Four Twenty Seven Received ISAR Honours

OCTOBER 24, 2018 – GENEVA, SWITZERLAND – Four Twenty Seven received ISAR Honours for asset-level climate risk scores.

ISAR Honours recognized Four Twenty Seven’s contribution to developing best practices on corporate reporting. The Intergovernmental Working Group of Exports on International Standards of Accounting and Reporting (ISAR) supports progress on the Sustainable Development Goals (SDGs) by fostering corporate transparency, good governance and sustainability standards. Its awards aim to foster the dissemination of initiatives that improve global corporate reporting and integrate environmental, social and governance factors into reporting cycles. ISAR is convened through The United Nations Conference on Trade and Developments (UNCTAD).

“Four Twenty serves governments and cities, corporations and financial institutions,” Four Twenty Seven’s Director, Europe, Nathalie Borgeaud said during the awards ceremony. “We inform about the physical climate risks they incur. We inform about floods, cyclones and sea level rise and we inform about extreme heat and droughts, for each of their assets, with forward-looking, science-driven data. In order for all to develop  meaningful resilience strategies, we inform about the future that is knocking on our door. And we all know it is knocking hard.”

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Explore Four Twenty Seven’s award-winning equity risk scores and other climate data analytics that enable investors, corporations and governments to understand climate risk exposure and build resilience.

PRI Webinar: Measuring and Managing Physical Climate Risk

This PRI webinar, hosted in conjunction with DWS, discusses recent research in identifying physical climate risks and integrating this information into investment decisions. DWS shares its process for leveraging Four Twenty Seven’s equity risk scores to create a climate-optimized index.

Speakers

  • Murray Birt, ESG Thematic Research Strategist at DWS, breaks down physical climate risk and its financial impacts.
  • Emilie Mazzacurati, Founder & CEO of Four Twenty Seven, presents a methodology for assessing and visualizing climate risk in portfolios.
  • Edward Baker, Senior Policy Advisor at PRI, shares new investor data on climate risk reporting under the TCFD recommendations.
  • Gerold Koch, Director of Passive Product Development at DWS, discusses DWS’ strategy for creating a climate-optimized index.
  • Jessica Elengical, Head of ESG Strategy, Alternatives at DWS, speaks about the impacts of physical climate risks on real estate investments.

Newsletter: Japan’s Floods Halt Manufacturing

 

 

Four Twenty Seven’s monthly newsletter highlights recent developments in climate adaptation and resilience. This month, don’t miss our analysis of Japan’s recent flooding, a new report on economic climate risk in Australia, and context around other recent extreme weather events.

In Focus: Time and Tides – Flooding in Japan

Four Twenty Seven Analysis


Japan was the inundated by over 70 inches of rain in early July, resulting in significant loss of life and business disruptions. The clouds have since receded, leaving economic damage with long-term implications yet to be understood. However, estimates expect industry losses to be in the billions USD. Destruction was centered in Okayama and Hiroshima, driven by flooding and landslides. Japan’s floods were followed by a deadly heat wave, threatening those left without power after the storm and hindering recovery efforts.

Our latest analysis identifies companies affected by the event based on the location of vulnerable corporate facilities. We find several automobile manufacturers and electronic companies closed facilities during the flooding due to supply chain and labor disruptions. Understanding the ownership and operations of facilities in the damaged areas provides insight into what companies and industries may exhibit downturns in performance over the near term and be vulnerable to similar storms in the future.

Read our Analysis

Responding to Economic Climate Risk in Australia

New Four Twenty Seven report explores calls for increased climate risk disclosure in Australia


Our recent report, Responding to Economic Climate Risk in Australia, explores the connection between climate hazards and financial risks in Australia, sharing examples of corporate adaptation and investor engagement to build resilience.

Regulatory pressure and financial damage are necessitating an increase in physical climate risk disclosure in Australia. The nation’s predominant sectors are also the most exposed to drought and heat stress.

In exercising their own due diligence and assessing the exposure to physical climate risks in their portfolios, investors arm themselves with valuable information on corporate risk exposure which they can leverage to engage with companies around resilience.

Read the Report

Climate Change Contributes to Record Heat

Record-breaking heat around the world


Many areas around the world recently experienced their highest daytime temperatures and warmest lows. These records include Burlington, VT which had it’s warmest recorded low temperature of 80 degrees on July 2. Montreal had its highest recorded temperature of 97.9 degrees on July 2 when around 34 people died. Shannon Ireland set its all-time record of 89.6 degrees on June 28 and Quriyat Oman experienced the world’s warmest recorded low of 109 degrees on June 28.

Climate change threatens public health

Extreme heat threatens human health and economic productivity through impacts on the workforce, power grid and vulnerable populations. The Washington Post explains the connection between climate change and heat waves, and the social and economic challenges they bring. Strong and hot domes of high pressure have become more extreme as the climate warms, bringing heat waves. “While warm summer nights may seem less concerning than scorching afternoons” warmer nighttime lows are dangerous because the body has no respite, the New York Times reports.

Further Reading

Inside the Office at Four Twenty Seven

Four Twenty Seven in the Media

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:

  • July 18: Summer in the City CRS Investing Summit, New York, NY: Macroeconomic Risk Senior Analyst, Lindsay Ross, will speak on a panel about assessing physical climate risk in investment portfolios at this annual convening of the responsible investment community.
  • July 19: Webinar: Introduction to the California Heat Assessment Tool, 1:30-2:30pm PT: Director of Analytics, Nik Steinberg, will introduce the California Heat Assessment Tool (CHAT) to California public health officials during the CalBRACE webex meeting.
  • August 28-29: 3rd California Adaptation Forum, Sacramento, CA: Join Yoon Kim, Nik Steinberg, Kendall Starkman, Josh Turner, and Natalie Ambrosio at this biennial convening of adaptation professionals. Yoon will moderate a panel on the legal aspects of adaptation finance, Kendall will facilitate a panel on mobilizing climate adaptation through partnerships and Nik will present the California Heat Assessment Tool.
  • September 11: Building Transformational Community and Economic Resilience: San Francisco, CA: Four Twenty Seven will host a side event alongside the Global Climate Action Summit on Sept 11 to discuss the role of investors, businesses and governments in building climate resilience, both in California and abroad. Invite only.
  • September 12-14: PRI in Person, San Francisco, CA: Visit the Four Twenty Seven booth and meet with our team at this annual gathering of responsible investment industry leaders.
  • September 12-14: Global Climate Action Summit, San Francisco, CA: Join the Four Twenty Seven team at this convening of global climate adaptation experts meant to propel action around the Paris Agreement.

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Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for financial institutions, corporations, and government institutions.Our mailing address is:
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Responding to Economic Climate Risk in Australia

June 25, 2018 – 427 REPORT. Regulatory pressure and financial damage are necessitating an increase in physical climate risk disclosure in Australia. In exercising their own due diligence and assessing the exposure to physical climate risks in their portfolios, investors arm themselves with valuable information on corporate risk exposure which they can leverage to engage with companies around resilience. This report explores the connection between climate hazards and financial risks and shares examples of corporate adaptation and investor engagement to build resilience.

The global tide of interest in the Task Force on Climate-related Financial Disclosures (TCFD) has hit the shores of Australian financial markets, steered by regulators concerned about the systemic risk climate change poses to the economy. In 2017 Australian Prudential Regulation Authority’s Geoff Summerhayes was the first Australian regulator to formally endorse the TCFD. “Some climate risks are distinctly ‘financial’ in nature. Many of these risks are foreseeable, material and actionable now,” he said. This sentiment was echoed by John Price of the Australian Securities and Investments Commission in 2018 and reflects growing regulatory concern over climate risk disclosure internationally, as shown by Article 173 of France’s Law on Energy Transition and Green Growth and the 2018 European Commission Action Plan.

This Four Twenty Seven Report, Responding to Economic Climate Risk in Australia, explores the drivers of financial risk in Australia and discusses approaches to addressing this risk. The nation’s dominant industries are particularly threatened by the prevalent climate hazards. For investors, understanding a company’s risk to climate change is an essential first step to mitigating portfolio risk, but must be followed by corporate engagement to build resilience. Institutional investors are increasingly leveraging shareholder resolutions and direct engagement to prompt companies to disclose their climate risks and adapt.

Key Findings

  • Australia’s “Angry Summer” of extreme weather in 2013 cost the economy $8 billion and was followed by another summer of extremes in 2016-2017.
  • Construction, mining and manufacturing constitute almost 20 percent of Australia’s economy and are highly vulnerable to heat stress and water stress, which threaten large swaths of the nation.
  • Boral Limited and Rio Tinto are both Materials companies exposed to water and heat stress in their operations, but they have different risk scores stemming from differing vulnerabilities in their markets and supply chains.
  • Engagement on climate is relatively new for Australian shareholders, but is gaining momentum, with institutional asset managers voting on several climate risk disclosure resolutions in 2018.
  • Investors can address physical climate risk by reviewing their asset allocations, disclosing their own risks, investing in new opportunities and engaging with corporations.

Download the report.

Webinar: Emerging Metrics for Physical Climate Risks Disclosures

This Four Twenty Seven webinar on emerging metrics and best practices for physical climate risks and opportunities disclosures covers recent developments in TCFD and Article 173 reporting, challenges to assessing climate risk exposure, strategies for investors to incorporate this information into decision-making and approaches to build corporate resilience.

Speakers

  1. Emilie Mazzacurati, Founder and CEO, presents key findings from the EBRD-GCECA report: Advancing TCFD guidance on physical climate risks and opportunities and emerging best practices in physical risk reporting.
  2. Nik Steinberg, Director of Analytics, shares challenges and approaches for using climate data for business decisions.
  3. Frank Freitas, Chief Development Officer, discusses corporate engagement opportunities for investors and approaches to integrating climate change into investment strategies.
  4. Yoon Kim, Director of Advisory Services, shares examples of innovation in corporate resilience-building.

Newsletter: How to disclose physical climate risks & opportunities

 

 

Four Twenty Seven’s monthly newsletter highlights recent developments in climate adaptation and resilience. This month, don’t miss our new report on shareholder engagement,  recommendations for physical climate risk disclosure and upcoming webinars on physical climate risk.

In Focus: From Risk to Resilience – Engaging with Corporates to Build Adaptive Capacity

New report from Four Twenty Seven provides strategic guidance for shareholder engagement on physical climate risk


Released this week at RI Europe, our latest report From Risk to Resilience – Engaging with Corporates to Build Adaptive Capacity explains the value of engagement for both corporations and investors and describes data and case studies to drive engagement strategies. We identify top targets for shareholder engagement using data-driven strategies and provide sample questions as an entry point for investors’ conversations with corporations. The report shows investors can help raise awareness of rising risks from climate change and encourage companies to invest in responsible corporate adaptation measures.

Read coverage of the report in CFO Magazine’s article, Investors Push for Climate Risk Disclosure.

Read the Report

Advancing TCFD Guidance on Physical Climate Risk and Opportunities

A practical guide to climate risk and opportunities disclosures.


This seminal report aims to inform and support early adoption of climate risk reporting, based on findings from industry-led working groups with financial institutions and corporations. The report was sponsored by the European Bank for Reconstruction and Development, in partnership with the Global Centre of Excellence in Climate Adaptation.

The report calls on companies to perform forward-looking risk assessments and disclose material exposure to climate hazards. It also invites firms to investigate benefits from investing in resilience and opportunities to provide new products and services in response to market shifts. Co-authored by Four Twenty Seven and Acclimatise, the report provides best-in-class metrics and recommendations for effective disclosure in line with the TCFD.

The report was released at a high-profile conference hosted by EBRD – view conference materials, including a full summary, slides, op-eds and video at www.physicalclimaterisk.com.

Read the Report

427 Webinar: Emerging practices for TCFD reporting on physical climate risk 

Four Twenty Seven will host a webinar on TCFD reporting, emerging metrics and best practices for physical climate risks and opportunities disclosures. There will be two sessions of the same webinar to accommodate multiple time zones.

Agenda:

1. Metrics and emerging best practices for physical climate risks disclosures under Art. 173 and TCFD: Emilie Mazzacurati, Founder and CEO, will present key findings from the EBRD-GCECA report: Advancing TCFD guidance on physical climate risks and opportunities and emerging practices in physical risk reporting.

2. Using climate data to assess physical climate risks: Nik Steinberg, Director of Analytics, will discuss challenges and tools for using climate data for business decisions.

3. Building corporate resilience: Yoon Kim, Director of Advisory Services, will discuss do’s and don’ts of scenario analysis and share examples of innovation in corporate resilience-building.

3. Opportunities for investors: Frank Freitas, Chief Development Officer, will discuss corporate engagement opportunities for investors and approaches to integrating climate change into investment strategies.

5. Q&A: The webinar will include extended time for live Q&A.

Tues. June 12 at 8am PT; 11am ET; 4pm CET:

Register Here

Tues. Wed. 13 June at 9am HKT/SGT; 10am JST; 11am AEST (June 12 at 6pm PT):

Register Here

UN PRI Webinar: Measuring and Managing Physical Climate Risk

UN PRI and DWS present a webinar to explore the latest research on physical climate risks and their impacts on investment portfolios.

Speakers will discuss strategies for identifying physical climate risk in portfolios and incorporating this information into investment strategies.
Expert panel:

  • Murray Birt, ESG Thematic Research Strategist, DWS
  • Jessica Elengical, Head of ESG Strategy, Alternatives, DWS
  • Gerold Koch, Passive Product Development, Americas, DWS
  • Emilie Mazzacurati, Founder and Chief Executive Officer, Four Twenty Seven
  • Moderated by: Edward Baker, Senior Policy Advisor, Climate and Energy Transition, PRI

Wednesday, June 13, 8:am PT; 11am ET; 4pm BST

Register Here

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:

  • June 7-9: 7th Sustainable Finance Forum, Waddesdon, UK: 427 COO Colin Shaw will discuss the use of corporate facility data to assess climate exposure at this forum hosted by the Sustainable Finance Programme at the University of Oxford.
  • June 12: Four Twenty Seven Webinar: Metrics for Physical Climate Risks Disclosure, 8am PT and 6pm PT: This webinar will cover TCFD reporting, emerging metrics and best practice for physical climate risks and opportunities disclosures.
  • June 13:  PRI Webinar: Measuring and managing physical climate risk, 8:00am PT: Founder & CEO Emilie Mazzacurati will join DWS and PRI in this discussion of the latest research on physical climate risk.
  • June 12-14: VERGE Hawaii, Honolulu, HI: Kendall Starkman, will speak about Four Twenty Seven’s work modeling the impacts of heat on human health.
  • June 18-21: Adaptation Futures 2018, Cape Town, South Africa: Director of Advisory Services, Yoon Kim, will facilitate a session exploring integrating climate risks into infrastructure investment decisions.
  • July 18: Summer in the City CSR Investing Summit, New York, NY: Emilie Mazzacurati will discuss methods to assess physical climate risk exposure on a panel about the business impacts of climate change.
  • June 26GRESB Sustainable Real Assets Conference, Sydney, Australia: Chief Development Officer Frank Freitas will speak on a panel on innovation and tools for building climate resilience in real asset portfolios at GRESB’s annual conference on resilient infrastructure investments.
  • August 28-29: 3rd California Adaptation Forum, Sacramento, CA: Kendall Starkman will facilitate a panel on mobilizating climate adaptation through partnerships at this biennial convening of adaptation professionals from across California.
  • September 11: Save the date for a Four Twenty Seven side event on resilience finance alongside the UN PRI and GCAS.
  • September 12-14: PRI in Person, San Francisco, CA: Visit the Four Twenty Seven booth and meet with our team at this annual gathering of responsible investment industry leaders.
  • September 12-14: Global Climate Action Summit, San Francisco, CA: Join the Four Twenty Seven team at this convening of global climate adaptation experts meant to propel action around the Paris Agreement.

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Copyright © 2018 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for financial institutions, corporations, and government institutions.Our mailing address is:
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2000 Hearst Ave
Ste 304
Berkeley, CA 94709Add us to your address bookWant to change how you receive these emails?
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Report: Advancing TCFD Guidance on Physical Climate Risks and Opportunities

This seminal report aims to inform and support early adoption efforts of climate risk reporting, based on findings from industry-led working groups  from the financial sector and corporations. The report calls on companies to perform forward-looking risk assessments and disclose material exposure to climate hazards. It also invites firms to investigate benefits from investing in resilience and opportunities to provide new products and services in response to market shifts. 

Download the full report

Access conference materials (slides, summary, op-eds)

TCFD recommendations

The Task Force on Climate-related Financial Disclosures (TCFD) seeks to “develop recommendations for voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear, and efficient, and provide decision-useful information to lenders, insurers and investors.” It has crystallised a growing concern among investors and business leaders about the physical impacts that climate change could have on the economy and on financial markets.

The TCFD’s initial report noted a lack of understanding about the impact of climate change on corporate value chains and infrastructure, the channels through which these impacts are transmitted to financial markets, and a lack of transparency in reporting these risks. The final report recommended that financial disclosures should include metrics on the physical risks and opportunities of climate change but did not provide detailed guidance on appropriate metrics.

Without formal or regulatory guidance on metrics and indicators, firms are uncertain about what to include in their disclosures. Investors are therefore likely to receive a heterogeneous mix of financial reports including diverse indicators, metrics, assumptions and timeframes, which will fail to provide comparable data across a portfolio or provide the necessary transparency.

Advancing TCFD guidance on physical climate risk and opportunities

Recognising the challenges in the path towards standardising disclosure of physical risks and opportunities related to climate change, the European Bank for Reconstruction and Development (EBRD) and the Global Centre of Excellence on Climate Adaptation (GCECA) launched an initiative, “Advancing TCFD guidance on physical climate risk and opportunities.” The initiative aims to work with innovative thinkers in the financial and corporate sectors to identify the greatest needs for guidance, research and development. It also seeks to lay the foundations for a common conceptual framework and a standard set of metrics for reporting physical climate risks and opportunities.

The preliminary guidance in this report aims to build on the TCFD recommendations and provide common foundations for the disclosure of climate-related physical risks and opportunities. The report also identifies areas where further research or market action is needed so that detailed, consistent, industry-specific guidelines can be developed on the methodology for quantifying and reporting these risks and opportunities. The project focused on disclosure metrics that are specific to corporations. Improving the quality of firms’ climate disclosures is not just important for them, but also critical to managing climate risks and opportunities in financial markets.

Project process

This EBRD-GCECA initiative involved three industry working groups of a dozen participants, with a mix of financial institutions (asset owners, asset managers, banks, insurance), corporations, credit rating agencies, and a financial data provider. Each working group met several times over the first half of 2018 to discuss and consider research questions related to the topic on hand. The working groups debated how best to help the market make progress on disclosure.

  • Working group 1: Metrics for physical climate risk management and disclosure.
  • Working group 2: Metrics for climate resilience opportunities.
  • Working group 3: Climate intelligence for business strategy and financial planning.

The recommendations we developed aim to serve a dual purpose, seeking to improve corporations’ understanding of their own exposure and risk profile as well as opportunities arising from climate change, and provide clear signals for financial institutions to understand risks and opportunities implicit in individual holdings as well as portfolio-wide exposures.

The working groups built on the TCFD guidance, existing reporting frameworks, and an extensive review of literature to develop a set of recommendations on physical risks and opportunities. As a general rule, this report has prioritised recommendations that are consistent with current industry practices and that leverage metrics and frameworks already used for financial disclosures. It also includes a mix of recommendations that focus on providing better information, as well as recommendations that require more sophisticated analysis. In line with the TCFD recommendations, the recommendations of this EBRD-GCECA initiative are geared to facilitating comparability across companies within a sector, industry or portfolio, and to promoting disclosure of reliable and verifiable information.

Recommendations

Disclosing physical climate risks

A corporation’s vulnerability to climate impacts goes well beyond the physical exposure of its facilities. It includes supply chains, distribution networks, customers and markets. Furthermore, a company’s resilience to climate impacts depends on its risk management and business plans, as well as its governance.

Figure ES-1. How climate change affects corporate value chains

The impacts of climate change on corporate value chains depend on where the company operates and what impacts may affect relevant locations, but they also depend on the company’s activities. Corporations whose production processes consume high volumes of water, for example, may be particularly sensitive to changes in drought and the availability of water. Similarly, corporations with high energy consumption or significant use of outdoor labour will experience greater challenges as average temperatures rise, affecting both energy costs and labour productivity.

Recommendation 1: Assess exposure to all first-order climate impacts

Corporations should consider all first-order impacts when undertaking a climate risk assessment – heat stress, extreme rainfall, drought, cyclones, sea-level rise and wildfires – and additional climate hazards relevant to their industries, such as ocean acidification for fisheries. Exposure to climate hazards should be assessed at the local scale, using the most recent climate data and literature.

Recommendation 2: Assess climate risks over the duration of an asset’s lifetime or over the lifetime of a financial instrument

This report recommends that corporations provide more detailed information on the location of their critical operations, suppliers and market, at least at the country-level, as part of segment reporting to enable investors and creditors to conduct analysis on exposure to risk in their portfolio.

Firms should consider climate impacts over the following timeframes,

  1. Assess changes in asset performance over the past 5-10 years (or longer) that are attributable to extreme weather events or to climate variability, in order to detect possible impacts from climate change.
  2. Assess potential impacts over the expected lifetime of the asset and/or over the lifetime of the investment or loan.

Recommendation 5:  Disclose the impacts of weather variability on value chains

Corporations with moderate or high sensitivity to variability in temperature and precipitation should identify and disclose whether and how changes in temperature and precipitation have materially affected their performance.

Recommendation 6:  Perform forward-looking assessment climate-related risks

Corporations should disclose 1) their assessment of the types of climate-related risks to which they may be exposed in the future due to the geographic exposure of their facilities and 2) the estimated financial impacts from the risks they have identified as being material.

Recommendation 7: Describe risk management processes for the physical impacts of climate change

Corporations should describe their processes for identifying, assessing and managing the physical risks of climate change, as noted by the TCFD. For these physical impacts, aspects of particular interest to financial institutions and banks include risk management processes, insurance coverage, planned facility moves or retrofits, corporate adaptation strategy, and engagement with local authorities to build climate resilience locally.

Disclosing physical climate opportunities

The TCFD also encourages corporations to disclose opportunities related to the impacts of a changing climate. This recommendation is critical to ensuring that businesses and financial institutions continue to thrive in a changing environment. It is also vital for promoting the healthy development of resilience products and services that cater to new market needs for resilience.

The TCFD defines “climate-related opportunity” as “the potential positive impacts related to climate change on an organisation,” and notes that opportunities “will vary depending on the region, market and industry in which an organisation operates.” This report identifies three broad types of opportunities related to physical climate change impacts:

  1. Opportunities related to managing existing climate-related physical risks
  2. Opportunities to respond to new emerging risks
  3. Opportunities to adapt to market shifts and cater to new market needs

Recommendation 8: Identify opportunities based on managing risks and market shifts

Corporations and financial institutions should strive to identify opportunities in managing existing climate-related risks and responding to emerging risks. Corporations should also assess the potential changes in their value chains, explore potential market shifts as customer needs change and target their products and services to cater to growing demand for adaptation solutions.

Recommendation 9: Assess climate opportunities over timeframes relevant to business planning

Corporations should define the appropriate timescales in which to report opportunities in consultation with their investors. Opportunities in response to managing existing risks that affect recent and current accounts and the next year’s accounts should be reported as part of core financials. Opportunities arising from market shifts are unlikely to be reported quantitatively and are more appropriate for disclosure in general reporting on future business expectations.

Recommendation 10: Disclose business opportunities at the segment level; for critical facilities, disclose resilience benefits at the facility level

Opportunities may be disclosed at different levels to best serve firms and investors. Opportunities due to shifting market demand or new products should be reported at the segment level, in line with risk disclosures. Benefits from managing existing or emerging risks may be disclosed at the segment level (for process or supply-chain improvements, for example). For critical facilities, it may be advantageous for firms to disclose significant resilience upgrades or strategic improvements at the facility level, to showcase good stewardship and provide confidence that critical facilities are protected.

Recommendation 11: Disclose benefits from resilience investments using the same metrics as for risk disclosure

Corporations should acknowledge the importance of accurately accounting for the opportunity effects on their core financials arising from actions to manage current risks and respond to emerging risks. These metrics may include avoided negative impacts on revenues, operating expenses, capital expenses, supply chain costs, value-at-risk, or projected annual average losses.

Recommendation 12: Include business opportunities in qualitative disclosures

The disclosure of opportunities involving market shifts and new products and services can be achieved by qualitative disclosures of the lifecycle of new commercial opportunities. The disclosures may include information on the development stage of endeavours, sector, the size of potential markets, and the length of time until commercial viability.

Scenario analysis for physical climate risks and opportunities

With regard to climate intelligence for business strategy and financial planning, the TCFD recommendations strongly advocate the development and use of scenarios when analysing climate risks and opportunities. In this context, scenario analysis is intended as a tool to address challenges and acquire key information. Scenarios provide a narrative, either qualitative or quantitative, which “describes a path of development leading to a particular outcome.”

Recommendation 13: Consider current and desired GHG concentration pathways and related warming projections as a basis for scenario analysis of physical climate risks and opportunities

Corporations should not be concerned with developing new climate scenarios themselves. Instead, as a basis for their scenario analysis of physical risk, they should consider at least two main types of existing climate scenarios, based on the Intergovernmental Panel on Climate Change (IPCC):

  • Current GHG pathway: National climate policies currently in place around the world are projected to reduce baseline emissions, which would result in warming of about 3.4°C above pre-industrial levels.[i]
  • Desired (‘aspirational’) GHG pathway: These are the scenarios compatible with limiting warming to below 1.5°C by 2100 (with a probability of ≥50 per cent), and to below 2°C in the 21st century (with a probability of about 80 per cent).

Recommendation 14: Integrate scenario analysis of physical climate risks and opportunities into existing planning processes to ensure strategic, flexible and resilient businesses and investments

The main reason to undertake scenario analysis is to obtain a comprehensive assessment from firms of their risks and opportunities. Firms should achieve this by exploring different possibilities of what might happen in the future, despite uncertainty and by integrating climate change considerations into their existing business strategies and financial planning.

Recommendation 15: Avoid standardised scenario analysis in order to have a more comprehensive range of outcomes

Firms should look at more than one scenario and multiple climate models in order to have a more comprehensive range of potential outcomes. Although a degree of comparability is desirable, it is also recommended that corporations develop their own scenarios, which should be highly contextual, and based on the views and values of individual corporations.

Recommendation 16: Consider data from a wide variety of sources and scales when developing scenario analysis of physical climate risks

In order to construct plausible physical climate risk and opportunity scenarios, firms should consider inputs from a wide variety of sources and levels of detail. These include scientific data (not only on climate change), macroeconomic data, socio-economic data, data on political economics and policy, corporate data, ‘vision’ and market analysis data, ‘big data’, and so on.

Recommendation 17: Take account of scientific uncertainty inherent in climate data and in scenario analysis of physical risks and opportunities

Corporations and financial institutions are very well accustomed to making decisions within a large spectrum of uncertainty. In the same way, they should consider and manage the uncertainty that surrounds climate data and climate science for scenario analysis. Scientific uncertainty should be taken into account and made explicit when assessing climate-related financial risks and opportunities.

Recommendation 18: Disclose qualitative information that is relevant to the company and its investors

The ultimate objective in disclosing the use of scenarios is to build investor confidence that a company is meaningfully engaged on the topic of climate change, that it is looking at a broad range of outcomes and is responsive and proactive, rather than defensive and reactive. In this context, firms should disclose information on their climate risks and opportunities in the way that is most appropriate to them, as well as to their investors, and to the type of information disclosed or its format (quantitative or qualitative).

Conclusion

Efforts to formalise and standardise the assessment and disclosure of climate-related risks and opportunities are still in their infancy. As science and business continue to progress in their understanding of climate impacts, the recommendations made in this report will evolve over time, informed by emerging practices and the continuous efforts of corporations, financial institutions, credit rating agencies, industry groups, think-tanks, regulators and governments.

Climate disclosures will remain a topic of active research and discussion, and this report aims to support the emergence of market practices that bring transparency to markets and help build resilience in firms and financial institutions.

The Participants in the Initiative

The EBRD hosted the initiative and funded its technical secretariat.  The GCECA provided a secondment to the technical secretariat. The technical secretariat was provided by Four Twenty Seven, the leading provider of intelligence on climate risk to financial markets, and by Acclimatise, an advisory company specialised in adaptation to climate change.

The expert working groups in the initiative included participants from Agence Française de Développement, Allianz, APG Asset Management, AON, the Bank of England, Barclays, Blackrock, Bloomberg, BNP Paribas, Citi, Danone, the Dutch National Bank, DWS Deutsche AM, European Investment Bank, Lightsmith Group, Lloyds, Maersk, Meridiam Infrastructure, Moody’s, S&P Global Ratings, Shell, Siemens, Standard Chartered, USS and Zurich Alternative Asset Management.

Download the full report

Access conference materials (slides, summary, op-eds)

Newsletter: US Munis Increasingly Vulnerable to Floods, Storms and Drought

 

 

Four Twenty Seven’s monthly newsletter highlights recent developments in climate adaptation and resilience. This month, don’t miss our new report on muni climate risk exposure, details on upcoming Four Twenty Seven webinars and an update on risk disclosure resources!

In Focus: U.S Munis Increasingly Vulnerable to Floods, Storms, and Drought

New report from Four Twenty Seven analyzes exposure to climate hazards in U.S. muni market


Our latest report Assessing Exposure to Climate Change in U.S. Munis identifies U.S. cities and counties most exposed to the impacts of climate change. As credit rating agencies start integrating physical climate risk into their municipal ratings, our new climate risk scores help inform investors with forward-looking, comparable data on the climate risks that impact these municipalities. Learn more about Four Twenty Seven climate risk scores for cities and counties and options to finance city resilience in our Webinar: Building City-level Climate Resilience, May 23.

Read the Report

Advancing TCFD Guidance on Physical Climate Risk and Opportunities

EBRD and GCECA Conference on May 31

Advancing TCFD Guidance on Physical Climate Risks and Opportunities is a targeted initiative to lay the foundations for a common conceptual framework and a standard set of metrics for physical climate risks and opportunities disclosures. Working with thought-leaders in the financial and corporate sectors, the European Bank for Reconstruction and Development (EBRD) and the Global Climate Center for Excellence on Climate Adaptation (GCECA), with the support from technical experts Four Twenty Seven and Acclimatise, developed a set of technical recommendations on metrics for risks and opportunities disclosures.

The final report will be released during a conference held at the EBRD’s headquarters in London on May 31st, 2018. Four Twenty Seven founder and CEO Emilie Mazzacurati will facilitate the panel discussion on the project’s key findings with Murray Birt from DWS, Simon Connell from Standard & Chartered, Craig Davies from EBRD, and Greg Lowe from AON.

TCFD Knowledge Hub

The recently launched TCFD Knowledge Hub is a curated platform of insights and resources on climate risk reporting. Users can search by keyword or sort for resources by the four TCFD themes. There is a broad set of research, tools and frameworks for implementing the TCFD recommendations, including our Lender’s Guide for Considering Climate Risk in Infrastructure Investments, our Technical Brief on Using Climate Data and a Climate Scenario Guide for Investors.

Helping Banks Build Climate Resilience

Acknowledging that financial impacts, regulatory pressures and industry action all point toward the need for climate-related risk disclosure and more comprehensive data, IDB Invest asserts that what may have formerly been ancillary ESG factors must now be central to business decisions. They report on four key messages from their annual Sustainability Week, in their article “Four insights for banks willing to seize sustainable finance opportunities.” 

The key takeaways are that risk analysis must include more than solely financial data, technology is a crucial ally in translating data into actionable insights, new ways to understand risk bring new market opportunities, and prioritization of ESG and climate analysis demand shifting human capital needs. Four Twenty Seven provided one of the featured new technologies, combining climate data with data on bank’s credit portfolios to assess climate-related risks and new market opportunities for banks in Ecuador. Read more.

Tomorrow! Four Twenty Seven Webinar:
Building City-level Climate Resilience

Wed, May 23, 2018 11:00AM – 12PM PT 

Four Twenty Seven is hosting a webinar to provide insight into concrete actions that cities can take to more effectively attract investor financing for climate adaptation and resilience, and share findings from our comprehensive analysis of city-level physical climate risks in the U.S. The webinar will be recorded and made available in the Insights section of our website. Register here.

Save the date – Four Twenty Seven Webinar:
Metrics for Physical Climate Risks Disclosure

Four Twenty Seven will host a webinar on TCFD reporting, emerging metrics and best practice for physical climate risks and opportunities disclosures. We will provide insights and lessons from the front line on:

  • How to use climate data to assess risks
  • Do’s and don’ts of scenario analysis
  • How to structure your TCFD/Art. 173 disclosures
  • Strategies for corporate engagement

Tues. June 12 at 8am PT; 11am ET; 4pm CET:

Register Here

Tues. Wed. 13 June at 9am HKT/SGT; 10am JST; 11am AEST (June 12 at 6pm PT):

Register Here

The Third California Adaptation Forum

The biennial California Adaptation Forum will take place in Sacramento from August 28-29. This multidisciplinary gathering of adaptation professionals and local stakeholders will include plenaries, workshops and sessions discussing trends in climate resilience, forward-looking adaptation policy, strategies for adaptation finance and new tools.

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:

  • May 23: Four Twenty Seven Webinar Building City-level Climate Resilience, 11am-12pm PT: This webinar will discuss city level physical climate risks and opportunities to access climate adaptation and resilience financing. Register here.
  • May 23: Capital Region Climate Readiness Collaborative Quarterly Meeting, Sacramento, CA: Advisory Services Manager, Kendall Starkman, will join this quarterly meeting focused on the drivers of poor air quality in the Capital Region.
  • May 31: Advancing TCFD Guidance on Physical Climate Risk and Opportunities, London, UK: Four Twenty Seven is a strategic partner for this event hosted by EBRD and GCECA to discuss emerging guidance on metrics for physical climate risk disclosures and scenario analysis and Emilie Mazzacurati will moderate a panel presenting findings on physical risk metrics.
  • June 5-6: Responsible Investors Europe, London, UK: Hear Emilie Mazzacurati speak on a panel on corporate engagement and also meet with Chief Development Officer, Frank Freitas, and Senior Risk Analyst, Léonie Chatain, to discuss ratings and engagement on physical climate risk in equities.
  • June 7-9: 7th Sustainable Finance Forum, Waddesdon, UK: COO Colin Shaw will speak on a panel called “Supply chain transparency and network analysis” at this forum hosted by the Sustainable Finance Programme at the University of Oxford.
  • June 12: Four Twenty Seven Webinar: Metrics for Physical Climate Risks Disclosure, 8am PT and 6pm PT: This webinar will cover TCFD reporting, emerging metrics and best practice for physical climate risks and opportunities disclosures.
  • June 12-14: VERGE Hawaii, Honolulu, HI: Kendall Starkman, will speak about Four Twenty Seven’s heat assessment work at this convening of corporate, government and NGO stakeholders committed to building resilient cities and economies.
  • June 18-21: Adaptation Futures 2018, Cape Town, South Africa: Director of Advisory Services, Yoon Kim, will facilitate a session exploring integrating climate risks into infrastructure investment decisions.
  • June 26: GRESB’s Sustainable Real Assets Conference, Sydney, Australia: Meet with  Frank Freitas at GRESB’s annual conference on resilient infrastructure investments.
  • August 28-29: 3rd California Adaptation Forum, Sacramento, CA: Save the date for this opportunity to join over 600 climate leaders in workshops, sessions and networking around adaptation action in California.
  • September 12-14: PRI in Person, San Francisco, CA: Join the Four Twenty Seven team at this annual convening of responsible investment industry leaders.
  • September 12-14: Global Climate Action Summit, San Francisco, CA: Join the Four Twenty Seven team at this convening of global climate adaptation experts meant to propel action around the Paris Agreement.

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EBRD to Host Physical Climate Risk Conference on 31 May

The European Bank for Reconstruction and Development (EBRD) and the Global Centre of Excellence on Climate Adaptation (GCECA) have announced details of their conference, “Advancing TCFD guidance on physical climate risk & opportunities.”  A culmination of their initiative focused on building climate resilience in the financial sector, the conference will share findings on physical risk and resilience metrics from three expert working groups. Read the press release below, originally published on EBRD’s website:

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Findings of industry working groups will be published ahead of the event “Advancing TCFD guidance on physical climate risk and opportunities”

  • Conference on 31 May to discuss physical climate risk and opportunity disclosure in climate-related financial disclosure reporting. Industry-led working groups to publish findings.
  • Event will advance thinking on how to develop physical climate risk metrics in line with Task Force on Climate-related Financial Disclosures (TCFD) guidance.
  • Conference co-organised by European Bank for Reconstruction and Development (EBRD) and the Global Centre of Excellence on Climate Adaptation (GCECA).

The EBRD and GCECA are hosting an event “Advancing TCFD guidance on physical climate risk and opportunities”, which will be held on 31 May 2018 at the EBRD’s headquarters in London.

Findings about physical climate risk and opportunity disclosure by industry-led working groups, which have been meeting at the EBRD’s headquarters since 2017, will be released at the conference.

This event will build on the recommendations of the TCFD, headed by Mark Carney and Michael Bloomberg. These recommendations highlight a growing concern over the effects of climate change on the economy and financial markets, and the need for investors to be able to assess climate-related risks.

At the conference, senior representatives from the financial, business and regulatory communities will discuss the development of metrics for disclosing physical climate risk and opportunities, and the integration of these disclosures into decision-making.

The confirmed high-level speakers at the conference will include:

  • Suma Chakrabarti, President, the EBRD
  • Roald Lapperre, Netherlands Deputy Minister for Infrastructure & Water
  • Frank Elderson, Executive Director, DNB (Netherlands Central Bank).

The panelists will represent a rich variety of market leaders such as Aon, Citi, Maersk, Moody’s and Standard Chartered, as well as the Bank of England, the French Treasury and the European Commission.

Findings from the expert working groups will also be published. The working groups include representatives from Allianz, APG, Aon, Bank of England, Barclays, BlackRock, Bloomberg, BNP Paribas, Citi, DNB, DWS, Lightsmith Group, Lloyds, Meridiam Infrastructure, Moody’s, OECD, S&P Global, Shell, Siemens, Standard Chartered, USS and Zurich Asset Management. An expert team led by Acclimatise and Four Twenty Seven is providing the Secretariat function to the working groups.

TCFD recommendations, released for the G20 summit in June 2017, call for the inclusion of metrics on physical climate risk and opportunities into financial disclosures by corporations and financial institutions. This is echoed in the recommendations of the European Union’s High Level Expert Group on sustainable finance, released in January 2018, and the Action Plan from the European Commission released in March 2018.

Last month the EBRD become a TCFD supporter, the first multilateral development bank to do so. The EBRD’s 2017 Sustainability Report, to be released later this month, will provide an initial outline of how TCFD recommendations relate to the Bank’s operations. The conference on 31 May will be an important milestone in the Bank’s support for the TCFD process.

Since 2006 the EBRD has invested over €22 billion in projects under its Green Economy Transition approach. Energy efficiency and environmental sustainability have been a priority for the Bank since its creation in 1991.

—————————————-

Contact CEO Emilie Mazzacurati for more information and read about Four Twenty Seven’s solutions to help financial institutions, businesses and governments improve their climate resilience.

Newsletter: Fintech Meets Climate Data

 

 

Four Twenty Seven’s monthly newsletter highlights recent developments in climate adaptation and resilience. This month, don’t miss a discussion with our new Chief Development Officer, our report on using climate data and cool new innovations in climate science!

In Focus: Fintech Meets Climate Data

Meet Chief Development Officer, Frank Freitas

We chatted with our new Chief Development Officer, Frank Freitas, about his motivations to join Four Twenty Seven after almost 30 years in finance and fintech, and his vision for new products and markets in climate analytics. Having spent his career developing award-winning solutions for global institutional investors, Frank is a seasoned veteran of product management and strategic planning.

He founded and sold Pluribus Labs, a research and analytics firm focused on the translation of unstructured data into investable signals. Before that, he served as Chief Operating Officer and Head of Product Strategy at Instinet, a leading technology-levered agency broker. He started his career in Product Management, designing and leading the delivery of quantitative risk solutions at Barra (now MSCI). “The acceleration of climate’s influence on corporate performance is upon us, and investors are rapidly awakening to the risks that climate change brings to financial markets,” Frank says. “Four Twenty Seven’s sophisticated climate data analytics are at the forefront of identifying most exposed corporations and assets globally, and we will continue to build on our expertise to provide best-in-class analytics of climate risk for our clients globally.”

 

Inside Market Data covers Frank’s transition to Four Twenty Seven and highlights the company’s goals for this year, including a focus on incorporating new types of data to add nuance to our risk analyses.

Read the Interview

Using Climate Data for Investment Decisions

Using Climate Data: A Four Twenty Seven Report


In this new Four Twenty Seven report, we demystify climate data with a clear breakdown of what it is, where it comes from and the nuances to consider when choosing which data products to use. Understanding the risks posed by climate change for facilities or infrastructure assets starts with conducting a risk assessment, which requires an understanding of the physical impacts of climate change. However, for unfamiliar users, climate data is hard to integrate into enterprise risk management, financial risk modelling processes and risk analysis.This climate data primer serves as an introduction for financial, corporate and government stakeholders striving to understand their exposure to physical climate change.

Read the Report

Innovations in Climate Science

Solar-Powered “Saildrones”

Two solar-powered sail boats are returning to California this month after debuting their ocean monitoring capacity on a trip through the Pacific. These drones are part of a collaboration between NOAA and Alameda-based startup, Saildrone, and they may be able to replace the costly bouy system that scientists currently use to obtain ocean circulation data. The boats collect temperature, wind and solar radiation data, while also measuring ocean circulation currents and gas exchange. These data are more precise than data collected by satellites or buoys and have the potential to provide powerful insights into studies of climate’s impact on ocean circulation.

Autonomous Ice Robots

A squad of “Seaglider” robots have been programmed with navigational algorithms for their year-long journey under Pine Island Glacier in Western Antarctica. Some may sink or get lost in ice caves, but the rest will collect data on salinity, temperature and oxygen content to inform scientific understanding of the rate of ice loss with climate change and implications for sea-level rise, floating to the surface to transmit their data.

Science Funding in the Federal Budget

The omnibus bill passed by Congress and signed by the President last month, did not include the funding cuts to critical climate research that many feared. NOAA received $5.9 billion, which is $234 million above its FY 2017 amount. NOAA has many resources for adaptation professionals and others striving to better understand how the natural world affects their lives and businesses, ranging from its satellite system and weather data to its integrated science programs and US Climate Resilience toolkit. This alphabetized list highlights over 20 such resources.

CRA Webinar: What You Need to Know About TCFD and 2018 Reporting Cycles

Thu, May 10, 2018 1:00 PM – 2:00 PM EDT 
Climate change has become a growing concern for corporations, investors, and financial regulators alike. Corporations need to understand how the impacts of a changing climate may affect company operations or their broader value chain and assess how such impacts should be included in corporate disclosures and sustainability reports.

Emilie Mazzacurati will present an overview of how corporations can identify material risks, provide an update on rising regulatory requirements and changes to voluntary reporting frameworks to align with TCFD recommendations, and highlight opportunities to build resilience and adapt to new market conditions.

This programming is provided exclusively for Corporate Responsibility Association members and invited guests. To RSVP email Jen Boynton at jboynton@3blmedia.com.

Inside the Office at Four Twenty Seven

Four Twenty Seven Website Features New Insights Page

 

Our blog page has been revamped with featured articles at the top and an interactive filter feature that allows users to sort by author, client, media type and theme or to search for keywords.

Our most read publications this month include:

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:

  • April 30 – May 1: 2018 Local Solutions Eastern Climate Preparedness Conference, Manchester, NH: Advisory Services Manager, Katy Maher, will discuss strategies to build local resilience with this convening of government stakeholders.
  • May 1: TCFD US Scenario Analysis Conference, New York, NY: Founder and CEO Emilie Mazzacurati and Chief Development Officer, Frank Freitas, will join this discussion about using scenario analysis in climate-related risk disclosure and resources to help corporations do so.
  • May 10: What You Need to Know About Climate Related Financial Disclosures (TCFD), CRA Webinar: Emilie Mazzacurati is the presenter on this webinar about corporate climate risk disclosure. CRA members only.
  • May 17: GRESB’s Sustainable Real Assets Conference, Washington, DC: Emilie Mazzacurati will keynote GRESB’s annual conference on infrastructure resilience and Chief Development Officer, Frank Freitas will join the convening.
  • May 23: Four Twenty Seven Webinar, 11am-12pm PST: Save the date for a webinar on city level physical climate risks and opportunities to access climate adaptation and resilience financing. Registration details forthcoming.
  • May 31: Advancing TCFD Guidance on Physical Climate Risk and Opportunities, London, UK: Four Twenty Seven is a strategic partner for this event hosted by EBRD and GCECA to discuss emerging guidance on metrics for physical climate risk disclosures and scenario analysis and Emilie Mazzacurati will moderate a panel presenting findings on physical risk metrics.
  • June 5-6: Responsible Investors Europe, London, UK: Hear Emilie Mazzacurati speak on a panel on corporate engagement and also meet with Frank Freitas and Senior Risk Analyst, Léonie Chatain, to discuss ratings and engagement on physical climate risk in equities.
  • June 12-14: VERGE Hawaii, Honolulu, HI: Advisory Services Manager, Kendall Starkman, will join this convening of corporate, government and NGO stakeholders committed to building resilient cities and economies.
  • June 18-21: Adaptation Futures 2018, Cape Town, South Africa: Director of Advisory Services, Yoon Kim, will facilitate a session exploring integrating climate risks into infrastructure investment decisions.
  • June 26: GRESB’s Sustainable Real Assets Conference, Sydney, Australia: Meet with  Frank Freitas at GRESB’s annual conference on resilient infrastructure investments.
  • August 28-29: 3rd California Adaptation Forum, Sacramento, CA: Save the date for this opportunity to join over 600 climate leaders in workshops, sessions and networking around adaptation action in California.
  • September 12-14PRI in Person, San Francisco, CA: Join the Four Twenty Seven team at this annual convening of responsible investment industry leaders.
  • September 12-14: Global Climate Action Summit, San Francisco, CA: Join the Four Twenty Seven team at this convening of global climate adaptation experts meant to propel action around the Paris Agreement.

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Copyright © 2017 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for Fortune 500 companies, investors, and government institutions.Our mailing address is:
Four Twenty Seven
2000 Hearst Ave
Ste 304
Berkeley, CA 94709Add us to your address bookWant to change how you receive these emails?
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