Goldman Sachs is planning to add carbon accounting of client portfolios to the bank's investing application, Marquee -- which lets finance professionals access Goldman's technology platform via browser, or programmatically via APIs -- CEO David Solomon said today, as demand grows across the investment community for reliable data, clear metrics and digital tools to measure and reduce exposure to climate risk.
"After hearing from clients that they lack the tools to track their own progress, we’ve redoubled our efforts to better equip them", he said in an annual letter, adding that the bank has incorporated "a low-carbon tilt into all of our active quantitative equity funds to help clients manage exposure to climate transition risk."
(The bank will be working alongside partners including Allianz, BNP Paribas, Amazon, and UN Net Zero Asset Owner Alliance to develop an open-source data commons and net-zero alignment tools for cross-industry use.)
Goldman's move comes as a mid-2020 survey of 425 investors in 27 countries representing $25 trillion under management found that respondents plan to double their sustainable assets under management in the next five years – rising from 18% of assets under management on average today to 37% on average by 2025.
Most are chafing at the absence of high quality ESG data, however: more than half (53%) of respondents to that BlackRock survey cited poor quality or availability of ESG data and analytics as the biggest barrier to broader implementation of sustainable investing; a fragmented, inconsistent provider market isn't helping.
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While KPMG puts the number of substantive sustainability-related rating and data providers at ~150 worldwide. There’s little harmony or standardisation between them, though numerous efforts are afoot to change that. (In a reminder of just how immature this market is, even Bloomberg only launched proprietary ESG scores in August 2020. This initial offering includes Environmental and Social scores for 252 companies in the Oil & Gas sector and separate standalone “G” scores tracking board composition -- a narrow metric -- across 4,300 companies.)
As with any “Big Data” challenge, carbon emissions data tends to be fragmented, unstructured, and not machine readable. (It was not immediately clear what tools and underlying emissions data sources Goldman Sachs would be relying on to do carbon accounting in Marquee. The Stack will be following up).
Data providers remain frustrated at the poor quality and format of emissions reporting by many companies. (A host of startups are emerging to help make that process less painful). That frustration goes both ways.
As the European Commission recently noted: “Companies continue to express concerns about the timeliness of updates to their profiles within the various sustainability-related rating, data and research provider outputs and systems… providers not only have an issue with timeliness, but also with accuracy and reliability. Providers that state that AI and other automated search tools are keeping information up to date, also have errors.”