Discussion 1: A Roadmap for Collaboration
Co-convened by Prime Coalition and the OGCI Climate Investments
Thank you for joining us September 9, 2021, 9-10AM PT/12-1PM ET/5-6pm BST for a dialogue on early learnings from the working group on forward looking measurement and assessment of emissions. In case you missed it, below is an overview of the initiative and plan for an upcoming paper, on metrics and methodologies.
The event, which had over 100 participants, also featured live polling and a lively discussion on diverse challenges and needs.
If you would like to get more involved, please fill out this form and we’ll include you in future community engagement efforts. Questions? Contact impact@primecoalition.org.
Introduction
Sarah Kearney, Prime Coalition
The topic of this one hour session is building a framework to assess future greenhouse gas emissions reduction from innovation. If you were looking for a community of stakeholders all trying to do this very humbling work, you are in the right place. My name is Sarah Kearney, and I serve as executive director of Prime Coalition, a nonprofit seeking to mobilize catalytic capital toward climate solutions. My co-moderators today are Pratima Rangarajan from OGCI Climate Investments and Pol-Hervé Floch from BCG.
As we already all know, in 2020, over $20 billion in new climate funds were announced globally, and as of July 2021, over $30 billion has been announced. Everybody is going to need to be thinking about the forward-looking emissions impact of their investments. It’s not a topic that anyone owns, and it is critical to all of humanity that investment firms everywhere do the best they can with the resources they have to consider the emissions impact of their decisions.
In the spirit of humility, this topic is really hard, and we need dialogue. That's the major objective of today's meeting: community. So good listening will become a tenet of any ongoing effort from this group, so that we're not making things up in isolation. Our biggest hope is that you'll see the value in what we're building as a resource to help you solve a problem in your own corner of the climate investment world.
We know emissions in and of themselves are too narrow in terms of all impact metrics that matter toward climate justice, but we also know there are now hundreds of investment firms that have a desire to assess, track, maybe report, but at the very least, be aware of their portfolios’ impacts on emissions. And there are far too few resources to help us today. So this type of assessment is fraught with uncertainty and we're hoping that by coming together, we can each do our best.
What We’ve Learned
Pratima Ragaranjan, OGCI Climate Investments
Thank you so much for getting us started, Sarah, and welcome to everyone in this room. When we started down this journey, we were a little surprised that common practices didn't exist. Perhaps, we were even more surprised by how time consuming and complex it was to address all the nuances to assessment.
As we started speaking to others in the climate and impact space, we realized that we were not alone. Others perceived the same issues. Certainly there are some frameworks, like TCFD and others, being followed. But they are not fit for purpose for the forward looking emissions reduction estimation that investors like us need to make.
We saw this gap as an opportunity for us to bring some ideas together in a collaborative fashion. So an early working group formed, and together we reached out to a number of other funds to understand their challenges. We heard four main categories of comments, which have been raised by many of you as well.
There was a lack of common principles and clear methodologies.
It was difficult to know what data to use. This was particularly vexing when you think about what baseline to use, which markets to consider within that data set.
Doing the assessment was complex and resource intensive.
It was difficult to communicate to our LPs and to the world what we've achieved or what we are trying to achieve.
What We’re Building
Sarah Kearney, Prime Coalition
Thanks Pratima. We only want to do things that are deeply useful to the members of this group. We need you to contribute and to tell us what you need so that we can deliver it. The great news is that we are already building community. This is our first gathering right now, but hopefully there are many more to come and in formats that make it painless for you to engage.
We've already started drafting shared principles, and they will live in a working collaborative format. We now have a content sub-working group that's diving into common terminology and methodological guidelines, the subject of paper 2. What's really helpful is that the investment firms that have gotten involved so far are sharing very openly.
And starting in 2022, we aspire to build a tools library that would include any and all of the tools available. And we're hoping to staff almost a tour guide function to help investors explore those tools, point you to the right third parties to support you for your own needs, or incorporate follow-on development requests that you might have.
Paper 2: Metrics and Methodology
Pol-Hervé Floch, BCG
Thank you Sarah. As a first step, we want to be much more precise and transparent on the metrics that we assess and communicate. For example, what do we mean when we say that our technology can save 1 MT of CO2? Is it already saved or forward looking? Are we talking about avoiding emissions? Carbon removal? Or enabling solutions to reduce emissions? Once we have clear metrics, using a common language, the next step will be to define principles and best practices on how to calculate these metrics.
Invitation to Join!
Pratima Ragaranjan, OGCI Climate Investments
We believe that the intelligence from all of you will result in a much better overall product that we can all share, in outcomes and ownership. We'd love to take you along with us on the ride to paper 2, which we hope will be published before the end of the year.
Sarah Kearney, Prime Coalition
Please stay tuned as we ramp up this group's ability to devote resources over the coming months. As more interest pours into climate investing, let's make sure we're headed toward actually solving the problem and not just talking about it. We hope to make this easier and less costly for many investment firms moving forward. Thank you!
Discussion Topics
Getting concrete: Need for tools to be applied to a real or fictional business plan.
Coming up with standard ways to assess the global warming potential of short-lived greenhouse gases.
Who pays for measurement: entrepreneurs or investors.
Supporting firms at 101, 201, 301 levels of experience.
Are net zero commitments disincentivizing investment in innovation, in favor of decarbonization?
Timeframe for a rollout of a particular technology and relationship to global commodity flows.
How do you think about the catalytic effect of one company's technology? Do you consider the company or the companies that come afterward as a result?
How to account for the rebound effect?
Best practices around rolling up multiple companies into a portfolio assessment!
Post-investment and post-exit validation and verification through time.
How to estimate the impact of enabling technologies.
Avoiding double-counting across the value chain.
How to factor the evolution of supply chains / raw materials in the future, etc.
Machine-readability of measurements.
Incorporating technologies that reduce impacts of climate change. E.g., drought resistant seeds, water saving tech, or enabling tech like climate risk analysis where primary focus is on reducing severity of impacts of climate change that's already locked in.
Need for a community of other “ERP analysts” to share approaches and/or tricky technologies. If forming a group like that is in this plan, great.
How do we establish a robust feedback loop to ensure GHG emission 'estimates' reflect the reality for any new technology or scope?
Should future tons of CO2 avoided/reduced compared to a baseline be treated differently than tons of CO2 removed (and sequestered) from the atmosphere?
What role should policymakers have in developing a standard measurement tool - or adopting CRANE?