BRIEF: Climate physical risk analysis company XDI and global energy and finance risk consultancy firm Baringa Partners have announced they will be collaborating to provide a complete solution for climate change scenario development and portfolio impact assessment.
The alliance, announced yesterday during Climate Week in New York, will combine Baringa’s expertise in energy transition and financial risk analysis with XDI’s climate change physical risk assessment technology into a single tool offering vigorous assessment of the impact of climate change on assets.
The market for such high caliber, in-depth and integrated climate change assessments has been growing rapidly in recent times, according to XDI’s head of science and technology, Karl Mallon.
“There has been a significant uptake in the last six months,” he told The Fifth Estate, “particularly with TFCFDI (Task Force on Climate-related Financial Disclosures Initiative) gaining momentum around the world and the impacts of climate change becoming more visible.”
This is leading financial institutions, in addition to government and utilities companies, to increasingly view such rigorous climate assessment as a strategic imperitive, according to Oliver Rix, partner at Baringa.
“[They are] recognising that this will increasingly be a regulatory requirement in many jurisdictions around the world,” Rix said.
The collaboration between XDI and Baringa will enable banks, insurers and asset managers to understand how climate change impacts future profits and losses through impacts on equity values, debt pricing and credit risk, as well as aid them in meeting regulatory requirements and the implementation of TCFD and other types of reporting and compliance worldwide.