Four Twenty Seven's monthly newsletter highlights recent developments in climate risk and resilience. This month we feature an analysis on US climate risk disclosure, highlight developments at Moody's ESG Solutions and share recordings of recent climate risk events.
In Focus: Are U.S. Corporates Ready for Climate Risk Disclosures?
Analysis: The State of Climate Risk Disclosure in the US
The results from the U.S. presidential elections signal an impending radical shift in U.S. climate policy. President-elect Biden’s transition team identified climate change as one of four top priorities, promptly followed with the appointment of John Kerry as special envoy for climate. As part of his transition plan, Biden announced ten executive actions related to climate change that he intends to take on his first day in office. One of these measures is the requirement for public companies to disclose climate risks and greenhouse gas emissions in their operations and supply chains. This disclosure requirement aligns with a global trend, following similar announcements in the UK and in New Zealand.
We find that the largest US corporations tend to be slightly behind in terms of disclosing key indicators compared to their international peers. However, among all assessed regions, not even a quarter of the firms disclose the indicators reviewed in this assessment. This demonstrates the significant room for progress and shows that increasing firms’ capacity to assess and disclose climate risks in an informative manner remains a global challenge, aligning with findings in the TCFD's 2020 Status report released last month.
Emilie Mazzacurati Appointed Global Head of Moody's Climate Solutions
Moody's announced last week that Four Twenty Seven Founder and CEO, Emilie Mazzacurati will oversee the climate solutions suite within Moody’s ESG Solutions Group, a new business unit formed earlier this year to serve the growing global demand for ESG and climate analytics. As part of its climate solutions suite, Moody’s ESG Solutions provides risk measurement and evaluation tools to understand, quantify and manage physical and transition risks, informing due diligence and risk disclosure in line with the recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD).
Emilie also remains CEO of Four Twenty Seven, which is now fully owned by Moody's.
Moody's Analytics Wins Climate Risk Award at Chartis RiskTech100®
Moody’s Analytics' offering helps customers first identify whether they have exposure to climate risk in their portfolios and then quantify the credit risk implication of climate risk factors. These solutions incorporate climate risk analytics from Moody's ESG Solutions powered by Four Twenty Seven and V.E.
Moody’s: Climate Risk and Resilience at US Airports
Climate change will expose the airport sector to increased physical climate risks within the next two decades. In its report, US airports face growing climate risks, but business model and resiliency investments mitigate impact, Moody’s Investors Service leverages Four Twenty Seven’s physical climate risk data to explore potential damages from increased exposure of US airports to floods, heat stress, hurricanes, sea level rise and wildfires. The report finds significant exposure to floods and sea level rise, which can damage crucial structures, leading to significant costs or rendering the assets unusable. Hazards such as heat stress and wildfires present risks with implications for take-off and landing. Airports often undertake long-term capital intensive projects and integrating resilience measures into planning these investments will be critical. Register for free to read the report.
Climate Change and Financial Stability
Financial Stability Board Releases Report on Climate Risk
Yesterday the Financial Stability Board (FSB) released its report, The Implications of Climate Change for Financial Stability,outlining the ways in which physical and transition risks may affect the financial system. It highlights how physical risks can decrease asset prices, increasing uncertainty and how a disorderly transition could also destabilize the financial system, while an orderly transition is expected to have a less significant impact on asset prices. Likewise, the report emphasizes that climate risk could amplify credit, liquidity and counterparty risks and interact with other macroeconomic risks, with significant implications for financial stability.
Hong Kong SFC Consultation on Climate Risk Management for Funds
The Hong Kong Securities and Futures Commission (SFC) opened a public consultation on its proposed guidance for fund managers to integrate climate risk into their investment decision-making and to release climate risk disclosures. The guidance applies to all fund managers, while those with at least HK$4 billion under management would have to comply with additional requirements, such as disclosing more quantitative metrics. The recommendations reference the TCFD Recommendations to encourage consistency in risk disclosure. Respond by January 15, 2021.
Climate Analytics for Financial Risk Assessment: Panel Recordings
Moody's Analytics Synergy Americas Conference
Founder & CEO, Emilie Mazzacurati, and Moody’s Analytics Managing Director, Global Head of Quantitative Research, Jing Zhang, discuss the impacts of climate risk on credit risk in the panel, “How Floods, Wildfires, and Heat Stress Can Play a Role in Financial Reporting and CECL.” Register for free to access the recording.
Risk Australia Virtual 2020: Taming the Green Swan
Emilie Mazzacurati presents a keynote presentation titled “Taming the Green Swan: Incorporating Climate Risk into Risk Management.” She covers changes in the regulatory environment and how investors can use science to inform risk management and investment decisions. Emilie discusses progress made on climate risk disclosure to date, explains the latest thinking on conducting scenario analysis for climate risks and provides case studies of the economic impacts of climate risk in Asia and Australia.
Webinar: How Real Estate Can Adapt and Prepare for Climate Risks
Join us on Thursday Dec. 10 at 9am PST / 12pm ET / 5pm GMT
We’re already seeing the impacts of climate change on our real assets—so how do we better prepare for future climate events? Four Twenty Seven will join CBRE, Measurabl and Nova Group GBC to discuss the full process of integrating physical climate risk management into real estate investment. The webinar will include an explanation of the climate data driving the analytics, how to understand physical climate risks alongside broader ESG data and how to leverage this information to mitigate risk by building resilience.
Zachary Brown, Director of Energy and Sustainability at CBRE
Yoon Kim, Managing Director, Global Client Services at Four Twenty Seven
Cameron Ravanbach, Account Manager at Measurabl
Rob Jackson, Vice President, Equity Markets Group at Nova Group, GBC