FinanceMap is an online, publicly available platform by global climate-risk think tank InfluenceMap which examines the asset management sector through a climate lens. Using proprietary methodologies based on industry-recognized benchmarks, we analyze asset managers' performance on climate through portfolios, investor-engagement processes, and shareholder resolutions.
FinanceMap's 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 to a universe of 70,000 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. Additionally, we gather metrics on the filing and voting behavior of asset managers on climate-relevant shareholder resolutions. This methodology is benchmarked against the 2020 UK Stewardship Code published by the UK's Financial Reporting Council.
The FinanceMap team works closely with asset owners, asset managers and financial data providers to ensure that the platform is accurate and representative of reality. FinanceMap’s work is funded by EIT Climate-KIC and the KR Foundation.
FinanceMap assesses over 70,000 funds and their constituent holdings. These funds are managed by fund managers, who in turn are often subsidiaries of large asset management groups. For example, SPDR S&P 500 ETF Trust (SPY) is managed by fund manager SSgA Funds Management Inc, which is part of the global asset management group State Street Corporation. As such, an asset manager’s portfolio is defined as the aggregated holdings of all the funds which it manages either directly or through wholly-owned subsidiaries.
This research considers funds as collective pools of capital, managed by investment professionals and traded on markets or offered to investors in a regulated manner.
This research uses the most recent fund shareholding data available from the Refinitiv Lipper database. Where quarterly data is unavailable, the system carries forward the shareholdings from the last disclosure.
In practice, this means that FinanceMap's holdings data derives 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 $100M under management) or voluntary. These disclosures vary by region.
FinanceMap’s portfolio alignment metric is based on the Paris Agreement Capital Transition Assessment (PACTA) methodology. This tool considers the production of physical assets controlled by the companies held by the portfolio. It then compares these assets’ production evolution over a five-year forward-looking timespan to a Paris-aligned evolution of similar assets’ production as prescribed by the IEA Beyond 2 Degrees Scenario (B2DS). This gives an assessment of a portfolio's Paris alignment at the level of specific production technologies. FinanceMap currently covers production in four sectors with significant climate risk: automotive, electric power, coal mining, and oil & gas extraction.
FinanceMap implements a method to move from these technology-level Paris alignment results to the Sector and Portfolio Paris Alignment (PA) Scores. Each Sector PA Score is a weighted average of the technology-level alignments within that sector, with weightings defined by the portfolio’s exposure to each technology and the technology’s importance to global emissions. Similarly, the Portfolio PA Score is a weighted average of the Sector PA Scores, weighted by the portfolio’s exposure to the sector and the sector’s current contribution to global emissions.
FinanceMap analysis uses the IEA’s Beyond 2 Degrees Scenario (B2DS), which provides a pathway for a 50% chance of limiting warming to 1.75° C. With respect to a temperature target, the B2DS is the most ambitious available from the IEA. 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.
To assess how aligned a portfolio's corporate holdings are with the Paris Agreement, PACTA compares the held companies' future production with a Paris-aligned roadmap which lays out production quantity pathways at the technology level within each sector. For example, our analysis of the automotive sector considers three technologies: internal combustion engine (ICE) vehicles, hybrids, and electric vehicles (EVs). The roadmap used by FinanceMap, the IEA B2DS, currently only provides technology-level pathways granular enough for this analysis in the automotive, electric power, and fossil fuel extraction sectors. As a result, FinanceMap's portfolio analysis is limited to these sectors.
FinanceMap is working to expand this coverage in the future in order to include additional climate-relevant sectors in our analyses.
A fund’s Paris Alignment score is calculated on the basis of the shareholdings of the fund. An asset manager’s overall Portfolio Paris Alignment is analyzed by compiling the holdings of all its managed funds to create an aggregate portfolio. This aggregate portfolio is then scored on its Paris Alignment.
The asset manager’s aggregate Portfolio Paris Alignment is therefore not directly calculated as a weighted average of its funds’ Paris Alignment scores.
The current FinanceMap research focuses on listed equity holdings. The FinanceMap team intends to incorporate analysis of corporate bond holding data in future releases.
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. 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' disclosures to the US Security Exchange Commission (SEC), asset manager websites (including third-party websites they link to), directly from the asset managers, and through specialist voting data provider ProxyInsight. 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; Preliminary Resolutions; Climate Corporate Governance; Active Ownership of Fossil Fuels. FinanceMap looked at a population of around 250 ESG and other potential climate-related resolutions filed in 2018 and prioritized 56 of these as deemed climate-relevant as measured against the IPCC benchmark. This was repeated over 2019-2020, and InfluenceMap identified 56 resolutions in 2019 and 60 resolutions in 2020. The full list of resolutions assessed is available here.