Pathzero number one in global carbon emissions data
Australian start-up Pathzero has emerged as the largest private markets carbon emissions data network in the world, expanding its coverage to USD $3.5 trillion in assets under management. This is part of an ambitious initiative to shift from sector-based emissions estimates to more accurate, company-reported data. The network will soon introduce industry benchmarks, reflecting its commitment to enhancing emissions data reporting.
Pathzero marks a significant milestone with initial emissions figures covering USD $3.5 trillion out of the USD $13.1 trillion in global private market assets, as detailed in McKinsey's Private Market report. The quality of emissions data is expected to improve rapidly as the network encourages direct reporting by companies, moving away from broader sector estimates. This shift is critical in the face of increasing demands for mandatory climate reporting and the development of transition plans.
The technology company, based in Sydney, was recently engaged to deliver the first comprehensive analysis of a global allocator's carbon impact. Prior to this initiative, Pathzero had integrated over 250 fund managers into its network, with more than 10,000 assets in private markets reporting emissions. Prominent clients in this space include Aware, HESTA, and IFM Investors. This new roll-out is anticipated to significantly boost these numbers, setting the stage for the creation of comprehensive asset class benchmarks.
Pathzero CEO Carl Prins highlighted that this initiative marks the beginning of a substantial drive in private markets towards basing reporting and investment decisions on real data, with a clear focus on climate impact. Prins stated that Pathzero's efforts are critical in traditionally opaque investment classes such as infrastructure, private debt, private equity, and commercial real estate. He emphasised the importance of asset owners and fund managers being able to disclose detailed climate impact reports to stakeholders and in cases of climate litigation.
The Pathzero network enables the sharing of company-reported information, facilitating a departure from sectoral estimates. By connecting asset owners to external fund managers and directly held investments, Pathzero ensures emissions data is comprehensive. Any gaps in disclosure are addressed using Pathzero's estimation module. When a new asset owner joins, their partner fund managers can grant access to existing data, enhancing the network's robustness.
Technology and collaboration are fundamental to improving emissions reporting. Pathzero's platform is notably aligned with the Partnership for Carbon Accounting Financials (PCAF) standards. This ensures efficient data collection and sharing while maintaining data integrity through a clear chain of custody and the security of sensitive information.
Prins reiterated the necessity of real data for allocators and fund managers to develop effective transition-management plans. He noted that a granular understanding of underlying operations is crucial and that such plans cannot rely on estimates. Technology, Prins added, provides a cost-effective solution, especially crucial as entities are expected to increase efforts without proportional budget increases.
Pathzero's technology suite includes Pathzero Navigator and Pathzero Clarity. Pathzero Navigator connects users to a global network of private market participants for emissions data exchange. Pathzero Clarity, on the other hand, is a carbon-management platform that supports the disclosure of corporate emissions and the actions undertaken to manage them.
Addressing climate risk and potential litigation is another key focus. Prins noted the recent allocation of an additional AUD $17 million by the federal government to regulators to combat greenwashing, indicating heightened scrutiny of public declarations regarding investment allocations. He emphasized Pathzero's role in helping clients navigate transition risks, such as litigation risks and the impact of carbon-intensive products on customer retention.
