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Emissions data demand drives tech growth

An Aussie start-up has become the world's largest private markets emissions data network with US$3.5 trillion in assets under management.

Founded in 2020, Pathzero now has initial emissions data for more than US$3.5 trillion of the US$13.1 trillion in global private markets assets, according to McKinsey - that is more than 50,000 assets.

Among its 250 clients are Aware Super, HESTA, and IFM Investors.

The increase in demand is part of a push to base reporting and investment decisions on real data - and ultimately, to prevent greenwashing, chief executive Carl Prins said.

The regulator is scrutinising green claims, and investors need to ensure data does not rely on estimates.

Clients want to "move away from sectoral estimates as fast as possible", Prins said - especially in traditionally opaque investment classes like infrastructure, private debt, private equity, and commercial real estate.

"As we approach mandatory reporting, asset owners and fund managers are recognising the urgency of being able to disclose detailed climate impact reports to stakeholders, and in cases of climate litigation," he said.

"The need for real data within the network is emphasised when allocators and fund managers need to develop transition-management plans.

"You cannot build a transition management plan based on estimates."

To ensure confidentiality of sensitive information, the tech is based on PCAF-aligned output through a clear chain of custody.

"There are not enough consultants in the world to manage the amount of data and analysis that will need to be undertaken for upcoming mandatory reporting," Prins said.

"Do you have litigation risk? Are your customers going to stop buying your product because it's too carbon intense? Where are you going to feel the pain? That's what we do.

"IFRS S2 is now broadly established as the basis upon which the accounting will happen, and the standard on which future regulation will be based. Starting now will put you in a better place when regulation arrives."

Read more: Carl PrinsAware SuperHESTAIFM InvestorsMcKinseyPathzero