Mispricing or underestimating climate risk can lead to an investment with significant contingent liability.

Climate and Sustainable Finance

To meet global climate goals and avoid permanent damage to our planet and the most vulnerable, there is an urgent need to channel, accelerate and expand finance for climate crisis solutions. The future rests squarely on the side of investments that support the transition to a low-carbon, resource-efficient, climate-resilient and sustainable economy.

 

Pressure is increasing to scale up carbon markets and measures to foster liquidity and market demand signals. Regulatory regimes to facilitate sustainable finance flows are rapidly emerging, such as: 

  • the EU Paris-aligned and EU Climate Transition Benchmarks,

  • the EU's Sustainable Finance Disclosure Regulation (SDFR), specifically articles 8 and 9 and the requirements to disclose 'Principal Adverse Impacts,'

  • and the Basel Committee's Basel III regulations for standardized disaster resilience stress tests. 

Financial institutions need to be prepared for and resilient to climate-related risks and losses including exposures to fossil fuel stranded assets. Financial metrics such as maximum probable annual loss (MPAL) are key to valuing and incorporating climate risk and resilience into the global financial system. The good news is that the conditions and tool exist to rationally allocate capital with respect to extreme weather and climate disaster risk. They can do so by factoring climate information into lending and investment decision-making and confirming appropriate risk management frameworks and controls are in place. Transitioning investment and asset portfolios to be aligned with net-zero emission goals are also key.

GI-494903038-version2.jpg

How we can help

Balance Sheet 
Stress Testing
  • Climate-adjusted stress testing of balance sheets and overall financial performance

  • Climate-adjusted quantitative risk analysis and modelling 

  • Translating climate-financial model quantitative outputs into financial metrics

Paris and Temperature Aligned Investment Strategy
  • Alignment of implied benchmark portfolio GHG emissions with Paris Climate Agreement long-term warming target

  • Development of 'investing in green growth' and 'investing in transition' strategies (e.g. EU Ecolabel)

  • PCAF / Scope 3 emissions footprinting

Climate and Natural Capital Finance &
 Carbon Markets 
  • Transaction (M&A) due diligence support

  • TNFD - Climate/green/biodiversity finance fund and program management

  • Venture acceleration program management

  • Structuring climate impact commercial models and financial products and instruments (e.g. corporate and sovereign climate bond, resilience bond)