Get signals – before others – that might trigger shifts in market sentiment.
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.
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.
APPLICATIONS for investment professionals
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:
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
Asset Managers – Drive changes in governance and practices at companies via shareholder resolutions and proxy votes