Australian start-up Pathzero becomes world’s largest private markets emissions data network
Pathzero has become the largest private markets carbon emissions data network globally, broadening coverage to USD$3.5 trillion of assets under management, with industry benchmarks to follow.
The Australian technology company was recently engaged to deliver the world’s first comprehensive analysis of a global allocator’s carbon impact, with the aim of moving away from sector-based estimates and into real, company-reported data.
Prior to this campaign, Pathzero had more than 250 fund managers in its network reporting emissions on more than 10,000 assets in private markets, supporting clients that include Aware, HESTA, and IFM Investors. With this major roll-out, these numbers are set to increase significantly, allowing for the creation of comprehensive asset class benchmarks.
Pathzero CEO Carl Prins said this is just the start of a large push in private markets to base reporting and investment decisions on real data, with climate impact in mind.
“Pathzero enables the capture and sharing of company-reported information to move away from sectoral estimates as fast as possible. Critically, our work is undertaken across traditionally opaque investment classes – infrastructure, private debt, private equity, and commercial real estate,” Prins said.
“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. Emissions data can be analysed to gain insights into the quantity, source, and certainty of emissions in portfolios.
“With this latest push we’re excited to see a transformative improvement in the data quality and transparency of emissions disclosures in private assets.”
Pathzero’s network connects asset owners to external fund managers and directly held investments to receive emissions data. Any disclosure gaps are filled using Pathzero’s estimation module. When a new asset owner joins, any of its partner fund managers can grant access to the manager’s data that’s already been reported.
The importance of tech and collaboration in emissions reporting
Pathzero’s technology is uniquely based on PCAF-aligned output, efficiency in collecting and sharing data, enhanced data integrity through a clear chain-of-custody of data, and the security and confidentiality of sensitive information.
“The need for real data within the network is emphasised when allocators and fund managers need to develop transition-management plans,” Prins said. “You cannot have a transition plan for your clients or portfolios if you are not engaging at a granular level with the underlying operations. You cannot build a transition-management plan based on estimates,” Prins said.
“Technology not only allows you to build a transition plan but also provides a cost-effective solution, because many of these emerging issues – mandatory climate reporting and transition plan development – do not come from an existing funding pocket or budget line. Everyone will be asked to do more with less, so using technology to drive outcomes is essential.
“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. It can be done only through technology and collaboration, driven from the top down through to individual companies, to get the best data.”
Protecting against climate risk and litigation
The most recent federal budget allocated an additional AU$17 million to regulators to combat greenwashing – indicating further scrutiny of public comments against an asset owner’s investment allocations.
“We are focused on helping clients with transition risk,” 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.”
The Pathzero technology suite comprises Pathzero Navigator and Pathzero Clarity. Pathzero Navigator connects users to a global network of private market participants, creating and sharing emissions data. Pathzero Clarity is a carbon-management platform that enables the disclosure of corporate emissions and the actions being taken to manage them.
