Sustainability

Voices of Sustainability: Arcturus.io

  • Sebastian Hoepfner
  • March 22, 2022

Today, there’s a need for making better-informed decisions to rebuild the economy and achieve a sustained reduction in carbon emissions. However, there are very few metrics to really measure this. And the available metrics, at least on a company level, are not very forward-looking for decision-makers or people who want to invest.

This doesn’t just apply to the retail investor who wants to have an aligned sustainable portfolio, but also the banks that remain critical capital providers and need to fund things like new power plants, oil and gas companies, or solar parks.

Additionally, there are trillions of dollars that, over the next couple of years, need to be invested to achieve sustainability targets.

Arcturus was built to address these issues.

We help answer questions like, how can our company reduce its carbon footprint by 50% in the next 15 years, or how can we ensure that our portfolio is on track to achieve its sustainability targets?

Can you tell me more about Arcturus and how you’re contributing to the sustainability movement?

We are a technology company focusing on the intersection of data and analytics. Take the oil and gas industry. They’ve spent the last 30+ years buying land, drilling wells and refineries, and have massive infrastructure that costs billions of dollars to maintain. And now, they face immediate pressure (from shareholders, capital providers, consumers, and regulators) to lower their carbon emissions. Some companies will rise to the challenge and manage the transition by building new businesses and reinventing themselves, and others will go out of business.

Arcturus aims to help investors predict these changes. We track the performance and sustainability of a portfolio over time in granular detail, allowing financial institutions to make more informed, sustainable investment decisions.

How do you do this?

We do this by standardizing data, identifying viable open source and alternative data sources, aggregating and mapping these datasets to company universes. Then an investment manager can say, I have to choose between Company A or Company B, which one has a higher environmental risk over the next five years?

Thanks to Arcturus’s predictive analytics function, the investment manager can then assess the climate-linked financial risks of each company, and ultimately construct the strongest portfolio aligned to defined sustainability goals.

What role does investing play in creating a more sustainable world?

Investing plays an extremely important role in the push for sustainability because it signals how committed society is to rebuilding the future, and our existing infrastructure. Think about sustainable technology like electric cars. To forward this, you need funding—which requires buy-in from investors. In some ways, investors are the enablers of change because they can bring these projects to life with capital.

What kinds of clients do you primarily work with?

We are engaging with banks, leading asset owners, and investment managers including alternative investment platforms. We aim to work with a broad range of institutional investors and market participants from across the financial services industry to drive sustainable investing to a new level. We view assisting large corporates in their sustainability data collection and data management as part of this vital process, to help them to deliver on their decarbonization glide paths.

Why would the financial services industry be interested in working with Arcturus?

Larger financial institutions are dealing with the challenge of how to speed up innovation—but due to their size, executing can be relatively complex. Collaborating with Fintechs like Arcturus is a core part of how incumbent financial services providers can deliver on these objectives while managing R&D spending. Arcturus has the advantage of being agile and, acting in a focused way, can innovate quickly. We are also unburdened by legacy systems, we are building in the cloud using the latest technology and machine learning tools.

I also think our business model is well suited to the financial services industry because we provide a high level of transparency, and give companies the power to derive their own conclusions from the data they’re provided with.

What role do you see corporations playing in the push for sustainability?

Corporations have a critical role to play, and they are highly motivated – the consumer and shareholders are having their say on climate & ESG. Those corporations that don’t get on board with decarbonization, engaging across their value chain, and hitting ambitious targets will be singled out for scrutiny.

The consumer is saying, I want to spend more time understanding how this is produced, and I would prefer to buy a substitute product, even if it’s more expensive because it’s more sustainable.

So, we, as a society, have to decide to invest in more sustainable products. It starts with small decisions like, instead of buying those cheap shoes that will last a year, I should buy the more expensive alternative that will last for 10.

Then you make sustainability a competitive advantage for companies.

Where do you see Arcturus five years from today?

I see us being a market standard-setting platform for innovation in sustainable investment analytics, transparency, and disclosure of climate and environmental risks of financial investments. Arcturus will also have built a broad engagement with users across the financial services industry who can very easily understand risk systems and are equipped to invest effectively in sustainable organizations and initiatives.

What, if anything, makes you optimistic about our ability as a society to create a more sustainable world?

I think we will manage this if we help developing countries achieve a sustainable living standard and continue to focus on lowering our carbon footprint. In the Western world, we’re already seeing a decline in carbon emissions. The next step is to financially incentivize people and organizations to come up with a better alternative to carbon-producing technology like the combustion engine— and we must widen our focus to reconsider different sustainable solutions.

Because, if you design the market the right way, it can deliver a really great outcome.

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