Australian-based clim-tech company XDI today joined globals Legal & General Investment Management (L&G) and Baringa Partners to launch a new, market-leading Climate Change Risk Framework using the most comprehensive climate change data available worldwide.
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With financial regulators globally calling for stress testing climate risk, firms may soon be required to test the physical and transition risks of climate scenarios as impacts increase due to climate change. Fintech News
L&G, the UK’s largest investment company, working with XDI on climate physical risk and Baringa on transition (emissions reduction) risks, has developed a new Climate Change Scenario Model that allows businesses to produce end-to-end, transparent and highly interactive climate risk data. It is the world’s first portfolio-scale TCFD reporting tool covering counterparty company assets.
XDI analyzed 1.8 millions assets associated with 1,800 listed companies in the US, Canada, Europe, Africa, the UK and Australia against climate risk hazards including flooding, coastal inundation, heat, drought and forest fire. XDI’s data and analysis are the basis for the physical risk quantification in the new framework launched in London today.
“XDI now offers the finance sector the most comprehensive climate risk assessment available in line with TCFD physical risk reporting,” said XDI CEO Rohan Hamden. “The new tool allows investors and potential buyers to carry out detailed analysis on companies and their assets independently.”
“The ability to assess a company’s climate risk independently is a game-changer. A company can no longer hide risk and potential costs of impacts from extreme weather,” Hamden said. “Our new framework means that those who haven’t assessed and reported climate risk are vulnerable in a market where detailed, counterparty assessment is now being carried out.”
“We at XDI hope the new framework will provide a more objective understanding of business climate risk and show that independent climate analysis — not just self disclosure — is now possible,” Hamden said. “Investors like L&G can now undertake climate change risk analysis across a target company’s assets anywhere globally.”
