Uncover new opportunities for alpha generation and risk avoidance

Heat Map of methane leakage by company – updated daily.  MethaneScan® detects major leak at Acme Petroleum wellhead in this hypothetical example. Heat maps keeps you on top of market changes as they occur, and are integrated with your full suite of data, news and analytics.

Heat Map of methane leakage by company – updated daily. MethaneScan® detects major leak at Acme Petroleum wellhead in this hypothetical example. Heat maps keeps you on top of market changes as they occur, and are integrated with your full suite of data, news and analytics.

methanescan® Detects unexposed ESG risks

Why methane is key

METHANE EMISSIONS THREATEN CLIMATE STABILITY

Methane – the primary component of natural gas – is a potent greenhouse gas. A powerful heat trapper, methane produces 86 times the warming power of carbon dioxide during its first 20 years in the atmosphere. This is why fugitive methane emissions are extremely deleterious to climate stability.  

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Onus falls chiefly on oil & gas industry

Unfortunately, methane levels have shot up in the past decade. Keeping methane in check is critical to staving off the worst effects of climate change. In the U.S., the onus chiefly falls on the oil and gas industry as the #1 source of methane emissions.

New York Times – The Natural Gas Industry Has a Leak Problem
Financial Times – Gas leaks worse for climate than thought

Applications for investment professionals

News of corporate governance lapses can    jolt markets   .

News of corporate governance lapses can jolt markets.

Methane leaks may be a key indicator of wasteful, inefficient energy businesses with poor governance. Super emitters, in particular, are likely to have above average exposure to governance lapses, legal liability, and accidents – as well as reputation and political risk. Therefore, the highest emitting companies may be candidates for short positions (or under-weighting) by traders and investors versus cleaner operating peers and alternatives.

Hedge fund managers, asset managers and the sell side can use MethaneScan® in several different ways, including:

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Alpha Generation

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Risk AVOIDANCE

Hedge Fund Managers – Long-Short strategies and opportunistic event-driven trades in global energy sector

Asset Managers – Better decisions about which companies/sectors to over- or under-weight based on verified actual risks

Sell Side – Deliver more fully informed guidance to clients investing with ESG considerations

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Engagement

Asset Managers – Drive changes in governance and practices at companies via shareholder resolutions and proxy votes

 

Analogous to bond ratings

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LIKE BOND RATINGS

  • Trusted independent source

  • Delivers transparency for better investment decisions

  • Normalized scores for peer-to-peer comparisons by sector

unlike bond ratings

  • Scientific observations – not subjective judgements

  • Focus on largest climate stressors – energy and food

  • Applicable to equities as well as bonds