Quantitative transition risk analysis to meet your regulatory needs.
It’s time to start preparing for mandatory climate reporting.
Emmi’s reporting module has been built to align directly with current ISSB guidelines, to provide you with a clear pathway to compliance under TCFD and ISSB standards.
The transition risk data set we generate across six asset classes for each customer is among the most comprehensive in the world. This makes us confident that evolving standards will likely be met with our existing data.
We’re committed to staying on top of requirements, so as they develop, our reports will shift to meet those requirements.
A clear path to compliance
We provide all the quantitative analytics you need to consider for your ISSB aligned report, as well as the the granular data required to investigate or support any claims or conclusions you want to make.
After running our Carbon Diagnostics process for your portfolio, we’ll provide the key elements and analysis to go straight into your report. We can go one step further and pre-fill our quantitative analysis directly into an ISSB aligned template, making your reporting process easy and time-efficient.
ISSB & TCFD Reporting Requirements
There is a widely held belief that the newly released ISSB standards will be broadly adopted, creating a new legal requirement for reporting entities. It is becoming clear that IFRS will be taking over from TCFD for monitoring the climate reporting standards. This is a huge win for the industry, creating a coalescence of efforts into a single capability.
Below is Emmi’s quick summary of how the ISSB will impact reporting for institutional investors:
The International Sustainability Standards Board (ISSB) released standards on Monday 26th June 2023; its inaugural climate disclosure standards.
The ISSB is a standard setting body established under the International Financial Reporting Standards (IFRS) Foundation, which is the global body that develops accounting standards that most major jurisdictions adopt as part of their accounting standards.
When a jurisdiction, such as Australia, USA, UK etc adopts a new IFRS standard it become a legal obligation for reporting entities within that jurisdiction to comply with such standard.
The ISSB climate disclosures are expected to be adopted by many national accounting bodies (jurisdictions) in 2024. TCFD has been adopted by a few countries, the UK and New Zealand are notable examples. We expect that with time, these countries will shift into line with the ISSB reporting standards.
In July 2023, the IFRS indicated they would be taking over from TCFD in monitoring the progress of companies for reporting this information.
The Governance clauses in both TCFD and ISSB standards are for the reporting entity to outline how they have established and resourced the associated governance body within their entity, and how they are able to take into account risks and opportunities (in ISSB, this is clause 6a) iv)).
Part of any good governance framework is establishing the right data and analytics to inform the governance body on strategy, risk management and metrics and targets. ISSB 6a) v) also points to the requirement of robust data and analytic sets to be able to set targets and monitor progress towards these targets. The results provided by Emmi’s Carbon Diagnostics are best-in-class robust data and analytics, in line with these requirements.
To be able to understand the data and analytics needed to meet the governance requirements, we suggest entities go through the Strategy, Risk Management, Metrics & Targets sections first to then be able to sufficiently answer the requirements around Governance.
ISSB clause 9a) is about explaining whether underlying investments will surpass or struggle to meet specific carbon obligations, which will determine whether there is a risk or opportunity against transition risk factors, stemming from the five transition risk categories (Legal, Regulatory, Market, Reputation and Technology). Carbon Diagnostics will provide financed emissions across all asset classes with corresponding temperature alignment, carbon budget apportionment, emission reduction requirements, potential carbon liability and forward looking assessments, helping to answer this question.
ISSB clause 9b) is about understanding the effects of climate related risks and opportunities as an institutional investor, you will need to be able to quantify the risk resulting from the emissions of the underlying holdings you finance. The transition risk present in each holding represents an aggregated transition risk at the institutional investor level. A holding in a business that is currently dependent (and continues to be dependent) on heavy carbon emissions for it’s viability will lead to financial downside through the transition, potentially up to 100% value erosion of that business.
With Emmi, you can quantify the risk of your financed emissions in dollar and return terms, across multiple time horizons and scenarios, to deeply understand how your institutional investor business model could be effected.
ISSB clause 9c) is about explaining how the above will inform strategy and decision making. With climate risks and opportunities quantified in dollar terms with Emmi, and additional scenario analysis with Emmi, strategy and decision making can be well informed, with high impact. Data can be used to back up decisions and planning around key strategies or holdings, such as:
Engage with underlying investments to inspire or hasten transition,
Hedge the investments out by investing in carbon financial products (such as carbon credits),
Divest the investments to totally remove the risk, or
Justify holding the investment given other risk returns factors of the investment.
By having quantified and flexible carbon analytics at your finger tips, strategy and decision making can be reliably informed and defended.
ISSB clause 9d) is about explaining how the risks explored might change key performance metrics like cashflow or financial performance for the reporting entity. With Emmi’s robust analysis, you can use quantitative data and scenario analysis to explore impacts, especially when considering cash flows, financial performance and position. For the best results, multiple climate scenarios should be modelled for potential financial impacts, and probability weighted across the investments an organisation holds. Only then can cash flow, financial performance and position be truly understood across the short, medium and long term horizons.
ISSB clause 9e) is about understanding the resilience of any strategy and decisions that are employed. Emmi’s climate scenario analysis provides clear perspectives on alternative future scenarios, allowing exploration of the volatility between alternative scenarios. Explore aggregated and granular data that highlights persistent transition risk, vs scenario-dependent transition risk, such as whether sectors or geographies play a role in the level of risk.
The entirety of ISSB clause 25 is about setting out the methodology, policies and processes used to inform the strategy taken.
a) With Emmi’s Carbon Diagnostics, you’ll have a transparent and robust explanation of the methodologies and modelling used to achieve the transition risk portion of your total climate risk analysis. We’ll provide easy to use content that can inform your responses to these clauses.
b) As is described for 25a), for transition risk, the same process and data sets can be employed for identifying transition opportunities.
c) With Emmi, analysis around transition risk and opportunities is quantified into consistent dollar and return terms. This makes it easier to integrate into an institutional investor’s overall risk management process as all other financial risks are quantified into dollar terms too.
ISSB clause 28 is about the metrics and targets that need to be tracked to understand how a reporting entity is performing. a) discusses the definitions of the cross industry metrics the entity plans to use. Emmi provides clear disclosures about:
Definitions for scope 1, 2 and 3, as well as financed emissions (which require disaggregation into scopes 1, 2, and 3 of the underlying investments).
How the emissions numbers are generated and rationale for this approach
The % of portfolio value vulnerable to transition risk + % of portfolio value open to transition opportunities - climate scenario analysis, with carbon budget apportionment, emission reduction requirements and potential carbon liabilities across all underlying investments help highlight persistent risk, vs. scenario-dependent risk (opportunity).
28b) While 28a is about reporting metrics that are consistent across all industries, if there are industry specific metrics that are reported this should also be used, for example the temperature alignment of a fund is becoming a common metric across Asset Owners and Asset Managers
28c) Institutional investors need to state, set and track targets both internally and externally, and with Carbon Diagnostics, you’ll get data that can inform your initial target-setting exercise, as well as creating a consistent ongoing tracking capability.
Our free ISSB reporting template simplifies the complex task of climate reporting, helping you meet new regulatory requirements with confidence. This is your essential toolkit for navigating ISSB's climate disclosure standards.
Sign up for a free ISSB reporting template.
We provide you with quantitative results, created from transparent methodologies. We’ll explain how each reported metric was created, giving you the confidence to stand by the analysis.
Our data is driven by peer-reviewed and award winning science-based machine learning models, and financially rigorous algorithms.