Amazon, Microsoft and Allianz among corporate founders of new climate-risk-focussed data initiative

The tool will map physical and transition risks across a number of scenarios

The initiative will use AI-enhanced, open-source analytics and open data to help actors across the finance sector to measure and reduce their climate risk exposure and maximise the benefits they can reap from the transition to a net-zero economy.

A digital platform mapping multiple physical and economic scenarios across all geographies and business sectors, called the OS-Climate platform, will be the outcome of this collaborative work.  

Investors, banks and other asset holders will be able to use the platform to inform their predictive analytics, spurring low-carbon investment, appropriate divestment and increased engagement with corporates on climate issues. Governments, meanwhile, could use the tool to develop more effective adaptation and mitigation policies and to make key decisions around infrastructure.

The project is being spearheaded by the Linux Foundation and, aside from its corporate founding members, has garnered the support of WWF, OSI, Ceres, the Sustainability Accounting Standards Board (SASB) and the Science-Based Targets initiative (SBTi). A beta version of the SBTi’s open-source finance tool will be incorporated into the final version of the OS-Climate platform.

“The cost and complexity of analytics for climate-related investments require highly organized collaboration and resource sharing across hundreds of users and contributors,” the Linux Foundation’s executive director Jim Zemlin said.

“[This initiative] will enable neutral governance, shared development costs and technical leadership from many of the world’s leading financial institutions, multilateral organizations, academia, governments and NGOs.”

It is hoped that the initiative will help to boost global annual climate finance to the $1.2trn level recommended by the Intergovernmental Panel on Climate Change (IPCC).

Risk and reward

Given that the Covid-19 pandemic has highlighted the interconnected nature of environmental, social and economic risks on a global scale, it is unsurprising that climate risk has become something of a hot topic recently.

This year’s World Economic Forum, in January, saw the organisers declare that the five biggest risks to humanity and the planet in terms of likelihood and severity are climate-related. Previous analyses had all emphasised economic and social risks.

Since then, the Task Force on Climate-related Financial Disclosures (TCFD) has surpassed 10,000 supporters, placing fresh pressure on governments to improve legislation around climate risk disclosure and green investment. The UK Government has said it will mandate TCFD-aligned disclosures for certain large organisations within three years, under its Green Finance StrategyLarger pension schemes will be among the first cohort of organisations affected by these changes.

New metrics and ranking systems are also being developed. CDP’s newest ratings assess the temperature pathway of investment portfolios, funds and stock indices, for example. Similarly, members of the Institutional Investors Group on Climate Change (IIGCC) are trialling a net-zero blueprint on their real-world portfolios, collectively representing $1.3trn of assets.

Join the conversation at edie’s Sustainable Investment Digital Conference

edie is launching its first bespoke sustainability conference focused on green finance, with experts from ING, BlackRock, BNP Paribas and more set to discuss investment and the green recovery at the Sustainable Investment Digital Conference on 7-8 September 2020.

The two-day digital event will feature a myriad of expert panel discussions, breakouts and deep dives into key green finance themes – including climate risk –  plus opportunities to network virtually with delegates.

For further information, sponsorship inquiries and registration, click here

Sarah George

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