, such as hurricanes, or the longer-term effects of climate change, such as sea level rise. Transition risks refer to the costs related to moving to a low-carbon economy, such as increased carbon prices as the result of government policies.

 

This large insurance company understands the important role it plays in the communities it serves and is committed to the Science Based Targets initiative (SBTi), which promotes best practices in emissions reduction. It is also working on an action plan and timeframe to reach net zero. The company sees this as a three-pronged undertaking: (1) reduce direct carbon emissions from directly owned operations, (2) identify carbon emissions of suppliers and engage with the largest emitters of greenhouse gases (GHGs) on climate strategies, and (3) ensure that its investment portfolio integrates ESG factors in the asset allocation process. The heads of financial risk and the asset management team were to lead the initiative and realized they needed more extensive data and analytical tools to effectively assess these carbon footprints and track improvements over time.

 

Pain Points

A sound climate strategy had become a high priority for this insurance company to show its action plan for reaching net zero. This required access to extensive data, tools, and subject matter expertise.  

The company had limited environmental data available to develop a comprehensive climate strategy, even though it had spoken publicly about wanting to reach net zero by 2050. An appropriate action plan became a high priority for the heads of financial risk and asset management, and they needed to identify a firm that could provide:

  • A comprehensive set of carbon data to estimate the current footprints.
  • An understanding of a company’s potential earnings at risk should there be government policies that increased the price of carbon.
  • Insights on possible physical risks from droughts, floods, cold waves, and other natural disasters.
  • The ability to track companies against the Paris Agreement goal of limiting global warming to 1.5°C and 2°C climate change scenarios.
  • Details on fossil fuel reserves and potential embedded carbon emissions, as well as on energy assets.
  • A powerful desktop platform for data retrieval, display, and analysis.

 

The company was an existing client of S&P Global Market Intelligence and contacted the firm to learn more about its offering in the environmental space. At the same time, the heads of corporate capital planning, strategy, and competitive intelligence asked to learn more about data services for privately held firms around the world that could support the company’s ongoing business planning and acquisition efforts.

The Solution

The Market Intelligence team first discussed Sustainable1, a new group at S&P Global that represents the firm’s integrated sustainability offerings. This includes Trucost, the data and analytics engine that powers many of S&P Global’s ESG solutions. The team then spoke about S&P Capital IQ Pro − a one-stop solution for essential intelligence with unrivaled data, tech-forward productivity tools, news, and research. Together, the capabilities would enable the company to:

 

 

 

Sustainable1 for the climate strategy:

 

 

Determine carbon footprints for the company, its supplier network, and its investments

Trucost Carbon Emissions Dataset contains information on over 22,000 companies,[1] covering Scope 1, 2, and 3 with metrics on quantities and intensities of carbon-equivalent emissions (tCO2e, tCO2e/US$ revenues) and their estimated damage cost equivalents (US$), along with impact ratios. It contains sector revenue data that gives revenues and percentages of company revenues derived from each of 464 business sectors. Data goes back to 2005, where available.

 

 

Assess the ability of a company to absorb future carbon prices

Trucost Carbon Earnings at Risk Dataset can be used to stress test a company’s current ability to absorb future carbon prices and understand potential earnings at risk from carbon pricing at a company and portfolio level. Integral to this analysis is the calculation of the Unpriced Carbon Cost, which is defined as the difference between what a company pays for carbon today and what it may pay at a given future date based on its sector, operations, and a given policy price scenario.

 

 

Delve into asset-level climate risks

Trucost Climate Change Physical Risk Analytics offers an asset-level approach to the assessment of physical risk at the company and portfolio level. This includes data that provides detailed information to help understand the exposure of company-owned facilities and capital assets to seven climate-related physical impacts (i.e., flood, water stress, heatwave, cold wave, hurricanes, sea level rise, and wildfire) under different climate change scenarios. Scores at an asset basis can then be aggregated to a company level.

 

 

Understand sovereign bond carbon exposure

Trucost Sovereign Carbon Exposure Dataset provides an understanding of carbon exposure linked to investments in sovereign bonds, and enables users to compare performance against a benchmark and report in line with voluntary and mandatory reporting requirements. The dataset covers the territorial and import-export GHG emissions of 170 countries across all GHG Protocol gases, plus country-level socio-economic and energy data.

 

 

Track a company’s alignment with the Paris Agreement

Trucost Paris Alignment Dataset assesses company-level alignment with the Paris Agreement. It enables users to track their counterparties, portfolios, and benchmarks against the goal of limiting global warming to 1.5°C and 2°C climate change scenarios.

 

 

Take a deep look at fossil fuels

Trucost Fossil Fuels Dataset identifies all the 331 companies within a global 5,000 universe that have any revenues derived from fossil fuel activities. This includes the percentage of revenues companies derive from their business activities in fossil fuel extraction, power generation, and clean energy sectors.

 

 

Better understand energy assets

 

Trucost Energy Offering delivers a range of capabilities from company financials and commodity pricing to detailed statistics, summaries, and project tracking. Data covers industry subsectors, such as power, natural gas, renewables, and coal. News provides essential sector-specific regulatory and financial updates. Key types of data available include: Market details, corporate finance data, supply and demand analytics, power plant data, third-party commodity prices, power forecasts, and more.

 

 

Delve into additional “E” factors

S&P Global ESG Scores is an environmental, social, and governance dataset that provides scores at: (1) a company level (one overall ESG score), (2) for each of the three dimensions (environmental, social, and governance scores), and (3) 23 criteria (e.g., biodiversity, environmental policy and management systems, packaging, and raw material sourcing), with additional breakdowns below each criterion. Scores are prepared for 61 industries and are based on the S&P Global Corporate Sustainability Assessment (CSA) process, which is an annual evaluation of companies' sustainability practices. Benchmarking capabilities enable users to evaluate their scores relative to others to identify areas of strength, as well as areas for further improvement.

 

 

Capital IQ Pro for business planning and acquisitions:

 

 

Evaluate both private and public companies

Private Company Dataset covers 16 million private companies around the globe, 10 million with financial statements, and 500,000+ early-stage companies supported by data from Crunchbase.[2]

Premium Financials Dataset provides standardized data for more than 5,000 financial, supplemental, and industry-specific data items for 150,000+ companies globally, including 95,000+ active and inactive companies across multiple industries. Data is available at numerous frequencies and point-in-time representations of a financial period include press releases, original filings, and restatements.

 

 

Round out the story with deep datasets

Transactions Dataset provides profiles of approximately 2 million deals captured across the globe. This includes M&A, private placement, venture capital, PIPE, spin-off, bankruptcy, share buyback, and equity/debt public offerings. Each transaction has a synopsis and lists deal size, company participants, advisor coverage, and associated filings with up to 10 years of history.

Transcripts review data on earnings, M&A activity, company conference calls, and special calls. The data also comes in a machine-readable format with metadata tagging.

Key Developments Dataset provides information on more than 1 million developments, based on 160+ standardized topics. This includes 20,000+ news sources, such as press releases, and regulatory filings.

Ownership Dataset provides detailed historical equity ownership data on 90,000+ public and private companies, institutional investment firms, mutual funds, and insiders/individual owners.

 

 

Get to know people

Professionals Dataset provides 3.2 million+ profiles, including biographies, contact data, education, compensation, affiliations, and corporate board memberships, each linked to a person ID.

 

 

Quickly find what is needed

A smart screener enables users to instantly find information across companies, news, documents, research, transcripts, and investor presentations. A Document Viewer incorporates AI-based searches to speed up the discovery process for text-based insights across filings and transcripts.

 

 

Navigate data with advanced visualization tools

The Maps Tool builds a bird's-eye view of the market. Users can identify unseen opportunities and see the pro-forma footprint of potential mergers when conducting M&A analysis. Presentation-ready graphics can be created in an instant with crisp visuals, including asset-level data and market statistics.

 

 

Leverage formulas and models

An Excel® Add-In and suite of office tools seamlessly powers proprietary models and streamlines presentations. Users can access a library of hundreds of ready-to-use models and templates, or partner with Market Intelligence’s support analysts to build their own. It is possible to integrate data from Excel to PowerPoint or Word with fewer errors and refresh formulas in Excel with just one click.

 

 

 

Key Benefits

The company was impressed with the comprehensiveness and breadth of the offering, and the subscribed to all the components that were discussed. There was a widespread view that this solution set would enable different functional areas to:

  • Meet regulatory requirements to assess the environmental stance of investments.
  • Have an ESG Score to use in outreach to stakeholders to underscore the company’s commitment to a net zero target.
  • Establish carbon footprint benchmarks to monitor progress on emission reductions over time and assess the carbon footprints of new investment opportunities and acquisitions before any moves are made.
  • Better understand potential exposure to both physical and transition risks on a forward-looking basis.
  • Use the findings to engage with suppliers on their preparedness for policy changes and strategies for climate change adaptation.
  • Leverage the extensive capabilities of S&P Capital IQ Pro to dig deep on both privately held and public companies to support acquisition analysis and vet the financial stability of firms throughout the value chain.


[1] All data as of October 2021.

[2] All data as of July 2021.

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