Climate risk modelling capabilities are in hot demand, with industry research firm MSCI Inc set to buy fintech and data analytics firm Carbon Delta AG.
The move follows ratings agency Moody’s Corp’s recent acquisition of Four Twenty Seven, a company that measures the physical risks of climate change.
The company entered into a definitive agreement on Monday to acquire the Zurich-based firm that provides climate change scenario analysis.
Carbon Delta’s modelling technology can support climate scenario analysis and predictive assessments of transition and physical risks, as well as company-level analysis of publicly-traded companies globally.
The plan is to leverage the expertise of the company’s modelling technology to create a new climate risk metric called MSCI Climate Value-at-Risk.
“We believe climate change will become one of the most important investment factors over the long term. Institutional investors should be able to analyse the exposure of their portfolios to climate risk while also being able to report on their climate strategy,” said MSCI head of ESG Remy Briand.
“We are pleased to come together with Carbon Delta to provide our clients with state-of-the-art climate risk analysis capabilities that can help shape investment management practices of the future,” he said.
The new offering will allow global investors to better understand the impact of climate change on their investment portfolios, and help them comply with climate risk disclosure initiatives and requirements through the likes of the Task Force on Climate-related Financial Disclosures (TCFD).
Although reporting initiatives such as TCFD and the United Nations-supported Principles for Responsible Investment are voluntary, mandatory disclosure requirements are in the works across the European Union and North America.
The terms of the deal were not announced but the transaction is expected to close within the next month.