Companies that don't do a good job of slicing energy costs may find investors bailing out, as financial institutions offer investment clients new data analysis tools that reveal the impact of a company's energy and emission policies on economic performance.
Northern Trust, for example, just deployed an environmental analytics engine as part of its existing suite of investment risk and performance solutions for institutional and high net worth investors. "To our clients, there's an increasing awareness of how the environmental efficiencies of an organization can have an impact on corporate earnings," says Jim Trotter, global head of investment and risk analytical services for Northern Trust, who says the initial focus of the product will be in the UK, though it's available in the U.S. and elsewhere.
Northern Trust's deployment portends a change in the flow of investments market-wide. Goldman Sachs recently predicted that as much as 10 percent of the total cash flow of listed companies could be transferred from companies with below average carbon efficiency to those with above average efficiency over the next couple of years. "Banks are looking at this issue from a risk management and credit perspective rather than social responsibility issues," says Rod Nelsestuen, a senior research director, TowerGroup.
Northern Trust's intel will be based on data from Trucost through its Style Research Portfolio Analyzer. Trucost analyzes hundreds of business and energy activities to forecast what each firm's emissions are expected to be, based on data such as water, electricity and other energy use. That information is combined with company reports, Web information and other public data to produce an environmental profile. Trucost then consults with the company (obtaining confirmation and/or comment), and then feeds that information into a database that's available to clients.
The product can be used to manage environmental exposure on a portfolio level by comparing carbon emissions of a fund's holdings against a benchmark. "For example, we can take one percent of BP's emissions or Aon's emissions [if that's the fund's holdings in those companies], and aggregate those to see what your fund owns in terms of carbon emissions, and then compare that with a benchmark," says Neil McIndoe, head of environmental finance for Trucost, whose data underpins UBS' Europe Carbon Optimized Index (a carbon emissions index), and also counts Deutsche Bank-which uses its data to aid "alpha seeking" low carbon funds-among its clients.
Other firms that analyze how environmental controls impact economic performance include Risk Metrics, which recently purchased Innovest, an environmental impact ratings firm; and KLD, a provider of social investing research and analysis. Hewson Baltzell, a product development manager for Risk Metrics, says the firm analyzes the impact of emissions reductions, and the cost of compliance, and other factors. Additionally, tech firms such as SAP and CA offer enterprise carbon accounting systems that allow companies to track their own emissions.
HSBC's Techie Green-House
HSBC recently opened a new sustainable office in Burnaby, British Columbia for its software development team.
About 850 employees will staff the five-story, 146,000-square foot building, called "Discovery Green" by the bank. The structure has been certified LEED platinum for core and shell by the U.S. Green Building Council.
Ken Harvey, CTO and services officer for HSBC, says the Discovery Green office center will be the primary design site for all software development for HSBC globally and will play a role in One HSBC, the enterprise-wide program to improve customer experience and fiscal performance though globally standardized products, processes and technology.
HSBC has long been active in environmental initiatives. The bank, which has been carbon neutral since 2005, launched a $90 million green program in 2007 and plans to reduce energy consumption of retail units by about 20 percent through real estate power metering.
Teacher CU Dumps Paper
First Nebraska Educators & Employee Groups Credit Union deployed an electronic document management system from Millennial Vision to capture member receipts at the teller window, part of the CU's "We Love Trees - Paperless Transactions" campaign.
Receipts are also archived digitally for immediate search and retrieval. Other features include image capture; quick fields, which allow the CU to ID and store documents; and workflow, which automates pieces of the document approval process within the staff hierarchy.
This article can also be found at AmericanBanker.com.
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