The blockchain-based method also analyzes climate risk impact on asset portfolios as part of organizations’ long-term financial planning
KPMG LLP (KPMG) announced a new patent-pending blockchain-based capability, Climate Accounting Infrastructure (CAI), which is intended to help organizations more accurately measure, mitigate, report and offset their greenhouse gas emissions.
In 2020, organizations globally are expected to report sustainability practices and results to meet environmental, social and corporate governance (ESG) demands of capital markets investors. At the same time, carbon emissions requirements continue to evolve and expand. In order to achieve both enterprise and compliance objectives, they need a trusted and transparent system to measure, account for, and report on emissions data.
“As investors broaden their focus beyond financial factors to include ESG practices, organizations are increasing efforts to reducing carbon footprints, alongside transparent disclosure of progress. Trusted reporting capabilities, such as those enabled by Climate Accounting Infrastructure, will be critical to meet stakeholder expectations and to comply with emerging regulations,” said Arun Ghosh, KPMG’s U.S. Blockchain leader.
In order to support transparent and reliable reporting of emissions data, CAI will integrate an organization’s existing systems, including IoT sensors, with external data sources to establish a verifiable trail of emissions and offsets recorded on blockchain. CAI also utilizes trusted, real-time environmental data and advanced analytics to model the impact of climate risks on business operations and financial performance.
“Modernizing ESG practices is becoming a priority for every industry, from energy to technology to healthcare to retail, to support both financial performance and resilience,” said Mike Hayes, KPMG’s Global Renewables leader. “As a result, global organizations are looking to integrate environmental and financial risks associated with the cost of carbon into their real estate portfolio approach, using emerging technologies to validate their data and strategy.”
To bring Climate Accounting Infrastructure capabilities to market, KPMG is working with industry groups, large technology players, and climate technology companies including Context Labs, Prescriptive Data and Allinfra. Context Labs enriches emissions data with environmental context, utilizing its Immutably™ platform to record and certify environmental, operational, and financial information as “Asset Grade” before translating this data into AlphaESG™ signals via machine-learning models. These signals are combined with additional third-party and publicly available data sources to support advanced emissions analytics and insights.
Prescriptive Data supports verifiable emissions data across real estate portfolios with their intelligent building software, Nantum OS, which uses artificial intelligence, machine learning and Internet of Things (IoT) sensors to capture and analyze building, occupancy, and environmental data. This data helps to optimize consumption, reduce emissions, and provide insight into carbon offsets and renewable energy certificates needed to achieve emissions goals.
Allinfra, a Consensys-backed company, enables end-to-end integration across the carbon offset demand model by providing a verified supply of carbon offsets and renewable energy certificates (RECs). Allinfra’s blockchain-based platform integrates with renewable energy-producing infrastructure assets, at source, which allows organizations to have visibility into the provenance and integrity of carbon offsets and RECs they purchase.
The recently submitted patent application is one component of KPMG's intellectual property strategy, which includes strategic investments in emerging technologies and partnerships with leading technology companies, to develop and deploy technology-based solutions that address complex business challenges.
To learn more about KPMG’s perspective on climate change and emerging technologies, read the paper here: https://advisory.kpmg.us/articles/2020/climate-accounting.html
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