This report highlights the potential of asset-level data in addressing environmental risks for financial institutions. To respond to the shortcomings in the availability of sustainable data, the consortium has developed the Assets at Risk Database, which synthesises asset-level data globally across six major energy sectors, including power, automotive, steel, cement, aircraft and shipping. The report demonstrates the potential capabilities of asset-level data and the expanding portfolio of analytical building blocks available for energy transition risk assessment.

The report discusses that the physical environmental change and societal responses to environmental change, particularly climate change and the transition to a net zero emissions economic system, create many risks and opportunities for financial institutions. The report highlights that shortcomings in the availability of appropriate forms of data, information, and analysis is a key barrier for financial institutions responding to these challenges. Utilising asset-level data could enable them to appropriately understand environmental risks, returns, and impacts.

Asset-level data: Definitions and applications

The report defines asset-level data and includes its relevance to financial institutions. Asset-level data is detailed and complete data on corporate assets, which enables adequate assessment of risk in companies and the diffusion of that risk through the financial system. The report also highlights the importance of Asset-Level Data due to the failure of data-release piecemeal, incomplete, or long after the fact, which makes it necessary for companies to provide information on asset-level data.

Use cases of asset-level data

The report highlights many uses of asset-level data, including assessing global exposure to downside environment-related risk, empowering active ownership and stewardship, assessing the future impact of environment-related risk on real assets at high resolution, and providing accountability and verifiability to company disclosures.

Asset-level data: A case study of the aviation sector

The report uses an aviation industry case study to demonstrate the use of asset-level data. It shows how companies can evaluate its exposure to water stress due to drought, increased risk of flooding, reputational and regulatory risk exposure via Asset-level data. Companies benchmark their risks against comparable companies and competitors to assess its relative performance. The report further showcases a comparison of carbon emissions from different aviation types: a business jet, a short-haul Boeing 737 and a long-haul Boeing 747. The emission involved in each of these aircraft’s entire life-cycle is not tracked presently, yet this example illustrates the potential to track and trace carbon emissions across the aviation sector if there is data coverage.

Assessing and managing environmental risks and opportunities

The report provides recommendations for companies to assess and manage environmental risks and opportunities effectively. It is necessary to develop and publish policy assessments, demonstrate investment value proposition, access lower cost of debt, and compare performance with peer companies. Quantitative evidence from the report also illustrates the aggregate data on asset-level emissions up to the global level, which enables bottom-up assessments of the practicality of global emissions goals.

Conclusion

The report points out that Asset-level data has the potential to revolutionise the understanding and management of environment-related risks across private and public sectors. In response to the widespread potential of this data, the consortium has developed the Assets at Risk Database, which synthesises asset-level data globally across six major carbon-emitting industries. It is hoped that the report demonstrates the potential of asset-level data to meet deferred emissions goals and more effectively respond to economic and climate uncertainty, which is crucial for sustainable finance and investment.