Uncover new opportunities for alpha generation and risk avoidance
methanescan® Detects unexposed ESG risks
Be alerted to material risks prior to news on Bloomberg, Reuters etc.
Quant Lab reveals insights – alignments with factor models; linkages to financial risks and returns; hidden alpha factors
Pathway to leadership for oil & gas producers – benchmark performance versus peers; gain competitive advantage – and enhance market value – by responding proactively to safety, reputation and political 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.
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
Analogous to bond ratings
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