Climate Solutions

Align your portfolio to the low-carbon economy

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Regulatory developments and market guidance such as the EU Action Plan and TCFD have placed renewed urgency on the investment community to take a more active role to address global climate change. With Sustainalytics’ suite of Carbon Solutions, investors can identify, assess and manage climate-related investment risks and opportunities. Learn how our carbon research and services can provide a more holistic view of carbon risk.

Our Solutions

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Carbon Risk Ratings

Our Carbon Risk Ratings assess a company’s carbon risk, driven by the transition to a low-carbon economy.  The ratings are determined by evaluation of a company’s material exposure to and management of carbon issues. 

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Carbon Solutions Involvement

Sustainalytics examines company involvement in carbon solutions, including renewable energy and low carbon alternatives, such as green transportation, green real estate and energy efficiency

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Carbon Emissions Data

Our data looks at scope 1, 2 and 3 GHG emissions and intensity for over 10,000 companies. More than 100 different estimation models are used for non-reporting companies.

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Fossil Fuel Involvement

We assess different types of company involvement in fossil fuels, including thermal coal, oil and gas, oil sands, shale energy, deep water production and Arctic offshore exploration.

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Stranded Carbon Assets Research

We evaluate the risk of oil and gas assets becoming non-commercial due to the transition to a low carbon economy. Exposure includes life-cycle carbon intensity of production and proven reserves as well as involvement in high-cost projects.

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Engagement Services

Our Engagement Service offering also includes thematic engagements on climate change and voting recommendations on ESG and climate-related topics.

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Key Benefits

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Breadth and Scope

Coverage includes reported and estimated data on Scope 1, 2 and 3 emissions as well as several types of involvement research, from shale energy to thermal coal.

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Comprehensiveness

We provide end-to-end solutions to support security selection, product creation, portfolio management and active ownership

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Simplicity & Compatibility

Our forward-looking Carbon Risk Ratings combine multiple, complex forms of carbon research in a simple, decision-useful metric to analyze and report on material carbon risk while allowing for best-in-class and cross-sector comparisons.

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Reliability

Sustainalytics is a trusted research provider with well-established and robust research and quality control processes

Use Cases

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Security Selection

Evaluate company-level carbon-related risks and opportunities for security selection purposes.

 

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Portfolio Management

Assess the risks and opportunities within your portfolio and provide richer reporting insights.

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Support Active Ownership Efforts

Engage with companies by using objective quantitative metrics.

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Advance Low-Carbon Investment Strategies

Manage your portfolio exposure to carbon-related risks.

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Develop New Investment Solutions

The Task Force on Climate-Related Financial Disclosures (TCFD)

Sustainalytics’ carbon research and services can be used to support several of the TCFD recommendations - with an emphasis on identifying and reporting on forward-looking transition risks, including carbon foot-printing and stranded assets. Several of our Active Ownership Services also focus on climate change and can be used to support the recommendation to engage with portfolio companies.

industry emitting carbon

Why Sustainalytics?

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A Single Market Standard

Consistent approach to ESG assessments across the investment spectrum.

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Award-Winning Research and Data

Firm recognized as Best ESG Research and Data Provider by Environmental Finance and Investment Week.

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End-to-End ESG Solutions

ESG products and services that serve the entire investment value chain.

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25+ Years ESG Expertise

500+ ESG research analysts across our global offices.

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Largest Second-Party Opinion Provider

As recognized by Environmental Finance and the Climate Bonds Initiative.

Impact Solutions

Measure, manage and report on the social and environmental impact of your portfolio.

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Thematic Engagement

Engage on the most challenging ESG issues, from climate change to human capital.

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ESG Risk Ratings

Take a coherent and consistent approach to assessing financially material ESG risks.

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Morningstar® Low Carbon RiskSM Index Family

Exposure to equity investments with Low Carbon Risk scores and limited exposure to fossil fuels.

Morningstar® Global Renewable Energy IndexSM

Exposure to equity investments that generate revenue from renewable energy and green transportation.

Morningstar® Sustainable Environment Index FamilySM

Diversified portfolio of firms with below average exposure to environmental risk.

Morningstar® Sustainability LeadersSM Index Family

Pure exposure to firms with the most exemplary ESG record.  

Related Insights and Resources

Climate Action for Investors

For Investors with Ambitions to Lead on Climate Action Post COP26

In the weeks following COP26, investors in the UK and worldwide face a myriad of upcoming climate-related regulations heading towards the implementation phase. In addition, major global coalitions such as the Glasgow Financial Alliance for Net Zero have sprung up to attempt to accelerate decarbonization via targeted investment.

cop26 trending themes for investors

COP 26: A Spotlight on Emerging Climate Action Themes for Investors

Reactions to the COP26 Conference and the resulting Glasgow Climate Pact have predictably run the gamut from claims of greenwashing to the celebration of progress in the fight against climate change. Ultimately, any judgement on COP26 may be premature, as the success of the conference will best be measured in time by the extent to which commitments made are put into motion. While we wait to see the concrete actions that materialize, the past two weeks have underscored the importance of several themes that will garner increasing attention and should be considered by sustainable investors.

oil refinery GHG

The Impact and Cost of Air Pollution: U.S. Petroleum Refineries

Investors can examine to what extent petroleum refiners manage their Non-GHG Air Emissions and assess the quality of a company's programs to reduce air pollutants. For instance, examining all the petroleum refiners assessed by Sustainalytics, we observe that only 3% have a strong program to manage non-greenhouse gas emissions.

EU Action Plan SFDR

Momentum Around Principal Adverse Impact Data Remains Strong Despite SFDR Delays

Despite the shifting timelines, we observe that the market momentum around PAIs is not diminishing, quite the contrary. Investors in the scope of the regulation are using the fourth quarter of this year to get acquainted with PAI data and set up their systems. Most investors we speak with want to be prepared in time to be able to monitor PAIs throughout 2022 and adjust their portfolios to boost their PAIs (or rather limit the downside, as these are adverse impact indicators). This means that PAIs may significantly impact stock selection and portfolio construction by fund managers keen to have ‘good’ PAI scores.