Summary:
- Private equity firms are being held to higher standards regarding understanding portfolio environmental risks and meeting firmwide sustainability goals.
- Project Canary’s continuously measured, accurate, and auditable emissions data, including robust environmental risk assessments (covering 600+ data points), allow upstream O&G management teams to benchmark performance, demonstrate operational improvements, and differentiate assets.
- Firms can then harness their climate data to accelerate M&A transactions and broaden capital market activities, including sustainability-linked financing, equity research positioning, and annual sustainability reporting.
- Project Canary emissions data has also been deployed to mitigate the hesitancy of insurance providers underwriting O&G capital projects.
Only a few years ago, it was acceptable for operators to estimate their emissions using intermittent and infrequent estimates. Today, tech-enabled sensing has modernized how industry-leading organizations track and report emissions performance. Estimates are highly inaccurate, and measurement is the only way to truly understand and benchmark environmental performance of critical assets.
One of the easiest ways to understand emissions management advancements is to imagine you’re a runner and want to track your progress and max out performance. To biohack your strategy, data from your phone, an Oura ring, and an Ultrahuman metabolic glucose sensor attached to your arm can track your movement, sleep, heart rate, nutrition, and metabolic health throughout the day and when you run. This gives you the insights you need to maximize performance. Continuous emissions monitoring works similarly. Just as a fitness tracker helps an individual track their performance and identify areas for improvement, emissions monitoring helps companies track and measure their emissions to identify opportunities to operate more efficiently and sustainably.
Investors, lenders, and insurance providers are looking beyond primary financial data to make informed investments and evaluate risks and returns, especially in the energy sector. Project Canary’s emissions management solutions and assessments allow operators to detect and quantify all operational and fugitive emissions. The Canary SENSE platform measures, analyzes, visualizes, and reports data every 60 seconds into a customizable dashboard so users can confidently understand emissions at the facility-level 24/7/365.
Project Canary and CPP Investments have successfully partnered to harness the power of emissions data. Bruce Hogg, Managing Director and Head of Sustainable Energy at CPP Investments, noted, “The ability to quantify environmental performance data is becoming increasingly important as owners and investors prioritize greenhouse gas emissions reduction and adapt to a global economy that is moving toward net-zero…Project Canary’s solutions have been used within our portfolio companies, and this investment in a high-growth area represents a meaningful addition to our Sustainable Energies program.”
The oil and gas sector continues to experience constraints in institutional investment and a reduced appetite to underwrite insurance policies due to environmental concerns. Companies must do more than the regulatory minimum to demonstrate strong environmental stewardship and a robust approach to managing their emissions footprint, which earns the trust of investors and other financial stakeholders. Partnering with Project Canary provides evidence of companies’ sustainable performance.
The Canary Benefit:
- Benchmark Emissions Footprint: Project Canary data establishes meaningful KPIs that can baseline current operations. PE firms can utilize this emissions data to identify portfolio companies where emissions are high, implement industry best practices and then prove operational upgrades to the investor community to avoid financial and reputational risks associated with high emissions.
- Accelerate the M&A Process: Holistic environmental risk assessments and measured emissions data assist with marketing and diligence of O&G assets. PE firms have used Project Canary environmental data at the facility level to accelerate environmental due diligence throughout the transaction process (achieving premiums for verifiable low methane assets)
- Unlock New Pools of Capital: The regulatory minimum is no longer sufficient. Companies must demonstrate strong environmental stewardship and a robust approach to managing emissions footprint.A data-driven approach to sustainability and carbon management will earn the trust of new and current LPs as well as other financial stakeholders, improving the overall perception of O&G exposure.
- Differentiate Commodities: The Responsibly Sourced Gas (RSG) revolution is here.RSG is natural gas that has undergone independent 3rd party verification that molecules meet higher environmental standards such as low water use and low methane intensity. PE Firms can educate and encourage operators to differentiate molecules in response to market, community, and regulatory pressures.
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