Home > Inrate Study: Sector Analysis on Transportation

Inrate Study: Sector Analysis on Transportation

Feb 23, 2017

Investing in the transportation sector is a significant opportunity for investors. Inrate’s ESG Impact Rating offers investors the opportunity to identify companies that understand best how to innovate and come up with products and services to reduce carbon emissions, while minimizing unfavorable trade-offs related to traditional fuel vehicles.

Main development and trends
Transportation is a cornerstone of our economy and society. Currently, several major trends can be observed in the transportation sector: the traditional combustion engine is challenged by alternative drive systems, autonomous driving is becoming a reality and car sharing is gaining traction. Digital mobility services and new means of mobility such as e-bikes are shaping how people and goods move from A to B. It is only a matter of time until the transportation sector will be highly automatized, vehicles will be interconnected and able to communicate with each other.

Impact of the transportation sector
The economy might benefit from transportation, albeit at the expense of the environment and society. Transportation is a major contributor to climate change and responsible for more than half of all NOx emissions worldwide. Transport activities have an impact on hydrological conditions, water quality and biodiversity. Not only are there health impacts due to environmental damage, but society is also affected by societal costs such as road accidents, in some cases poor working conditions, noise emissions and infrastructure capacity problems.

Moving towards sustainability
To accomplish the transition to a sustainable transportation system, we must shift our focus to three base pillars: decarbonization, internalization of external costs and the investment in infrastructure. It is imperative for society to transition to zero-emission vehicles, shift towards public transport, walking or cycling and reducing the need to travel. Also, the external costs of transportation need to be reduced, which can be done by implementing eco-taxes or emissions trading systems, for example. Last, but not least, substantial efforts in infrastructure are required.


Sector Analysis: Transportation

Financial market infrastructure provider SIX announced today the launch of a new climate data offering, aimed at supporting investors in reporting and monitoring of climate factors, and in climate-related investment and risk decision making.

The climate data sets, from various data providers in a range of industries, will provide clients with modelled and reported emissions data, covering over 33,000 companies globally, and bringing together multiple data sets on regulatory, historical and forward-looking climate impacts from providers including MSCI and Inrate. SIX also announced that it has recently entered into an agreement with environmental disclosure platform CDP to offer access to its global Greenhouse Gas (GHG) Emissions Dataset across various industries.

According to SIX, the new data sets come as investors increasingly require ESG and climate data to monitor investment decisions and to meet growing regulatory disclosure requirements, including the EU’s SFDR and the U.S.’ upcoming SEC Climate Disclosure Rules.

Martina Macpherson, Head ESG Product Strategy and Management, Financial Information, SIX, said:

“Understanding, measuring and managing climate risk and opportunities, as well as the impact that these can have on investment decisions, is a critical area of focus for market participants and policy makers alike. As more climate risk monitoring and reporting is required globally, the cost of compliance is increasing – both in operations and in terms of specialist ESG resources. SIX works with established providers of basic and specific ESG and climate data in the market.”