S&P Global Acquisition Of The Climate Service Highlights The Demand For Climate Scenario Modelling

S&P Global Acquisition Of The Climate Service Highlights The Demand For Climate Scenario Modelling

The publicly traded company S&P Global recently acquired the start-up The Climate Service (TCS), headquartered in Durham, North Carolina, in order to expand their ESG capabilities and solutions.

In a Verdantix analysis of 45 ESG financial solutions providers, TCS displayed a wide range of capabilities and an extensive customer base in climate change risk quantification. Its GIS-based analytics platform, Climanomics®, allows users to quantify the physical risk and opportunities from climatic events such as drought, flooding and water stress, under different warming scenarios as far ahead as 2100. In addition to offering financial risk and opportunities assessment in line with TCFD requirements, TCS provides support on the transition risk related to changes in regulatory and legal conditions, market and reputation.

The acquisition builds on the launch of Sustainable1, S&P Global’s centralised source of sustainability and ESG solutions for their clients, encompassing indices, benchmarking and analytics services. TCS capabilities will bolster S&P’s ESG offering with more sophisticated climate data and modelling tools, reflecting the need for investors and corporates to meet increasingly stringent regulatory standards.

The Climate-related Financial Disclosures (TCFD), one of the main frameworks for firms to follow in order to disclose the financial risks and opportunities associated with climate change, is now mandatory in multiple jurisdictions, and is expected to reach mandatory status in many more soon. A core element of TCFD is scenario analysis, a tool to identify financial risks and uncertainties under different hypothetical climate change scenarios.

The complexity of scenario analysis is one of the main barriers to Climate-related Financial Disclosures (TCFD) adoption, as well as one of the top investment priorities according to the Verdantix 2021 ESG Global Corporate Survey. Out of 400 respondents, 39% defined analysis of climate change risk as “high priority”. Investors are showing increased interest in geo-spatial data providers, offering an incredible opportunity for technology vendors, like The Climate Service, that facilitate scenario analysis through the acquisition of accurate and transparent data. If 2021 can still be considered a transitional year towards ESG, 2022 will likely be a crucial year for ESG to drive markets and for climate-related financial disclosures to become more prevalent.

If you would like to understand more about current TCFD strategies please consider reading Verdantix Strategic Focus: Mastering TCFD Disclosures.