Four Twenty Seven Wins WatersTechnology Asia Award

JULY 9, 2020 – Hong Kong – Four Twenty Seven Wins WatersTechnology Asia Award for Best Alternative Data Provider. 

The WatersTechnology Asia Award 2020 for Best Alternative Data Provider recognizes Four Twenty Seven’s innovation, accuracy and high standard in curating and deploying data for financial stakeholders. This regional award showcases vendors and end users with high quality solutions with global relevance that are also especially pertinent to Asia markets.

In 2020 Four Twenty Seven launched the first of its kind Physical Climate Risk Application, allowing investors to score any asset in the world on its exposure to floods, heat stress, hurricanes & typhoons, sea level rise and water stress. This came as financial regulators across the Asia-Pacific region have increasingly contributed to the global call for increased measurement and disclosure of climate risks in investment portfolios, encouraging financial actors to step up.

Committed to meeting the growing need of investors and other financial stakeholders in these markets, Four Twenty Seven opened a Tokyo office and hired a senior country representative, Toshi Matsumae, in October 2019. In June 2020 we announced a partnership with Derani Brewis of DB Funds Advisory, who leads our business development in Australia and New Zealand. We’ve seen growing demand for physical climate risk analytics from these markets and look forward to engaging more directly with stakeholders across the Asia-Pacific region to deliver our award-winning climate risk data and continue refining our analytics to meet their needs.

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Explore Four Twenty Seven’s on-demand Physical Climate Risk Application for real assets and learn about our other data products for investors, banks and corporations to assess their exposure to physical climate hazards.

Four Twenty Seven Announces Partnership with Nova Group, GBC

July 9, 2020 – BERKELEY, CA – New Climate Resilience Assessment leverages Four Twenty Seven’s physical climate risk data to enable proactive risk management by commercial real estate stakeholders

Commercial real estate assets are increasingly affected by climate change, whether it be costly hurricane damage, increasing energy costs due to higher temperatures, or the impacts of sea level rise on asset value. As it becomes evident that every asset has its own risks and that these risks will continue to manifest in financial loss, real estate investors and property managers need to prepare. Granular, site-specific data on risk exposure is the critical first step for understanding these impacts, and it is essential to use these assessments to inform investment in preparedness. Nova’s new Climate Resilience Assessment fulfills this demand for data-driven insights into how to build resiliency, based on the risks and characteristics of the specific asset of interest.

“The single most frequent question we get from clients is ‘I know my risk now, but what do I do next?’ We are delighted to partner with Nova Group to answer this question, filling the urgent demand for site-specific guidance on how to build resilience,” said Emilie Mazzacurati, Four Twenty Seven’s Founder & CEO.

“Arguably there is no greater risk confronting the global commercial real estate industry than climate change. We are thrilled to partner with the industry leaders of Four Twenty Seven to amplify their forward-looking, predictable, and location-specific data to create a more resilient world,” stated Ben Bohline, Nova Group’s President & CFO.

Read Nova Group’s announcement here.

Racial Justice and Climate Change: Exposure

Introduction

The relationship between race and climate change is too often ignored. The recent protests for racial justice and police reform call attention to the fact that racism is still deeply embedded in our institutions and public policies. In the United States, people of color are disproportionately affected by polluting industries and climate change. A long legacy of racist housing policy and weak environmental protections contribute to this disproportionate exposure, coupled with systemic issues related to public health, education and wealth.

As part of our commitment to help raise awareness of the nexus between racial equity and climate change, this article will provide a brief overview of environmental injustice issues in the U.S., as well as highlight the disproportionate impacts of climate change on Black communities and people of color.

Disclaimer: We are aware that the history of environmental justice in the U.S. is deep and complex, and this short piece cannot do justice to the complex web of issues and suffering imposed on minorities. We hope this blog post provides an entry point for identifying organizations and researchers with greater expertise and a long history of commitment to environmental justice.

Housing Discrimination and Environmental Injustice  

The disenfranchisement of Black communities and other people of color in the United States includes discrimination in terms of access to education, public transportation, recreation, employment, healthcare and housing. Environmental racism is just one manifestation of this oppression and is particularly evident in housing and development.

Black communities and other people of color have been relegated to neighborhoods that have greater exposure to environmental pollution and toxicity than primarily white neighborhoods. Housing and lending policies have historically limited options for Black communities and people of color and concentrated these communities in locations with higher exposure to environmental hazards. In the 1930s, federal housing policy actively and intentionally contributed to segregation, subsidizing development for middle to low-income white households and prohibiting people of color from purchasing those homes. Relegated to live only in certain areas, entire minority communities were then “redlined,” labeling home buyers’ mortgages as too risky to insure. “Threat of infiltration of negro[s]” and “Infiltration of: Negroes” were often listed as reasons for giving a community a low grade, and for deeming the community as “hazardous.”

In America, where homeownership is the single most important source of equity- and wealth-building, Black households have historically been shut out of higher-value neighborhoods and have been systematically prevented from benefiting from the upward mobility and financial resources that accompany homeownership. Factors like redlining, disenfranchisement and the operation of toxic facilities in Black neighborhoods means that homes in majority Black neighborhoods are valued at half the price of homes with non-Black residents. Lack of opportunity to build equity through home ownership is a key reason that African American wealth equals just 5% of white wealth in the U.S.

Furthermore, as of 2019 over 30 million Americans live in areas where water infrastructure has violated safety standards. For example, in rural and primarily Black Lowndes County, Alabama, only around 20% of the population has a sewer system—the others have pipes deploying raw sewage into their yards. Navajo Nation residents rely on water contaminated by uranium mining, and infections and cancer are rampant in these communities. Lack of access to safe water leads some residents to drive for hours to obtain safe water, which in turn hampers education and work efforts, further perpetuating inequities. There is a nationwide trend in lack of enforcement and regulation around safety standards for drinking water, and often low-income, Black, Indigenous and other people of color who lack political clout endure the most severe impacts. In 2017 the American Society of Civil Engineers rated the U.S. drinking-water infrastructure as a D, estimating a need for $1 trillion investment in the next 25 years to prevent further erosion of pipes.

After decades of discriminatory housing policies and inequitable development, Black communities are still disproportionately exposed to pollution and environmental toxins, leading to detrimental health impacts which are often compounded by lack of access to suitable healthcare. This disproportionate exposure has been well-documented since the 1980s when a nationwide study by The United Church of Christ Commission on Racial Justice found that race was the strongest determinant of the location of commercial hazardous waste sites. Nationally, “African Americans are 75 percent more likely than Caucasians to live in fence-line communities—those next to commercial facilities whose noise, odor, traffic or emissions directly affect the population.”

Disproportionate Exposure to Climate Impacts and Climate Justice

While climate justice has multiple dimensions, at its core it refers to the understanding that those who are least responsible for climate change suffer its gravest consequences. Globally this manifests in developing countries experiencing the worst impacts of climate change, while their industrialized counterparts bear the responsibility for the carbon emissions responsible for worldwide climate impacts. From an intergenerational perspective, today’s younger generations are inheriting the consequences of older generations’ actions related to climate change, with Greta Thunberg a vocal advocate for generational justice.

Climate justice also manifests through racial inequity, in particular in the U.S., where the impacts of climate change will not be distributed evenly. While Black communities and other people of color bear the greatest health costs of industrial activity and of physical climate hazards, they also bear less responsibility for the greenhouse gas emissions causing the climate crisis. While individuals within these communities can be highly resilient, confronting social and economic disparities daily, these communities also often lack the resources to adequately prepare for and respond to the health impacts of pollution and physical impacts of climate change.

Floods

Flooding in the United States disproportionately affects Black residents, as Black neighborhoods are often in low-lying floodplains, with impermeable surfaces and a lack of effective flood protection infrastructure. In many cases, nearby chemical sites, refineries and other industrial infrastructure are also located in flood zones, multiplying the risks of exposure to toxic chemicals during storms. While many middle-income white households face difficult decisions about whether to permanently leave their home in the floodplain, not everyone has the economic freedom to make such decisions. In many cases, Black residents and other people of color do not have access to the transportation or the savings to evacuate at a moment’s notice, let alone permanently relocate.

Storms

The overexposure of Black neighborhoods to flood risk, alongside the lack of resilience investment in these communities, also leads to disproportionate vulnerability to the impacts of storms. During Hurricane Katrina, Black individuals were among those that were least likely to evacuate, with access to transportation being a key factor. The city’s four largest public housing buildings, primarily occupied by Black residents, were permanently closed after incurring storm damage. Four of the seven zip codes enduring the costliest flood damage due to Hurricane Katrina were at least 75% Black and the community most damaged by Hurricane Harvey was 49% nonwhite. This is a common trend across the nation.

These statistics, stem partially from a history of inequitable funding. In 1965 Hurricane Betsy hit New Orleans, causing the most damage in New Orleans East and the Lower Ninth Ward, which are primarily Black neighborhoods. This catalyzed investment in levees to protect New Orleans from flood waters, but these investments went primarily to predominantly White neighborhoods which were not as damaged and already had some flood protection infrastructure. This distribution of funds foreshadowed the unequal distribution of impacts when Katrina hit decades later.

Sea level rise

Global sea levels have risen by about eight inches over the past century, with the rate of rise increasing recently. In responding to sea level rise, jurisdictions tend to take one of two approaches: invest in adaptation measures to keep the water out, or abandon an area to the rising seas. Studies show that low-income minority neighborhoods are more likely to be abandoned while higher-income predominately white neighborhoods tend more often to be protected. One reason for this is decision-making that relies only on financial indicators. Resilience investments driven by cost benefit analysis focusing only on the property values, rather than looking at social and cultural characteristics of a community, further contribute to the inequitable impact of climate change.

Relatedly, as the risks of sea level rise become more evident there is an increased risk of “blue-lining” – a term used by Tulane Professor Jesse Keenan, to express its connection to redlining. Many Black and low-income populations that did not receive investment in sound sewage and drainage systems due to redlining experience the worst impacts of flooding today. As banks and investors learn about exposure to floods and sea level rise, they are increasingly hesitant to offer funding to these neighborhoods. Yet without investment, communities are unable to improve their infrastructure and build resilience, further reinforcing the cycle of racial injustice.

Research in Miami-Dade County, Florida found a positive relationship between price appreciation and elevation in most study cities. This shift can potentially lead to ‘climate gentrification’—another term coined by Prof. Keenan, as minority populations migrate towards more exposed areas. For example, in Miami’s higher elevation, traditionally minority neighborhoods such as Liberty City and Little Haiti, rising property values are making homes unaffordable for residents, reflecting the new preference for high elevation. This combination of being priced out of higher elevation neighborhoods and property values decreasing in more exposed coastal areas may further contribute to the cycle of disproportionate exposure to sea level rise among Black populations and other minority residents.

Water Stress

According to the World Resources Institute’s data, 20% of the U.S. currently experiences “high” or “extremely high” water stress, and this number is expected to increase significantly by midcentury. Population growth will further threaten drinking water supplies, and the impacts will be uneven. In 2014 the water table in Fairmead, an unincorporated town in California’s Central Valley with majority Black and Latino residents, dried up and the citizens had to rely on donations and emergency relief for drinking water. Many of Fairmead’s residents are farmers, relying on water for their livelihoods as well as for human consumption, and water for irrigation comes from private wells that are only a few hundred feet deep. While these farmers cannot afford to drill deeper wells, nearby corporate farms can afford to drill wells up to 1,000 feet deep and are thus less affected by the dwindling water table. Climate change will exacerbate existing inequities around water access, particularly for Black and Indigenous communities.

Extreme Heat

Extreme heat kills more residents annually in the U.S. than any other climate hazard. Temperatures can vary by as much as 20ºF between neighborhoods due to the urban heat island effect. The hottest neighborhoods tend to be disproportionately covered in concrete and home to low-income and Black residents. Research shows that these urban development trends are connected to the history of racist housing policies. Residents in low-income and Black communities are also less likely than middle-income and white populations to have well-insulated homes, access to consistent air-conditioning or cool, safe public gathering spaces. Meanwhile, the asthma, heart disease and other chronic illnesses precipitated by exposure to air pollution, increases the health risks of extreme heat.

Conclusion

Due to a history of segregation and systematic economic oppression Black communities are consistently relegated to areas most exposed to flooding and extreme heat, while at the same time lacking resilience investment and access to educational, health and transportation resources to effectively prepare for and respond to disasters. Investing in equitable climate change adaptation is one facet of pursuing climate justice. Equitable adaptation requires involving community members in every step of decision-making and reviewing adaptation options based on the exposure and vulnerability of the community in question, as well as the potential for downstream impacts on others. We discuss this subject in our blog on equity as a cornerstone of adaptation.

Panel Recording: Understanding and Managing Different Climate Risks

This Responsible Investor Digifest panel covers the elements of transition, physical and liability risks related to climate change and the importance of using climate risk data for investment decision-making.

Speakers

  • Viola Lutz, Head of University Consult and Climate at ISS ESG, discusses assessing companies’ alignment with climate change mitigation targets.
  • Emilie Mazzacurati, Founder & CEO of Four Twenty Seven, shares Moody’s and Four Twenty Seven’s latest work on quantifying the financial impacts of climate change.
  • Julie Gorte, Senior Vice President for Sustainable Investing at Impax Assess Management, discusses physical climate risk from an investor perspective.
  • Gerald Esono, RI Analyst at Ilmarinen Mutual Pension Insurance Company, speaks about integrating ESG analysis into the investment decision process.
  • Moderator: Sophie Robinson-Tillet, Editor, Responsible Investor

Panel Recording: Electric Vehicles, Green Public Travel

This Responsible Investor Digifest panel features a discussion on the time frame for adoption of evolving electric vehicle technology, the improvements of green mass transit, how this affects carbon transition risk and the investment impacts and credit rating implications of the transport revolution.

Speakers

  • James Leaton, Vice President and Senior Credit Officer of Moody’s discusses the future of mobility and its cross-sector credit implications.
  • William Todts, Executive Director of Transport and Environment, highlights prominent issues to consider post-COVID-19 in the transport space.
  • Joy Williams, Senior Advisor of Mantle 314, shares investor and analyst perspectives on navigating resilience.
  • Moderator: Daniel Brooksbank, Head of Strategic Content, Responsible Investor

Newsletter: Black Lives Matter

Four Twenty Seven's monthly newsletter highlights recent developments in climate risk and resilience. This month we emphasize the need for racial justice, share new resources on climate risk for investors and regulators and highlight recent calls for climate risk disclosure.

Black Lives Matter

We at Four Twenty Seven are saddened and angered by the recent killings

of Rayshard Brooks, George Floyd, Breonna Taylor, Ahmaud Arbery along with so many others, and by the systemic injustice and continued brutality Black individuals experience every day. We stand in solidarity with the Black community against all forms of racial injustice and we state unequivocally that Black Lives Matter.

During this time of national reckoning, we are reflecting on our responsibility to use our platform to speak out against injustice and elevate the voices of Black people, other People of Color, and those who have dedicated themselves to racial justice.

While the issues we are facing today are not new, they have reached a boiling point, due to centuries of injustice, mistreatment and violence against Black individuals. This is a systemic problem, deeply rooted in our society, that calls for systemic change. We are committed to being a part of the change.

Together with Moody’s, our parent company, we believe “we all have a responsibility to do better and to build a more just society that serves everyone equally.”

As a company whose mission is to catalyze climate adaptation and resilience, we are committed to supporting equity and racial justice in our daily work. Black communities and communities of color are disproportionately affected by climate change and environmental degradation. They are on the frontlines of the impacts of pollution, extreme heat, storms, and disease. They have less means to mitigate detrimental climate and environmental effects, and often lack insurance and other means to recover when disaster strikes. Any investment in systemic resilience must be an investment in equitable adaptation.

As part of our commitment to change and owing to our expertise on environmental and climate-related issues, we commit to taking the following steps:

  • Use Four Twenty Seven’s platform to educate about environmental justice, equitable adaptation, and the interplay of race and climate change through webinars, publications and research;
  • Incorporate into our analytics a lens on equity and racial justice wherever possible; and
  • Connect students from underserved communities with education around opportunities in climate science through mentorship and internship opportunities.

As an organization and an employer, we also commit to fostering dialogue on racial justice among our team members and will strive to enhance the diversity of our team.

James Baldwin’s words ring true today more than ever: “Not everything that is faced can be changed, but nothing can be changed until it is faced.” We stand in solidarity with the Black community and are committed to doing our part to change the system and fight racism and injustice in our country.

Forthcoming Publications & Webinar on Racial Justice & Climate Action

As part of our commitment to using our platform to educate on these topics, we have planned the following pieces:
  • A blog outlining the issues of environmental justice in the U.S. and the disproportionate exposure and vulnerability of Black communities and other People of Color to the impacts of climate change.
  • A blog explaining the need for racial equity in climate adaptation and sharing approaches for integrating equity into adaptation planning and implementation.
  • A webinar on racial equity and climate action, scheduled for July 8th at 5pm CET / 11am EST / 8am PST.
Guidance for Addressing Climate Risk

Network for Greening the Financial System Guide for Supervisors

The NGFS Guide for Supervisors: Integrating climate-related and environmental risks into prudential supervision, outlines five recommendations for supervisors to address climate risks: determine how climate risks affect economies, develop a strategy, identify risk exposure in supervised firms, set transparent supervisory expectations and engage with financial institutions around effective risk management. The report highlights ways in which supervisors around the world are taking steps to address these risks, citing data from Four Twenty Seven.

The Institutional Investors Group on Climate Change Guidance for Asset Owners and Asset Managers

The new report, Understanding physical climate risks and opportunities, and its brief companion report, Addressing physical climate risks: key steps for asset owners and asset managers, provide an overview on the latest climate science, its implications for financial institutions and a process for addressing climate risks. It outlines five key steps, providing examples of how firms can understand physical climate risks, assess risks at the asset or fund level, review portfolio-level effects, identify risk management options, and monitor and report on these actions.
Continued Calls for Climate Risk Disclosure

The International Monetary Fund on Physical Risk and Equity Prices

The International Monetary Fund (IMF) dedicated a chapter of its Global Financial Stability Report to exploring the affects of physical climate risks on financial stability and found that equity investors may not be pricing these risks sufficiently. The IMF encourages mandating global physical climate risk disclosure and emphasizes the need for granular climate risk exposure data.

Ceres on Why U.S. Regulators Need to Address Climate Risk

Ceres' recent report, "Addressing Climate as a Systemic Risk: A call to action for U.S. financial regulators," encourages US. regulators to address climate risk as a systemic risk. Its recommendations include integrating climate change into prudential supervision, exploring how to address climate risks through monetary policy, considering climate risk in community reinvestment programs and joining the NGFS. 
Meanwhile, the Commodities Futures Trading Commission is preparing to release a report on addressing climate risks next month.
Rising Temperatures and Climate Science
The past seven Mays have been the seven hottest Mays on record, with this past spring being the second hottest on record. As the climate continues to change, we have record high temperatures more often, and parts of Africa, Asia, western European, South and Central America all experienced record warmth this spring. Meanwhile, new research suggests that the climate may be more sensitive to carbon emissions than previously expected, due to increased understanding of cloud microphysics. 
Four Twenty Seven Partners with Measurabl

Access Four Twenty Seven's Physical Climate Risk Data on Measurabl's ESG software for Commercial Real Estate

Twenty Seven’s physical risk data is now available in a new Physical Climate Risk Exposure tool on Measurabl’s investment grade ESG (environmental, social, governance) data hub. Through this integration Measurabl customers can now identify their physical climate risks to inform opportunities to build resilience across their real estate portfolios. “We’re thrilled to partner with the leading ESG data management platform to provide unprecedented levels of transparency to real estate owners and managers worldwide,” said Emilie Mazzacurati, Four Twenty Seven's Founder and CEO. “As climate change increasingly causes financial damage to real assets, this partnership helps fill the urgent demand for data to help the real estate industry prepare for the impacts of climate change.”

“The evolution of Measurabl’s software to include climate risk data was a natural development as we continue to build the best-in-class ESG –and now “R” – platform for commercial real estate,” said Matt Ellis, Measurabl's Founder and CEO. “The union of physical climate risks with ESG creates unparalleled transparency for climate-related financial decisions and disclosures.”
 

Webinar on Physical Climate Risk: Identifying Your Exposure with Measurabl

How does physical climate risk manifest for real estate assets and how can investors identify and manage their risk exposure? Josh Turner, Director, Research, at Four Twenty Seven, joined Measurabl's Noelle Bohlen and Cameron Ravanbach to discuss the climate data driving Four Twenty Seven's analysis and share insights on how real estate investors can leverage this information. Watch the recording.
Public Consultations on Climate Risk

European Commission Consultation on Climate Adaptation

As part of its Green Deal the European Commission has launched a climate adaptation strategy to encourage eco-friendly investments and build resilience. It is refining the initiative and soliciting feedback through a public consultation. Respond by June 30.

European Central Bank Consultation on Climate Risk Disclosure Guidance

Last month the European Central Bank (ECB) published guidance asking banks to disclose their climate-related risks and integrate these risks into their risk management processes. Compliance will be expected when the guidelines are finalized at the end of the year. The ECB has solicited feedback through a public consultation open until September 25.
Inside the Office at Four Twenty Seven

Derani Brewis - Australia & New Zealand

Four Twenty Seven is delighted to partner with Derani Brewis, of DB Funds Advisory, who will lead Four Twenty Seven's business development and growth strategy in Australia and New Zealand.

Derani brings over 25 years of experience in the Australian asset management industry, with relationships across the Australian superannuation and investment management community.

Most recently, Derani was Head of Business Development and Asset Consultants at GMO Australia. Derani has also held senior roles with BT Financial Group, Rothschild Asset Management and Prudential Fund Managers. 

Join the team! Four Twenty Seven is Hiring

There are several opportunities to join Four Twenty Seven's dynamic team. See the open positions below and visit our Careers page for more information.
  • Project Manager with excellent leadership skills and proven experience coordinating activities across teams of different disciplines within research, content and technology
  • Regional Sales Director (North America) with extensive experience selling and supporting data products and services for large commercial, financial and government institutions
  • Climate Data Analyst with expertise translating applied climate science for a wide range of stakeholders.
Upcoming Events

Join the team online at these upcoming events and check our Events page for updates, including registration links to webinars not yet available:

  • Jun. 15 - 19 - Responsible Investor Digital Festival, Virtual: Four Twenty Seven joins Moody's and Vigeo Eiris at a virtual exhibit and Emilie Mazzacurati, Founder & CEO, will presented on climate scenario analysis today.
  • Jun. 30 Urban Land Institute Webinar, Living on the Edge: Sea Level Rise, 9:30am EST / 6:30am PST: Emilie Mazzacurati will present on climate risk for real estate.
  • Jul. 2 – Finance for Adaptation Solutions & Technologies Roundtable, 4pm BST/ 8am PST: Emilie Mazzacurati will speak.
  • Jul. 8 – Moody's Sustainable Finance Webinar on Racial Justice and Climate Change, 5pm CET / 11am EST / 8am PST: Members of the Four Twenty Seven team will speak.
  • Sept. 2-3 – Risk Americas Convention, New York, NY: Members of the Four Twenty Seven team will host a booth and present on climate risk.
  • Sept. 9 Environmental Finance - The Future of ESG Data 2020, Virtual: Léonie Chatain will speak.
  • Sept. 15 - 16 – Responsible Investor Tokyo 2020, Tokyo, Japan: Members of the Four Twenty Seven team will present on risk disclosure and host a booth. 
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Four Twenty Seven Partners with Derani Brewis of DB Funds Advisory in Australia and New Zealand

JUNE 9, 2020 – BERKELEY, CA – Derani Brewis, senior finance executive, will represent Four Twenty Seven in Australia & New Zealand.

Four Twenty Seven, an affiliate of Moody’s and the leading publisher of climate data for financial markets, is pleased to announce the appointment of DB Funds Advisory Pty Ltd, the third party marketing firm founded by Derani Brewis, to represent them in Australia and New Zealand. Based in Sydney, Derani will lead Four Twenty Seven’s business development and growth strategy in Australia and New Zealand.

Derani brings over 25 years of experience in the Australian asset management industry, with relationships across the Australian superannuation and investment management community. Most recently, she was Head of Business Development and Asset Consultants at GMO Australia. Derani has also held senior roles with BT Financial Group, Rothschild Asset Management and Prudential Fund Managers. She will leverage her expertise in building business development strategies and creating strategic relationships to bring Four Twenty Seven’s climate risk data to financial stakeholders across sectors and asset classes.

“Australia is on the frontline of climate change and has already suffered extended damage from bushfires and cyclones over the past years. Investors are eager to understand their exposure to the physical impacts of climate change so they can better manage those risks,” says Emilie Mazzacurati, Four Twenty Seven’s Founder and CEO. “Four Twenty Seven’s on-the-ground presence in Australia will allow us to bring the best available science to respond to this demand and support resilience investments.”

Four Twenty Seven clients are able to assess virtually any property or facility worldwide for the projected impacts of climate change, including single real assets such as office buildings and airports, as well as large portfolios of securities. The financial sector in Australia is increasingly vocal on the need to assess and disclose climate-related risks as part of their overall assessment of investment opportunities.

“Many financial stakeholders are leading the way on climate change by taking a proactive approach to incorporating factors such as increases in temperatures, changes in water supply and demand, changes in rainfall conditions with potential floods, sea level rises and cyclone risks into their investment decisions,” says Brewis. “I think Australians and New Zealanders generally appreciate that climate change cannot be ignored and that climate change analysis is increasingly critical to making informed investment and business decisions. Given this, I am excited to help bring Four Twenty Seven’s climate risk data and unique analysis to financial stakeholders across Australia and New Zealand.”

Download the Press Release.

Four Twenty Seven Announces Partnership with Measurabl

June 2, 2020 – BERKELEY, CA –  Four Twenty Seven’s data on climate-related risks is now available on Measurabl’s real estate data platform.

Measurabl is the world’s most widely adopted ESG software for commercial real estate, and Four Twenty Seven’s physical risk data is now available in a new Physical Climate Risk Exposure tool on Measurabl’s investment grade ESG (environmental, social, governance) data hub. Through this integration Measurabl customers can now identify their physical climate risks to inform opportunities to build resilience across their real estate portfolios.

As the effects of climate change worsen, real estate companies are feeling tangible impacts. Properties exposed to rising sea levels rise in the United States sell at about 7% less compared with similar, unexposed properties. Severe climate events such as hurricanes are occurring more frequently and costing billions of dollars in damage to assets. Additionally, companies face growing regulatory and investor pressures to disclose climate-related financial risks in line with frameworks like the Task Force on Climate-related Financial Disclosure (TCFD).

Yet today, real estate owners and lenders lack transparency into the forward-looking impacts of climate-related threats on their assets and find it difficult to collect and analyze physical climate risk data in a meaningful, comprehensive way.

For each building in a portfolio, Measurabl’s Physical Climate Risk Exposure tool provides Four Twenty Seven’s data for the five key climate hazards of floods, heat stress, hurricanes & typhoons, sea level rise and water stress, as well as earthquakes. The tool identifies the level of risk an asset faces for each hazard and allows users to sort, filter and export Four Twenty Seven’s physical risk data by property type, risk category, and risk level. Users can access this data from Measurabl’s centralized software alongside relevant ESG performance metrics and analytics. This new release improves transparency and enables lenders and investors to better assess and manage their risk.

“We’re thrilled to partner with the leading ESG data management platform to provide unprecedented levels of transparency to real estate owners and managers worldwide,” said Emilie Mazzacurati, Founder and Chief Executive Officer of Four Twenty Seven. “As climate change increasingly causes financial damage to real assets, this partnership helps fill the urgent demand for data to help the real estate industry prepare for the impacts of climate change.”

Physical climate risk data analyzed in tandem with ESG performance provides real estate and capital markets new opportunities to assess their risks and build more resilient portfolios in a central hub. Through advanced understanding of these risks, the built environment and capital markets will be empowered to make data-driven decisions on risk mitigation and strategic investments.

“The evolution of Measurabl’s software to include climate risk data was a natural development as we continue to build the best-in-class ESG –and now “R” – platform for commercial real estate,” said Matt Ellis, Founder and CEO of Measurabl. “The union of physical climate risks with ESG creates unparalleled transparency for climate-related financial decisions and disclosures.”

Read Measurabl’s announcement here and learn more about the new Physical Climate Risk Exposure tool incorporating Four Twenty Seven data.

Newsletter: Will There be a Green Recovery?

Four Twenty Seven's monthly newsletter highlights recent developments in climate risk and resilience. This month we discuss the potential for a green recovery, highlight ways in which asset owners can leverage Four Twenty Seven's Physical Climate Risk Application and share recent and upcoming webinars.

In Focus: Will There be a Green Recovery?

Governments Include Climate Measures in Recovery Efforts

As many EU leaders commit to pursuing Europe's Green deal alongside recovery efforts, already approved measures in European countries also mandate that corporations consider climate goals during their use of relief funds. As part of its green recovery programs Germany invited over 400 listed companies to participate in a research project on how these firms are aligned with the EU Taxonomy, currently focused on climate mitigation and adaptation activities.

Meanwhile, Canada requires that large corporations commit to filing TCFD-aligned climate risk disclosures to receive specific bailouts. China's Politburo Standing Committee has endorsed new infrastructure spending of $1.4 trillion over five years for several low-carbon technologies such as electric vehicle charging, high-speed rail and others. However, the details and implementation are still unclear, with provincial governments having significant control, and many still in favor of traditional energy.

Low interest rates do make this a particularly good time for governments to invest in resilience and green infrastructure, with substantial return on investment over time. Though in the U.S. there is less indication that stimulus efforts will include significant measures to support a green recovery, with any current action coming scattered from some states. However, if Biden is elected in November the situation may change in the U.S. Biden's appointment of Alexandria Ocasio-Cortez as co-chair of his climate task force could signal an intent to favor green jobs to help the economy recover.

Moody's Webinar: COVID-19 and Climate Change

During last week's webinar Founder & CEO, Emilie Mazzacurati, joined Rahul Gosh, SVP, Credit Research & Strategy at Moody's, to discuss what organizations can learn from the pandemic to help prevent and prepare for climate change. Emilie discussed the impact on emissions, government responses and how these events can help companies understand the implications of carbon transition risk. Register for the webinar to watch the replay.
How Can Asset Owners Manage
Climate Risk?

Use Case - Climate Data for Risk Management in Real Asset Portfolios

As regulatory pressure to assess and report climate risks picks up, and physical climate hazards increasingly result in financial damage, asset owners face the daunting challenge of leveraging climate data for financial decision-making. Real estate, infrastructure, agriculture, timber and other real assets have long been an integral component of an asset owner’s portfolio due to their returns and the diversification they offer to the overall fund. However, many real assets are highly vulnerable to physical climate risks. These risks manifest in direct and indirect ways, including increased costs, reduced revenues and decreased asset value.

Evaluating an asset’s exposure to physical climate hazards is challenging, yet also an essential first step in managing climate risks. Four Twenty Seven’s Physical Climate Risk Application allows investors to assess exposure to floods, sea level rise, hurricanes & typhoons, heat stress and water stress at the asset and portfolio levels. Asset owners leverage hazard exposure scores to identify regional and sectoral trends as well as specific hotspots. Flexible viewing options and digestible data provide insight for portfolio risk assessments and due diligence processes. This new case study explores how, armed with climate risk data at decision-relevant scales, asset owners can begin to manage their risk. 
 
Read the Case Study
Regulatory Updates

Bank of England Postpones Climate Stress Tests

Earlier this month the Bank of England and the Prudential Regulatory Authority postponed its climate-related stress tests until at least mid-2021 to allow banks and insurers to focus on COVID-19 recovery efforts. The announcement emphasized the ambitious scope of the stress tests and the hope that the delay will allow firms to invest sufficient resources in the exercise when the time comes.

European Central Bank Publishes Guidance on Climate Risk Disclosure

Yesterday, the European Central Bank (ECB) published guidance asking banks to disclose their climate-related risks and integrate these risks into their risk management processes. Compliance will be expected when the guidelines are finalized at the end of the year. The ECB has solicited feedback through a public consultation open until September 25.

Update to the EU Non-financial Reporting Directive

The European Commission is soliciting feedback on its non-financial reporting directive as part of its efforts to improve oversight of non-financial reporting in alignment with its Green Deal and a global call for a new approach to regulating non-financial disclosure. Provide feedback by June 11.

European Commission Consultation on Climate Adaptation

As part of its Green Deal the European Commission has launched a climate adaptation strategy to encourage eco-friendly investments and build resilience. It is refining the initiative and soliciting feedback through a public consultation. Respond by June 30.
Four Twenty Seven Shortlisted in Waters Ranking 2020

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Webinars on Integrating Climate Risk into Financial Decision Making

IIF Webinar Recording: Quantifying the Impacts of Climate Change

This Institute of International Finance webinar (IIF) features Emilie Mazzacurati, Founder & CEO of Four Twenty Seven, and Jing Zhang, Managing Director, Global Head of Quantitative Research at Moody’s, as they provide an overview of Moody’s climate risk solutions on the financial impacts of climate change. Watch now.

AllianceBernstein Webinar: Incorporating Climate Change into Investment Research

Please join us for a discussion about how the investment value chain is incorporating climate change into decision-making. Sara Rosner and David Wheeler, of AllianceBernstein, will discuss their collaboration with Columbia University on climate change and highlight the climate theme in their sustainable portfolios. Martina Macpherson, of Moody’s, will provide an overview of the current market environment and Moody's ESG and climate efforts, and Emilie Mazzacurati will present a deep dive into climate risk analytics. This webinar is next Wednesday, May 27 at 2pm BST / 9am EST / 6am PST. Register here.
Inside the Office at Four Twenty Seven

UK Sales Director - Ben Boukhobza

Four Twenty Seven welcomes Ben as UK Sales Director. Ben leads Four Twenty Seven’s business development and growth strategy in the United Kingdom and Ireland.

Ben leverages ten years of experience across various roles within the Commercial Group at Moody’s Investors Service (MIS). Most recently Ben led the EMEA Sales Support team, having previously held roles ranging from sales and account management to operations and technology.

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How Can Asset Owners Manage Climate Risk?

Introduction: Why Climate Risk Matters for Asset Owners

In the world where quarterly corporate reporting makes it feel like financial markets are ruled by short-termism, asset owners stand out in contrast, managing their portfolios with horizons in the decades and even longer. With trillions in assets under management and the long-term well-being of their beneficiaries and other stakeholders as their goal, asset owners’ risk management practices must be robust.  This includes the consideration of factors beyond traditional financial metrics. While their long horizon allows asset owners to withstand short-term volatility, their portfolios may be exposed to higher levels of other risks, including those posed by a changing climate, which is not necessarily accounted for in asset prices.

Additionally, regulatory actions like the EU Action Plan on Sustainable Finance, growing global support of the Task Force on Climate-related Financial Disclosures (TCFD), and groups like the Network for Greening the Financial System, whose members include 42 central banks and supervisors, are pushing investors of all stripes to take physical climate risks into account, warning of dire systemic consequences if climate risks continue to go unpriced.

With climate risk moving from the fringes of finance to center stage, the challenge is to translate climate models and climate data into actionable intelligence for financial decision-making. Climate models are complex, incorporating information from many disciplines of earth science, and their outputs are unwieldy. However, when transformed into indicators at appropriate scales and timeframes, climate data provides essential forward-looking information for financial decision-makers.

Assessing Exposure to Inform Risk Management

Evaluating an asset’s exposure to physical climate hazards is challenging, yet also an essential first step in managing climate risks. Four Twenty Seven’s Physical Climate Risk Application (Application) allows investors to assess exposure to floods, sea level rise, hurricanes & typhoons, heat stress and water stress at the asset and portfolio levels. Asset owners leverage hazard exposure scores to identify regional and sectoral trends as well as specific hotspots. Flexible viewing options and digestible data provide insight for portfolio risk assessments and due diligence processes. Armed with climate risk data at decision-relevant scales, asset owners can begin to manage their risk.

Climate Data for Portfolio Management

Real estate, infrastructure, agriculture, timber and other real assets have long been an integral component of an asset owner’s portfolio due to their returns and the diversification they offer to the overall fund. However, many real assets are highly vulnerable to physical climate risks. These risks manifest in direct and indirect ways, including increased costs, reduced revenues, and decreased asset value.

Asset owners use Four Twenty Seven’s Application to evaluate forward-looking physical climate risk exposure. For example, the portfolio-specific summary table in Figure 1 provides a snapshot of exposure and serves as the starting point for the analysis of physical climate risks.  In this portfolio, hurricanes & typhoons, earthquakes, heat stress and water stress are the most prevalent hazards.

While asset owners frequently emphasize the hazards they view as most financially material—for instance floods, hurricanes, and sea level rise—heat stress and water stress can also have material financial impacts. For instance, a major heat wave across Europe in the summer of 2019 demonstrated how increasing temperatures can cause business disruptions and raise operating costs. Absent retrofits to address climate risks in European real estate, the total increase in energy bills for commercial buildings could potentially cost $300 billion (£457 billion) by 2050. Water stress, another potentially overlooked risk, can threaten the long-term operations of assets like thermal power plants that rely on large amounts of water for cooling. For example, Moody’s found that 11 major U.S. utilities representing over $31 billion in rate base have extreme risk to water stress, which has already caused some power utilities to retire capital-intensive generation facilities early.

In addition to providing an entry point for further analysis, metrics in the summary table are useful for risk reporting. As reporting requirements develop, outputs from the Physical Climate Risk Application will empower asset owners to effectively describe asset exposure, communicate how risks are being managed, and characterize their portfolios’ overall climate risk and resilience strategies.

Asset owners can also identify exposure hotspots, explore sectoral trends, and dive deeper into the exposure of individual assets. Figure 2 shows the same portfolio ranked by highest flood risk score. Floods can raise costs, cause business disruption, and decrease asset values.

Using the data in Figure 2, asset owners can consider shortening their holding periods for assets with the highest levels of exposure, ensure that they have appropriate insurance coverage, and evaluate if coverage or premium prices may rise in the future. As the climate changes, insurers’ risk tolerances may also reach their limits and they may seek to exit markets. It is thus essential for asset owners to monitor the evolving landscape. Beyond evaluating potential changes to insurance, asset owners can also use this data as an entry point for engagement with a building manager, to better understand the site’s flood history and investigate if the asset has flood defenses.

Institutional investors understand that, over the typical commercial real estate hold period of seven to ten years, the next buyer of their building is likely to be concerned by climate risk as well. The Application equips asset owners with the exposure data they need to make sure their portfolios are resilient to climate risks and continue to provide the returns they need and expect from the asset class.

Climate Data for Due Diligence

Beyond analyzing portfolios of existing holdings, the application’s real-time scoring allows asset owners to quickly incorporate physical climate analysis into their due diligence processes for new acquisitions. In addition to providing easily digestible, high-level screening results, granular climate data allows clients to continue to invest, for example, in valuable coastal markets with known exposure. Figure 3 shows exposure of nine facilities in Tokyo, where the combination of storm surge and sea level rise could cause $1 trillion (100 trillion yen) in damages in a 1-in-100 year storm. Because the sea level rise (and flood) data featured in the Application is at a scale of 90 x 90 meters, investors do not need to eliminate entire markets from their investment strategies. Rather than exiting a profitable market, asset owners can use the Four Twenty Seven Physical Climate Risk Application to selectively invest in assets with lower exposure.

Asset owners often use Four Twenty Seven data to set their own internal thresholds for further due diligence. Using the detailed site information, as shown in Figure 4, as well as the downloadable scorecard, analysts can quickly understand which hazards to investigate further.

Some investors require further due diligence for any assets that receive “High” or “Red Flag” scores. Deal teams may be tasked to investigate asset-specific features that would make it more resilient to specific climate hazards, such as freeboard above base flood elevation, onsite power generators, or water efficiency measures.

Conclusion

Real assets, whose time horizon of returns aligns well with the investment goals of asset owners, are exposed to physical hazards, which will continue to become more frequent and severe. Exploring asset-level climate hazard exposure is the first step to analyzing and ultimately managing physical climate risk. As regulation around climate risk rapidly evolves, mandates to monitor and report these risks will also expand. Equipped with a detailed understanding of their portfolio holdings’ exposure, asset owners are empowered to make better-informed investment and risk management decisions, ultimately enhancing the resilience of their portfolios to physical climate risk.

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Four Twenty Seven offers on-demand physical climate risk scoring for real assets and other climate risk datasets for investors to assess their risk across asset classes. Learn more about Four Twenty Seven’s data or reach out to schedule a demo.