For a detailed explanation of the methodology of scenario analysis and climate risk providers, see Taming the Green Swan (2020) by Julia Anna Bingler and Chiara Colesanti Senni.
Free tools
For equity and fixed income investments
2 Degrees Investing Initiative’s Paris Agreement Capital Transition Assessment (PACTA)
Covers bond and equity issuers to analyze the alignment of portfolios with decarbonization pathways. Gathers evidence based on the five-year-ahead time horizon for which it is possible to track capital expenditures, which are a key input to the model. Developed in collaboration with PRI and free to the public.
https://2degrees-investing.org/resource/pacta/
Climafin
Analyzes large datasets regarding financial and industrial relationships using financial network algorithms, in order to estimate expected losses, value at risk, and other climate-adjusted financial metrics for portfolios under a range of climate scenarios. A free model with individual analyses customizable for a fee.
Cambridge Econometrics
Projects prices, emissions, and energy usage at the sectoral level under different climate scenarios. A free model with individual analyses customizable for a fee.
Transition Pathways Initiative
Assesses management quality, carbon performance, and transition readiness of issuers. Developed in collaboration with PRI and FTSE Russell and free to the public.
https://transitionpathwayinitiative.org/overview
University of Augsburg’s CARIMA
Develops “carbon betas,” climate-adjusted measures of price volatility relative to the market, for securities across the economy under different scenarios. Free and accessible to the public.
For infrastructure assets
ClimateWise
Assesses financial risk to infrastructure assets, including fossil fuel pipelines and utilities, under different climate scenarios. Produced by the University of Cambridge’s Institute for Sustainability Leadership; free to the public.
https://www.cisl.cam.ac.uk/business-action/sustainable-finance/climatewise
Commercial Tools
For equity and fixed income assets
Climate Risk Toolkit
Estimates potential variation in valuation of assets under a range of climate scenarios. Developed by Vivid Economics and available for a fee, though some data is public.
https://www.vivideconomics.com/net-zero-toolkit/
Carbon Impact Analytics
Assesses transition readiness, strategic orientation, and emissions at the firm level under a variety of climate scenarios. Developed by Carbone4. Both public and for-fee options.
Carbon Delta—Climate VAR
Estimates potential climate-stressed valuations of securities under different scenarios. Developed by MSCI with input from the Potsdam Institute for Climate Impact Research. Available for a fee, though some information is publicly available.
https://www.msci.com/documents/1296102/16985724/MSCI-ClimateVaR-Introduction-Feb2020.pdf
Climate Excellence
Assessment of issuer-level changes in earnings and other financial metrics under a range of potential climate scenarios. Developed by PricewaterhouseCoopers and available for a fee, though some information is publicly available.
https://store.pwc.de/en/products/climate-excellence
ERM
Portfolio screening for financial impact of physical and transition risk under a range of scenarios. Available on a for-fee basis.
https://www.erm.com/service/capabilities/energy-climate-change/
MATLAB Climate Scenario Explorer
Uses integrated assessment models provided by the Network for Greening the Financial System, IPCC, to assess transition risks to banks, financial services, insurance and energy companies under different climate policy scenarios.
https://www.mathworks.com/matlabcentral/fileexchange/82550-climate-iam-explorer
Moody’s ESG
Issuer-level assessments of exposure to physical and transition risk, as well as climate governance. (Successor entity to Four Twenty Seven.) Fee-based.
https://esg.moodys.io/climate-solutions
Ortec Finance Climate Maps
Estimates macroeconomic variables such as inflation and growth rates, as well as asset class returns, for a variety of climate scenarios.
Developed by Ortec Finance in partnership with Cambridge Econometrics, and available for a fee.
https://www.ortecfinance.com/en/insights/product/climate-maps
Portfolio Climate Impact Report and Raw Data
Covers bond and equity portfolios, assessing issuer alignment with a 2-degree scenario as well as carbon emissions, and assigning a carbon risk rating based on industry-specific indicators. Developed by ISS ESG and available for a fee, though some information is publicly available.
https://www.issgovernance.com/esg/climate-solutions/climate-analytics/
S&P Global Market Intelligence - Climate Linked Credit Analytics
Separate tools estimate 1) the potential impact of a carbon tax on the upstream oil and gas sector and 2) creditworthiness of companies across the economy based on their projected carbon emissions and a range of climate scenarios. Available for a fee although some data is public.
https://www.spglobal.com/marketintelligence/en/solutions/climate-credit-analytics
XDC Model
Assesses climate impact of a company or portfolio in terms of average temperature rise by 2050 if all economy was as carbon intensive as this entity. Available for a fee, though some information is publicly available.
https://www.right-basedonscience.de/en/right-based-on-science/
For corporate loans
Climate Transition Risk Methodology/Transition Check
Estimates the potential climate-related impacts on the credit risk of a bank’s corporate loan portfolio. Developed by Oliver Wyman in collaboration with UNEP-FI, and available for a fee.
https://www.oliverwyman.com/our-expertise/insights/2020/sep/transition-check.html
