Normative is on a mission to help businesses track and reduce their carbon emissions, mitigate climate-related risks, and support businesses to succeed in a net-zero economy
The financial sector is indispensable in the transition to a net-zero economy. According to the McKinsey study “The net-zero transition: What it would cost, what it could bring,” about $275 trillion must be allocated by 2050 for this transition. This mandates efficient direction of funds towards the right technologies and businesses to enable net-zero transition. However, a lack of access to data makes this hard since data provides transparency and guides decision-makers in determining where investments should be directed.
This is where carbon accounting becomes crucial “it provides businesses and financial institutions with a comprehensive overview of their greenhouse gas emissions, reveals carbon-related risks in their portfolios and investments, and empowers them to track their emissions reduction progress. With the insights gained from transparent, comprehensive carbon accounting, organizations can make informed decisions to support the net-zero transition”, shares Dr. Alexander Schmidt, Head of Science, Sustainability and Climate Research at Normative, a leading carbon accounting engine.
since financed emissions can be 700 times larger than the emissions from a financial institution’s own operations, there is a dire need to gather accurate data on an institution’s investments,”Dr. Alexander Schmidt, Head of Science, Sustainability and Climate Research at Normative
Synergistic intersection of software and advisory services
Normative presents a seamless intersection of software and advisory services through carbon accounting solutions. They have dedicated climate strategy advisors for each account specializing in specific sectors. This means that the financial services industry advisors are assigned with deep knowledge of the industry, experience working with similar businesses, and knowledge of best practices. Their experts guide financial institutions from the initial data collection phase, to determining a baseline, setting climate targets, and planning reduction initiatives, and through the value chain engagement required to reach net zero. Also, Normative continues to expands its offerings for the financial sector, recently launching a new product release for venture capital firms, private equity companies, and other financial institutions, automating the process of calculating financed emissions.
Driving sustainable finance
Normative helps financial institutions and other large enterprises go beyond mere carbon emission tracking by providing comprehensive support in developing effective sustainability strategies. “Essentially, there are two key challenges that companies face when it comes to embarking on the path towards sustainability. The first challenge is to understand the intricate landscape of regulations, regional variations, and standards. This understanding is vital, particularly in the realm of carbon accounting, where methodological guidance is much needed. This data is not readily available within a company’s system and requires active efforts to make carbon emissions transparent. And since financed emissions can be 700 times larger than the emissions from a financial institution’s own operations, there is a dire need to gather accurate data on an institution’s investments,” remarks Dr. Schmidt.
This is where Normative’s product and expert guidance come through in helping companies comprehend regulatory frameworks and intelligently automate the screening of financed emissions. A case in point is Zurich Insurance Group, where Normative is helping it drive sustainability throughout its supply chain. “They have set targets to ensure that 75% of their managed procurement spend aligns with science-based targets for emissions reduction by 2030. To support their suppliers in achieving these targets, Normative offers automated carbon calculations to Zurich’s suppliers to assess their progress. Suppliers can then craft their own net-zero strategy and set Science-Based Targets. This not only enhances their reputation but also demonstrates their commitment to sustainability,” adds Dr. Schmidt.
Ensuring regulatory compliance
Addressing the complexities of the sustainability space is crucial, especially considering the rapid evolution of regulations and standards. Normative has experts across the company who contribute to tackling these challenges. “At the forefront, we have our climate strategy advisors who monitor potential changes to accounting standards and industry-specific requirements. They ensure that customers are well-informed and supported in their sustainability efforts. In the background we have sustainability engineers who work with our emission factor databases, ensuring that we have the latest scientifically vetted and transparent emission factors available in our software.
Lastly, we have the science, sustainability, and climate research team that stays closely connected with regulators, academia, and NGOs. Our goal is to not only stay updated on regulatory developments but also contribute to streamlining and consolidating the industry by advocating for comparable and consistent standards,” concludes Dr. Schmidt.