Stockholm (NordSIP) – While there is no such thing as a free lunch, the launch of a useful free tool on the internet may make it easier to know how the costs are shared. This month saw the launch of an interesting tool that can be relevant for any investor looking at investing directly into companies in the Energy and Utilities sectors, especially those concerned with sustainability. Envonet is a free web-based portal that allows for an easy comparison of climate-related financial disclosures which can be found in the filings of major energy and utilities.
“Investors are urgently seeking more transparency from corporations about their material risks and risk management practices, particularly those related to climate change, but there are no simple tools to assist investors in collecting and assessing this information,” says Greg Rogers, co-founder of Envonet in the company’s press release.
In an short interview with NordSIP, Rogers explained the idea behind the product and his aspirations for the future. According to Rogers, the current version is a minimum viable product. The goal is to gather feedback and find out what investors are interested in. “We put in minimal resources so far. We really want to know if this is useful and to whom.” Rogers insists that this should be an open source system. “We really believe that this information should be widely available. A a lot of people who should be interested in this information is not sitting behind a Bloomberg terminal,” he adds.
One of the major ideas behind such a tool is to increase the visibility of information that is hidden and buried in very large and technical reports. The current information has been extracted from 10-K filings which, for some of those large oil & gas companies for example, can be extremely long and complex. Rogers expects that showing comparisons between different companies in the same sector will have a positive effect in the amount of disclosure in the industry. “From experience,” Rogers comments, “I know that benchmarking gets attention every time.”
When it comes to our own experience of the product at NordSIP, we were impressed by the simplicity of the sign up process and the ease of use. Understandably, the product’s functionalities are limited at this stage, but it allows to do what it promises, which is to enable comparison of somewhat standardized information in a straight forward manner. For example, we were able to compare oil & gas companies across the globe (up to four at a time), say e.g. BP, Chevron, ENI and Total, and see which ones had a separate “sustainability report”, a separate section on climate change, on governance or on risk management, and compare their Scope 1, 2 and 3 emissions, as well as their internal carbon price, among several other data points. The tool also allows to compare the wording of several specific disclosure texts such as market risk, technology risk or reputation risk.
As Rogers underlines, “when disclosures are compared side by side, the contrast between many European companies and their U.S. counterparts leaps off the page. For investors, it makes evident which corporations are treating climate change as a material financial risk and which are not.”