To make accurate, comparable, and comprehensive asset-level data tied to ownership publicly available across key sectors and geographies
ADI is a new non-commercial research-based initiative to support the bringing together of existing asset-level data with new sources of data. It will support efforts to collect, verify, and distribute asset-level data on all companies in key sectors globally, regardless of whether they disclose or not. The three objectives of the ADI are to drive the use of asset-level data; improve access to asset-level data; and improve the quality of asset-level data.
The ADI’s first objective will be to drive the use of asset-level data. This involves making the case through research; educating stakeholders on appropriate policies and regulations; building awareness among potential users; capacity building; promoting the introduction of a Principle of Asset-level Disclosure; and showcasing the potential of asset-level data.
The ADI will improve access to asset-level data for a wide range of stakeholders. This concerns lowering costs; ensuring format consistency and standardization; linking to commercial (e.g. Bloomberg, Thomson Reuters, S&P, Morningstar etc) and non-commercial (e.g. CDP, WRI etc) distribution channels; ensuring data distribution is consistent with user licensing and IP constraints; and developing the back-end IT infrastructure.
The ADI will increase the coverage and quality of asset-level data; match, clean, and integrate data sets; develop co-ordinated work programmes to address gaps; develop and pioneer new techniques using big data, remote sensing, and advanced analytics to improve the quality and coverage of datasets; and work to enhance estimation methodologies to make sure that where estimation has to be used, it is used in a transparent and accountable way.
The development of the ADI is driven by five use cases: asset managers, asset owners, citizen savers, regulators, and policymakers and civil society.
- Asset managers want data that can be analysed so as to differentiate between companies. They would like to be able to do that across asset classes (e.g. equities, non-listed, corporate bonds etc), sectors (e.g. downstream energy, upstream energy, transport, property etc), and markets (e.g. US, China, EU etc). Companies own portfolios of assets and so understanding the exposure of company assets to environmental factors and aggregating this data to the parent company-level is the best way of understanding firm wide exposure.
- In turn, asset owners want to be able to know the exposure of their asset managers so they can differentiate between them and compare them to benchmarks. If we know who owns which companies, and we know how exposed each company asset is to different risks, then we can effectively analyse asset manager exposure.
- Citizen savers are increasingly concerned about ethical considerations and trends such as the fossil fuel divestment campaign. They want to know which asset owners and which fund options are most aligned with their concerns and priorities. This trend is accelerating due to the trend towards ‘Defined Contribution’ pension schemes opposed to more traditional ‘Defined Benefit’ ones.
- Regulators, as recently demonstrated by interventions from the Governor of the Bank of England and others, are interested in where risk is in the system and whether it could have financial stability implications if there is a disorderly correction due to rapid changes in asset prices. They want to see which entities own assets most at risk – for example, which systemically important financial institutions are exposed directly or indirectly to particularly at risk assets.
Finally, policymakers and civil society want to know whether we are on track to delivering the transition to a low carbon economy, whether in aggregate (e.g. globally, regionally, nationally) or in terms of specific companies or sectors within countries. To do this, they need to know how much ‘committed emissions’ there are from existing assets or will be from planned capital expenditure. Civil society will want to examine whether companies’ rhetoric and action add up, and also whether financial institutions are owning or are financing companies and assets that are incompatible with climate change and other environmental challenges.