FinanceMap.org is an online, publicly available platform that looks at the asset management sector through a climate lens, examining portfolios, investor-engagement processes, and shareholder resolutions. The twin objectives are to give asset owners and other key stakeholders insights into how the asset management sector is performing on climate change and to drive improvement within the sector by providing benchmarking information.
FinanceMap applies the market-leading Paris Agreement Capital Transition Assessment (PACTA) methodology managed by 2 Degrees Investing Initiative to a universe of 50,000 listed funds to assess the alignment of portfolios with the Paris Agreement. The platform also provides metrics on investor engagement with companies on climate, using a methodology developed by the FinanceMap team in consultation with leading global asset managers. It also gathers metrics on the filing and voting behavior of asset managers on climate-relevant shareholder resolutions. The methodology is benchmarked against the 2020 UK Stewardship Code published by the UK's Financial Reporting Council.
The information will be online at FinanceMap.org. Users may search by the financial entity or fund. Information on portfolio analysis will be available on a fund and aggregated up to asset manager or asset manager group level so users may examine trends in the market and within a single financial group. Information on engagement and resolution analysis will be at the asset manager group level. The user interface will be simple, easy to use and focused on financial groups, with drill-down to funds and tabs for portfolio analysis and engagement/resolutions performance. The results will be free to use with site registration required.
FinanceMap is produced and managed by London based climate think tank InfluenceMap, in cooperation with partners, 2 Degrees Investing Initiative, convener of the Paris Agreement Capital Transition Assessment (PACTA) project that underlies the portfolio analysis, and the WWF European Policy Office. The FinanceMap team is working closely with asset owners and managers and financial data providers/consultants to ensure the FinanceMap is accurate and will be useful. The work is funded by EIT Climate-KIC and the KR Foundation.
FinanceMap assesses 50,000 listed funds (and their constituent holdings of equities/bonds) managed by 4,000 asset managers globally, the latter of which are part of 150 financial groups (e.g. iShares UK Equity Index Fund is operated by BlackRock Investment Management UK Ltd which is part of the global BlackRock Group). The 50,000 funds hold US $21.5Tn in listed equity assets (roughly 30% of the total value of all listed companies globally) as of December 2018. The FinanceMap universe thus offers a highly plausible representation of global finance and markets. FinanceMap's analysis considers the asset management operations of each of the financial groups only. Unless otherwise stated by the financial group, it is assumed that the company-engagement processes as disclosed relate to the entire group.
This research considers "listed funds" as collective pools of capital, managed by investment professionals and traded on markets or offered to institutional/other investors in a regulated manner. The open-ended segment of this market is likely to contain up to 30% of all global market assets, according to the European Fund and Asset Management Association as of 2018, so the dynamics of these markets are highly important. Listed funds are commonly described as passively or actively managed. In reality, there is a spectrum of management strategies used. For example, 'Full Index-Tracking' (defined as funds which hold positions in all securities of the underlying index in proportion to their weightings in the index); 'Optimized Index-Tracking', wherein index replication is achieved by investing in a representative sample of securities.
In assessing the assets held by these large asset management groups, FinanceMap's research aggregates the value of all the assets managed by companies operating under the parent organization. In some cases (e.g. AXA, Legal & General, JPMorgan Chase) the same financial group may contain companies active in (in addition to asset management) other financial-sector activities such as insurance, management of company-own pension funds, banking and advisory work. Portfolio analysis of the financial groups is done via analysis of the listed funds these financial groups operate, for which good data on equity/bond holdings is available.
FinanceMap's data on the share and bondholders of listed companies derive from a number of disclosure sources, which may be mandatory (e.g. US SEC 13-F filings applying to asset managers with more than US $100mn under management) or voluntary (e.g. the Government Pension Fund of Norway's portfolio disclosure). These disclosures vary by region and share/bondholder type. FinanceMap's data is most accurate and complete for listed funds, followed by asset managers and then by asset owners. By region, the US offers the most complete disclosure on the shareholders of companies. For example, roughly 70% of ExxonMobil's shareholders can be identified, while this figure is significantly lower for Chinese and Russian fossil fuel companies and investors. The gap in data of any company's shareholders is primarily due to the lack of disclosure requirements for individual investors, special purpose companies, or small-scale asset managers.
The initial FinanceMap release focuses on listed equity holdings. Future releases will incorporate analysis of corporate bond holding data as part of the project’s gradual rollout of a full set of portfolio metrics.
FinanceMap’s portfolio alignment metric is based on the Paris Agreement Capital Transition Assessment (PACTA) managed by the 2 Degrees Investing Initiative. This considers the underlying assets controlled by the companies in the portfolio and their future evolution with IEA climate scenarios. It covers sectors with significant climate risk: auto, electric power, fossil fuel production, shipping, aviation, steel, and cement production. FinanceMap then implements a method to move from these technology-level results to the Sector and Portfolio Paris Alignment (PA) Scores. Each Sector PA Score is a weighted average of the technology-level deviations for every technology within a sector. The technology deviation results are weighted both by the portfolio’s exposure to each technology as well as the technology’s importance to global emissions as determined by the IEA.
FinanceMap analysis uses the IEA’s ‘Beyond 2 Degrees’ Scenario (B2DS), which provides a pathway for a 50% chance of limiting warming to 1.750C. With respect to a temperature target, the B2DS is the most ambitious available from the IEA as of October 2019. While there are other climate scenarios with more ambitious temperature targets, the IEA’s scenarios are the most granular and span the broadest number of sectors, allowing for a more robust analysis. As other equally useful scenarios become available and are integrated by 2Dii into PACTA, FinanceMap analysis will be updated accordingly.
FinanceMap's methodology to measure the engagement process on climate was developed in consultation with several of the world's leading asset managers and uses key aspects of the UK Financial Reporting Council's 2020 Stewardship Code. The Stewardship Code was chosen to benchmark engagement quality as it provides an ambitious framework and detailed definitions of what constitutes effective engagement. FinanceMap defines the term ‘engagement’ as referring to all investor actions undertaken to influence the management strategy of the companies they own including: private communications with corporate management and appointed advisors; questions at AGMs/other company meetings; comments on the company in the media or public fora; escalation and the shareholder resolution process (filing, voting behaviour). FinanceMap’s methodology breaks the engagement process down into a set of sub-activities and looks for evidence associated with these across publicly available data sources (company disclosures, financial filings, CDP and AODP analysis). Sub-scores are available for these sub-activities: for example if a user wishes to isolate an asset manager's behavior on shareholder resolutions.
Climate-relevance categorization of shareholder resolutions is based on the IPCC’s Special Report on 1.5°C and its concluded need for “rapid and far-reaching transitions in land, energy, industry, buildings, transport, and cities.” FinanceMap scored voting on any resolution where the intent and likely outcome is consistent with this IPCC stated need. For example, a resolution requesting a utility company to increase its renewable energy production would be considered "climate-relevant". A resolution where any climate-impact would be indirect or unclear, for example, requesting a company to disclose on ESG, is not classed as "climate-relevant". The voting data is drawn from asset managers’ websites and disclosures to the US Security Exchange Commission (SEC) and to InfluenceMap directly. Resolutions in the following categories were included in the analysis: CO2 Emissions Disclosure; CO2 Emissions Target Setting; Climate Risk/ Scenario Analysis; Renewable and Energy Efficiency; Deforestation; Climate Policy Lobbying; Disclosure of Voting on Climate-related Resolutions.