Climatetech must become ‘part of institutional DNA’ to meet 2050 net zero targets, says new report

A new report, by Entelligent, a Colorado-based data and analytics company, is urging financial institutions to act now to ensure global emissions fall below net zero before 2050.

Founded by environmentalist and entrepreneur Thomas Stoner and Nobel Laureate Nasa Scientist, David Schimel, Entelligent’s report ‘Climate change - transition risk for equities’ - created as a part of the Société Générale Incubator program during 2020 and early 2021 - includes views from leading scientists, financiers and campaigners who are all calling on financial institutions to take advantage of emerging climate technologies in their efforts to tackle the escalating climate and ecological crisis sooner rather than later.
Entelligent was the first company to be granted a patent over the use of climate scenario analysis in climate-related risk assessment for security selection and other financial products that build on that approach.
Société Générale has licensed Entelligent’s E-Score, which is designed to measure a company’s sector relative exposure to climate change transition risk.
Thomas Stoner, CEO of Entelligent, says: “We need less talk more action. Organisations have been scrambling to announce suitably impressive targets and burnish their climate credentials, but 2021 needs to be the year when ambitious rhetoric is matched by equally ambitious action. It’s a make-or-break year for the climate; real-time climate assessments need to be integrated into everything you do.
“Market participants are gradually recognising the hard evidence of climate change and the imminent consequences. But policies alone are not enough.  Greater effort is now needed to shift from recording and communicating climate change contributions to interpreting these into forward looking mitigation tools.
“Over the past 15 years, the integration of advanced technology into work and product flows has become an integral aspect of global financial services. We do not have the luxury of 15 more years to truly begin fixing the climate crisis.
“Climate science derived advanced technologies and data are available to the capital markets today. By adopting climatetech early, financial market participants can help accelerate Net Zero pathways and alignment with Paris Agreement targets. Climatetech must now become part of the institutional DNA.”
Entelligent’s mission is to help asset owners and asset managers incorporate the realities of climate change into their investment decisions by lowering climate risk exposure, reducing volatility, outperforming comparative benchmarks, and accelerating positive social and environmental change.
Dr David Schimel, Chairman of Entelligent and lead scientist at NASA JPL, says: “Capital markets can act with great efficiency. Efficiency is essential to achieve near-complete decarbonisation by 2050. Measures to de-risk capital asset pricing from climate change impacts between now and 2030 can help markets avoid early financial impacts of global greenhouse emissions and their effects on the climate system.
“To accomplish this de-risking of our global economy, financial markets must develop information systems to evaluate both physical and transition risk from climate change as each sector shifts to a low-carbon economy. The emergence of market failure risk is now also a reality for all global stakeholders.”
Albert Loo, Global Head of Sales, Société Générale, says: “Environmental impacts can be financially material. Through in-depth analysis, investors can identify value-relevant issues and measure risk vs opportunities. Without such analysis, risk can be mispriced, leading to poor asset allocation decisions. Issues such as climate change are already modifying investment decisions in various sectors and industries worldwide, and this can result in lower output. For this reason, consideration of ESG issues has become a key part of the investment process.
“We have licenced Entelligent’s E-Score to build specialised indices to minimise investment exposure to climate change, while maintaining broad diversification and improving risk-adjusted returns.”