The carbon factor
The Kyoto Protocol was signed in 1997 and entered into force in 2005, while the European Union's emissions trading scheme (EU ETS) was established by the directive 2003/87/CE of 13 October 2003 and officially started on 1 January 2005.
These two programmes represent key milestones in international climate change policy. Such carbon-regulating policies modify the financial landscape by adding a new risk factor: the carbon factor.
Company carbon risk assessment
Facing this new element of risk, financial institutions need to conduct a systematic company carbon risk assessment of their investment portfolios. The EU ETS Company Database enables the rapid implementation of a systematic corporate carbon risk analysis. It includes data on CO2 and other greenhouse gas emissions, EU carbon allowances (EUAs) freely received, emissions-to-caps, CERs and ERUs surrendered for compliance, covering 900 companies (biggest emitters as well as largest companies in terms of market capitalisation and company valuation).
Company valuation models
The EU ETS Company Database can help you in conducting benchmarking and company valuation analysis. It provides you with unique and strategic data on the company carbon profiles. It also allows you to identify over time the strategy adopted by company boards towards climate change risk. For instance, the mergers and acquisitions occurred in the European power industry in the last years greatly modified the carbon risk profile of some major power producers.
Self-reported data vs third-party verified data
Nowadays, self-reported data produced on a voluntary basis are commonly found when dealing with a company’s greenhouse gas emissions. As these data are supplied on a voluntary basis and are not subject to any clear legal framework, data accuracy and reliability remains an issue.
Also, transparency on the data scope used (whether geographical or sectoral scope) represents too often a hurdle for implementing a solid CSR analysis.
These reliability and accuracy issues can be avoided by using data verifed by accredited third-parties. In the EU emissions trading scheme (EU ETS), emissions data are verified and audited every year by accredited carbon verifiers such as DNV, SGS, Bureau Veritas, or TÜV.
The EU ETS Company Database displays only carbon emissions data audited by EU-accredited carbon verifiers. Our carbon disclosure solution is therefore a trusted data source for professionals conducting a CSR (Corporate and Social Responsibility) and equity analysis.