S&P Global Market Intelligence and Oliver Wyman, two leading names in financial data and consulting, unveiled this week a significant enhancement to their Climate Credit Analytics solution — the addition of both climate-related physical and energy transition risk.
This addition, S&P writes in a press release announcing the move, “will support clients as they seek to understand and manage the physical and financial exposure of corporates and portfolios to climate change.”
Climate Credit Analytics: How it started
The genesis of S&P and Oliver Wyman’s transformative partnership can be traced back to June 2021, when the two companies first introduced their Climate Credit Analytics solution.
This pioneering tool was designed to “help financial institutions and corporations assess how a changing climate and the transition to a low-carbon economy will impact the creditworthiness of their counterparties and investments,” S&P explains.
Climate Credit Analytics fuses S&P Global Market Intelligence’s state-of-the-art Credit Analytics risk models and industry-specific datasets with Oliver Wyman’s expertise in climate scenario analysis and stress testing. The result is a powerful tool that transforms complex climate scenarios into “scenario-adjusted financials and scores at the company level.”
Expanding Horizons with Sustainable1 Data
The incorporation of S&P Global Sustainable1 data into Climate Credit Analytics, announced this week, is the latest milestone in the evolution of the tool.
The data that will be added includes information on the “physical risk exposure and related financial impact for over 20,000 companies mapped against a range of seven climate change related hazards across a range of four CMIP6 Shared Socioeconomic Pathway (SSP) climate change scenarios.”
As such, it “will support clients as they seek to understand and manage the physical and financial exposure of corporates and portfolios to climate change,” S&P writes.
John Colas, Vice Chairman of Financial Services for the Americas at Oliver Wyman, underlined the pivotal role this advancement will play for a wide spectrum of stakeholders, saying:
“This new release will serve banks, insurers, asset managers, asset owners and corporate risk managers to quantify climate risks in an even more thorough manner and thereby more readily integrate into business decisions and client engagement.”
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Whit McGraw, Head of Credit and Risk Solutions at S&P Global Market Intelligence, highlighted the pressing need for these expanded capabilities in the face of an increasing frequency of climate-related events. He emphasized that these events are driving companies to assess the far-reaching effects of climate change on their businesses, investments, and counterparties. With climate change becoming an inescapable factor in the business landscape, companies are racing to quantify their climate-related risks.
McGraw noted that S&P Global’s enhanced model suite and sector-specific approach, bolstered by strategic acquisitions like The Climate Service and the merger with IHS Markit, provide greater granularity for regulatory climate stress testing and scenario analysis.
“Our robust model suite and tailored approach to sectors […] provides greater granularity for regulatory climate stress testing and scenario analysis, enabling users to report to stakeholders with confidence,” McGraw said.