Category: Adaptation Finance

Newsletter: Climate Commitments

Posted on by Natalie Ambrosio

Four Twenty Seven, an affiliate of Moody's, sends a monthly newsletter highlighting recent developments in climate risk and resilience. 
In Focus: Climate Commitments

Climate Summit Commitments
The leaders of 40 nations and key private sector participants who joined Biden's Climate Summit last week, made new emissions reductions targets or recommitted to existing promises. The US, Canada, Brazil, Japan and other countries made ambitious new commitments. While change comes when commitments are followed by tangible action, these have the potential to accelerate the transition to a low-carbon economy, with implications for businesses and investors, including significant opportunities.


Financial Sector Action on Climate Change

Meanwhile, financial regulators around the world continue to issue guidance and expectations around climate risk. Last week the EU published the climate adaptation and mitigation portion of its Sustainable Finance Taxonomy and investors will be expected to disclose in line with the taxonomy starting next year. The EU also published a draft legislative proposal for a Corporate Sustainability Reporting Directive, which would replace the Non-Financial Reporting Directive and greatly expand the number of companies mandated to report on a range of environmental factors, including climate. New Zealand is considering passing a bill that would mandate climate risk disclosure for banks, insurers and investors by 2023. The Australian Prudential Regulation Authority issued a public consultation on its draft guidance for financial institutions to manage the risks of climate change.

Mark Carney, UN Special Envoy on Climate Action and Finance, announced the Glasgow Financial Alliance for Net Zero (GFANZ) last week, bringing together several industry-led net zero initiatives focused on supporting the transition to net zero emissions by 2050. Participating groups include the new Net Zero Banking Alliance, the Net Zero Asset Managers Initiative and the Net Zero Asset Owner Alliance. The Net Zero Insurance Alliance is expected to launch soon and will also join GFANZ. There are over 160 participating firms, which commit to science-based targets, addressing all emission scopes, issuing transparent disclosures and setting 2030 interim targets. 
 

The American Jobs Plan

Biden's $2 trillion infrastructure proposal places climate change and environmental justice in the center. The plan's wide-ranging elements include funding to grow the electric vehicle market in the US and to improve the nation's aging water and electricity infrastructure. There are provisions for affordable housing and a distinct focus on jobs training to support a just transition to a low-carbon economy. The plan aims to remove fossil fuel subsidies and mandate that the companies help pay to cleanup toxic sites. As crumbling infrastructure and polluting facilities are often in low-income communities and communities of color, these items would contribute to fostering environmental justice. Likewise, the plan allocates funding specifically to communities of color and frontline communities, and includes provisions to increase wages for in-home care workers who are often women of color, and for broadband internet development which is particularly needed in Black and Latino communities.

Moody's Analytics assessed the macroeconomic implications of the plan, saying it "provides a meaningful boost to the nation's long-term economic growth."
Banks and Climate Stress Tests

Moody's Webinar - Climate Stress Tests: What You Need to Know
As numbers of regulators begin to roll out climate stress tests and climate risks continue to grow, understanding how to undertake informative climate stress tests is becoming increasingly essential. Join us for a live, interactive panel discussion on climate scenarios and stress testing on Thursday May 6, at  3pm BST / 10am ET / 7am PT.

Key Discussion Points:
  • How are central banks incorporating climate stress testing into financial supervisory requirements?
  • What are the different types of scenarios needed for assessing climate risk?
  • What are the key building blocks for climate stress testing? How do they fit together?
Speakers:
  • Carmelo Salleo, Head of Division, Stress Test Modelling Division, European Central Bank
  • Emilie Mazzacurati, Global Head of Moody's Climate Solutions, Moody's ESG Solutions
  • Burcu Guner, Senior Director-Risk & Finance SME, Moody's Analytics
  • Rahul Ghosh, Managing Director-Outreach & Research, Moody's ESG Solutions (moderator)
Register Here

Moody's Investors Service: Climate Risk for Banks

Moody's Investors Service report, Climate change to force further business model transformation for banks, outlines ways in which carbon transition and physical climate risk will influence banks' risk assessment requirements and present new costs and credits risks for banks. The analysis covers the forthcoming stress testing requirements, discussing their credit implications. 
BIS Resources on Climate Risk for Banks
The Bank for International Settlements released two reports on climate risk, focusing on transmission channels of climate risk to banks and methodologies to measure climate-related financial risks. The report on transmission channels finds that climate risks affects banks through the traditional financial risk categories including market risk, liquidity risk and
operational risk. It underscores the ways in which the impacts of climate risk depend on geography, sector and the economic and financial system and emphasizes the need for more research on how climate risk translates into different types of financial risk. 

The report on measurement tools underscore the needs for granular, forward-looking data on climate-related financial risks, which includes new climate data tools in addition to improved information on counterparty locations. It discusses the early emphasis on risk assessment for near-term transition risk and the need to expand assessments and scenario analysis to include a range of physical climate hazards. The report highlights the increased research focus on translating climate risks into traditional financial risk metrics, noting that much progress to date has focused on credit risk, with market and liquidity risk at even earlier stages. 
Real Assets Exposed to Physical Climate Risk

Moody's Investors Service Adds Climate Data to RMBS Presale Reports
Moody's Investors Service presale and new issues reports for residential mortgage backed securitizations rated out of the US or Europe, now include Four Twenty Seven's physical climate risk scores as an appendix. "While these climate risk scores are not specifically incorporated in our ratings analysis, we believe these additional disclosures will be of great value to market participants," says London-based Moody's Investors Service Senior Vice President Anthony Parry in the press release.

Moody's Investors Service: Climate Hazards Threaten US Seaports

This Moody's Investors Service analysis, Intensifying climate events risk disruptions to seaport operations across the US, leverages Four Twenty Seven's physical climate risk data to assess the exposure of ports to climate hazards including floods, heat stress, hurricanes, sea level rise, water stress and wildfires. It highlights that landlord ports typically have more fixed revenues than port operators, which can reduce the short-term impacts of extreme events. In addition to significant exposure to storms and flooding, West Coast ports often face risks from wildfires, with implications for supply chains and transportation infrastructure. Similarly, while less damaging for the ports themselves, heat stress and water stress can affect agriculture exports, in turn affecting a port's business. Register for free to read the analysis.
Increasing Global Wildfire Potential 

Four Twenty Seven's Peer-Reviewed Research on Wildfire Potential Under Climate Change
2020 was a devastating wildfire year and this year is gearing up to just as hot and dry in many regions. This is a global trend exacerbated by climate change. Four Twenty Seven's article, A global assessment of wildfire potential under climate change utilizing Keetch-Byram drought index and land cover classifications, published in Environmental Research Communications, explores the effects of climate change on global wildfire potential. It shows that by 2040, regions like the American West, Australia and the Amazon will be drier and hotter for much longer than historical averages, experiencing more than 60 additional days of high wildfire potential per year.  

This article provides the detailed methodology behind Four Twenty Seven's publication, Climate Change and Wildfires: Projecting Future Wildfire Potential, which discusses key findings including regional trends and hotspots.

Current Drought & Wildfire Potential in the Western US

Drought contributes to conditions that are conducive to wildfires and also presents significant health and economic risks. In California, farmers are questioning the viability of their businesses and many families are facing depleted and contaminated wells. The snowpack in the Sierra Nevada is at 28% of normal, dry conditions are expected to persist through June and the summer is expected to have higher than average temperatures. This all suggests that a dangerous fire season is on the horizon. As the state continues to face these costly climate-driven events, California launched a Climate-Related Risk Disclosure Advisory Group earlier this month, to support the development of a climate risk disclosure standard.

Other Western states are also enduring damaging droughts, with North and South Dakota entirely in drought conditions and parts of Texas, Iowa and Colorado all experiencing drought impacts. Last week the White House launched an Interagency Working Group to focus on addressing the drought conditions in the West and their dire implications for farmers, Tribes and other communities.
Upcoming Events

Join the team online at these upcoming events and check our Events page for updates:

  • May 6 – Moody's Webinar on Climate Stress Tests: What You Need to Know: Founder & CEO and Global Head of Moody's Climate Solutions, Emilie Mazzacurati, will present on the drivers behind emerging stress testing requirements. See more details above.
  • May 25 – Moody's Investors Service Emerging Markets Summit 2021: Associate Director, Research, John Naviaux, will present on sovereign physical climate risk.
  • Jun 2-4 – Green Swan 2021: Emilie Mazzacurati will present during the session on climate-related risks data and accounting. Invitation only. 
  • Jun 22 – Ideas + Action 2021: Sustainability and Resilience: Emilie Mazzacurati will present on the economic implications of climate risk. 
  • Jul 23 – Environmental Business Council of New England Annual Climate Summit: Director, Global Client Services, Lindsay Ross, will present on physical climate risks.
  • Sept 22 – 2021 CARE Sustainability Conference: Director, Communications, Natalie Ambrosio Preudhomme will present on financial climate risk analytics during the panel "Implementation Issues."
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Copyright © 2021 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for investors, corporations and governments. Fill in the form below to join our mailing list. As data controller, we collect your email address with your consent in order to send you our newsletter. Four Twenty Seven will never share your mailing information with anyone and you may unsubscribe at any moment. Please read our Terms and Conditions.
 

Our mailing address is:
Four Twenty Seven
2000 Hearst Ave
Ste 304
Berkeley, CA 94709








Podcast: Banks are Getting Interested in Big Data to Figure out Their Climate Risk

Posted on by Emilie Mazzacurati

How are banks, investors and financial regulators addressing climate risk?  Founder & CEO, Emilie Mazzacurati, joins Molly Wood in the Marketplace Tech podcast series, “How We Survive,” to discuss climate risk assessment and risk mitigation. The conversation covers regulatory developments, increased transparency on climate risks, resilience investment and the impact of COVID-19 on climate change conversations.

Newsletter: How does climate risk threaten financial stability?

Posted on by Natalie Ambrosio

Four Twenty Seven's monthly newsletter highlights recent developments on climate risk and resilience. This month we feature analyses on climate change from the Federal Reserve, highlight insights on climate risk across sectors and announce the opening of Four Twenty Seven's Tokyo Office.
In Focus: Regulators Speak Up on the Financial Impacts of Climate Change

Federal Reserve Publishes Research on Climate Resilience
Last week, the Federal Reserve Bank of San Francisco released a set of articles on the impacts of climate change on communities and the economic and financial implications of these risks. The articles cover a range of topics including the impacts of sea level rise on real estate assets and lending, the need for innovation in insurance markets and the implications of climate-induced migration for the private sector. Four Twenty Seven contributed a piece on the connection between community resilience and asset-level resilience, describing a methodology for investors to understand and promote community adaptive capacity.

"The collection of 18 papers by outside experts amounts to one of the most specific and dire accountings of the dangers posed to businesses and communities in the United States — a threat so significant that the nation’s central bank seems increasingly compelled to address it." - The New York Times' Christopher Flavelle wrote.
Read the Publication

International Monetary Fund to Assess Financial Risk of Climate Change

“'We are doing work on the pricing of climate risks and to what extent it is priced into stock and bond markets,' Tobias Adrian, financial counselor and director of the IMF’s monetary and capital markets department, told Reuters." Adrian cited the costly impact of Hurricane Dorian in the Bahamas and growing investor concern around the mispricing of climate risk in mortgage-backed securities as examples of the widespread financial impacts of climate change. This was one of many climate change conversations at the IMF's annual meeting last week.
Resources for Resilience Across Sectors  

Optimizing Community Infrastructure
Optimizing Community Infrastructure: Resilience in the Face of Shocks and Stresses examines the multiple dimensions of infrastructure that underpin resilient societies. The book discusses transportation infrastructure as well as utilities, land use and buildings and includes case studies and guidance on financing resilient infrastructure. Four Twenty Seven co-wrote a chapter with Climate Finance Advisors that examines how physical climate risks can impact infrastructure assets throughout their life cycle and ways in which investors and lending institutions can identify and manage physical climate risks in infrastructure assets. 

Resilient Cities - Transforming Over Time
This set of editorials discusses innovative opportunities to adapt communities and infrastructure to climate risks. The pieces cover the economic and social elements of climate risk and resilience, and Four Twenty Seven contributed an article, Addressing Shared Climate Risks to Build Community-Corporate Resilience. 

Podcast: Climate Change is Here. Are We Ready?
Founder & CEO, Emilie Mazzacurati, joins a new podcast, The Last Environmentalist, to discuss the evolving views of climate risk in the financial sector. Emilie describes near-term impacts of climate change on real estate markets, adaptation actions taken by corporations and the linkages between climate risk and resilience across private and public sectors.
 Climate Change Exacerbated the Impacts of Typhoon Hagibis
Within 24 hours Typhoon Hagibis sent over three feet of rain into areas surrounding Tokyo, as fierce winds exacerbated flooding from storm surge. At least 74 people died, 34,000 homes lost power and 110,000 lost running water. Meanwhile, disrupted ground transportation and damaged facilities had rippling effects. Subaru stopped operations at three facilities in the area due to disruptions at their suppliers, other automobile manufacturers halted production at damaged facilities and logistics firms incurred the costs of doubling their distance with alternate routes. 

While many areas of Japan have robust building standards to account for already frequent typhoons, the frequency and distribution of storms in Japan is shifting. Three of Japan's most costly typhoons since 1950 have happened in the past two years, with Typhoon Hagibis expected to be the fourth. The storm was unique partly because it is rare for storms to hit Tokyo with so much force. Research shows that tropical cyclones in the Northwest Pacific Ocean Basin are reaching maximum intensities further north than they used to, partly influenced by climate change, which means areas less accustomed to these extreme storms may experience them more often. 
Inside the Office at Four Twenty Seven

Four Twenty Seven Opens Toyko Office and Announces Country Director

Yesterday, Four Twenty Seven announced the opening of its Tokyo Office. This office opens as investors and businesses in Japan and across the Asia-Pacific region face increasing market pressure to assess and disclose the risks physical climate hazards pose to their investments.
Four Twenty Seven welcomes Toshi Matsumae as Director of Japan. Toshi leverages his 30 years of experience in sales and development to lead Four Twenty Seven’s effort to provide climate risk screening to investors, asset managers, banks and corporations striving to understand their risk to physical climate hazards throughout Japan.
“We’ve seen growing demand from Japanese markets over the past year for transparency around exposure to physical climate risks in corporate assets, investment portfolios and in credit portfolios,” said Emilie Mazzacurati, Four Twenty Seven’s Founder and CEO. “Four Twenty Seven’s on-the-ground presence in Japan will allow us to bring asset-level risk data to support this demand and inform global resilience-building.”

Join the Team! Four Twenty Seven is Hiring

There are several opportunities to join Four Twenty Seven's dynamic team in offices across the U.S. and Europe. See the open positions below and visit our Careers page for more information.
  • Regional Sales Directors (North America and United Kingdom), with extensive experience selling and supporting data products and services for large commercial, financial and government institutions
  • Controller experienced in financial reporting, planning and analysis
  • Director of Financial Data Systems with significant experience in the development and management of financial data processing, storage and retrieval
Upcoming Events

Join the Four Twenty Seven team at these events:

  • Oct 25 – Yale Alumni Real Estate Annual Conference, New Haven, CT: Senior Analyst, Lindsay Ross, will speak about resilience planning in real estate.
  • Nov 5 – Moody's ESG Conference, London, UK: Director of Analytics, Nik Steinberg, will discuss climate change's financial implications and Chief Revenue Officer, Lisa Stanton, will also join. 
  • Nov 7 –  Moody's U.S. Public Finance Conference, New York, NY: Lindsay Ross will participate. 
  • Nov 7 - 8 – Building Resilience 2019, Cleveland, OH: Global Director of Client Services, Yoon Kim, will speak on a panel about public-private partnerships.
  • Nov 8 – Yale Initiative on Sustainable Finance Symposium, New Haven, CT: Editor, Natalie Ambrosio, will speak about physical climate risk disclosure. Invite-only.
  • Nov 13 - 15 – SRI Conference, Colorado Springs, CO: Natalie Ambrosio will speak about physical climate risk in investments.
  • Nov 21 - 22 – IACPM 2019 Annual Fall Conference, Miami, FL: Lisa Stanton will speak at this International Association of Credit Portfolio Managers conference.
  • Nov 29 – Climate Finance Day, Paris, France: Lisa Stanton, Director, Europe, Nathalie Borgeaud, and Senior Analyst, Léonie Chatain, will attend.
  • Dec 4 – 2019 HIVE Conference, Austin, TX: Strategic Advisor, Josh Sawislak, will present about how to use data to build resilience. 
  • Dec 4 - RI New York 2019, New York City, NY: Yoon Kim, will speak on the panel “Banks, insurers and climate risk stress-testing,” and Lindsay Ross and Natalie Ambrosio will host Four Twenty Seven's booth.
  • Jan 6 - Jan 9 – NCSE 2020 Annual Conference, Washington, DC: Yoon Kim and Lindsay Ross will speak about cross-sector resilience-building and resilient infrastructure, respectively.
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Copyright © 2019 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for investors, corporations and governments. Fill in the form below to join our mailing list. As data controller, we collect your email address with your consent in order to send you our newsletter. Four Twenty Seven will never share your mailing information with anyone and you may unsubscribe at any moment. Please read our Terms and Conditions.
 

Our mailing address is:
Four Twenty Seven
2000 Hearst Ave
Ste 304
Berkeley, CA 94709








The Last Environmentalist Podcast: Climate Change Is Here. Are We Ready?

Posted on by Natalie Ambrosio

How does the private sector view climate change, why is this important for global climate adaptation and how does someone in this field remain motivated?  Founder & CEO, Emilie Mazzacurati, joins Josh Dorfman’s new podcast, The Last Environmentalist, to discuss these topics and much more. The conversation covers the evolving views of climate risk in the financial sector and how this awareness can translate into resilience-building.  Emilie describes near-term impacts of climate change on real estate markets, adaptation actions taken by corporations and the interacting nature of climate risk and resilience across private and public sectors.

For more detail on climate risk in real estate, read our recent analysis, Real Estate Climate Risks: How Will Europe be Impacted? For more insight on shareholder engagement, read our report, Engaging with Corporates to Build Adaptive Capacity.

Newsletter: How will climate affect Europe’s real estate & U.S. retail?

Posted on by Natalie Ambrosio

Four Twenty Seven's monthly newsletter highlights recent developments on climate risk and resilience. This month we feature analysis on climate risk in European real estate, Moody's research on credit quality and heat stress and the first climate resilience bond.
In Focus: Real Estate Climate Risk in Europe

Four Twenty Seven Analysis - Real Estate Climate Risks: How Will Europe be Impacted?
From this summer's record-breaking heat waves to storm-surge induced flooding, Europe is increasingly experiencing the impacts of climate change. Extreme events and chronic stresses have substantial impacts on real estate, by damaging individual buildings, decreasing their value and potentially leading to unusable assets. These asset-level impacts also have wider market implications.

Our latest analysis assesses the exposure of retail sites and offices across Europe to floods, sea level rise and heat stress. We find that 19% of assessed retail spaces and 16% of offices in Europe are exposed to floods and/or sea level rise, with floods presenting the highest risk for both types of asset. The analysis identifies the cities with the largest percent of facilities exposed to floods and sea level rise, and discusses the implications this exposure has for business continuity and real estate markets across the continent. 
Read the Analysis
Credit Quality in U.S. Governments Exposed to Heat Stress

Moody's Investors Service Analysis - Growing Exposure to Heat Stress Mitigated by Economic and Fiscal Strengths
Moody's new analysis overlays Four Twenty Seven's data on exposure to heat stress in U.S. governments with information on outstanding debt and credit quality, finding that 21% of outstanding debt they rate is exposed to high or very high heat stress. This exposure is concentrated in the central U.S. and Florida. The Southeast has the most debt exposed to heat stress, but this debt tends to be from larger, well-resources governments with diverse economies, which improves governments' resilience to extreme events. Bloomberg covers the report, emphasizing the potential implications of heat stress for Midwest bond issuers. Register for free to read the analysis:
Read the Report
New Principles Support Integration of Resilience into Bond Markets

CBI Releases Climate Resilience Principles 
Last Week the Climate Bond Initiative released Climate Resilience Principles, integrating forward-looking climate risk assessment and resilience considerations into bond markets. The guidance document is meant to inform investors', governments' and banks' reviews of how projects and assets contribute to a climate-resilient economy. The principles will be integrated into the Climate Bonds Certification of green bonds, signaling a valuable step toward the consistent use of resilience standards for debt projects. Four Twenty Seven is proud to have contributed to the Adaptation and Resilience Expert Group that developed the principles. 

EBRD Issues First Climate Resilience Bond
The European Bank for Reconstruction and Development (EBRD) issued the first bond to solely finance climate resilience projects. This is the first bond to fulfill the requirements of the new Climate Resilience Principles. Craig Davies, head of climate resilience investments at the EBRD, told Environmental Finance "The climate resiliency principles that the CBI has developed are a really important landmark because they very clearly set out eligibility criteria, and some very simple but clear and robust methodologies for defining a climate-resilient investment." The EBRD's four year bond raised $700 million to finance "climate-resilient infrastructure, business and commercial operations, or agricultural and ecological systems."

The EBRD also released a consultation draft of a Framework for Climate Resilience Metrics in Financing Operations this week. The report, published jointly with other multilateral development banks and the International Development Finance Club, outlines a vocabulary to facilitate consistent discussion and measurement of resilience investment.
Global Commission on Adaptation Launches Year of Action
The Global Commission on Adaptation presented its flagship report, Adapt Now: A Global Call for Leadership on Climate Resilience this week at the United Nations Climate Summit. This report emphasizes the return on investment of climate adaptation, noting that "investing $1.8 trillion globally in five areas from 2020 to 2030 could generate $7.1 trillion in total net benefits." It focuses on early warning systems, climate-resilient infrastructure, improving dryland agriculture, mangrove protection and increasing the resilience of water resources. This kicks off the Commission's Year of Action, during which it will advance recommendations, accelerate adaptation, promote more sustainable economic development and collate findings to present at the Climate Adaptation Summit in October 2020.
The Commission's report was informed by a paper called Driving Finance Today for the Climate Resilient Society Tomorrow by the UNEP Finance Initiative and Climate Finance Advisors. It outlines financial barriers to the acceleration of adaptation investment and recommends six actions to unlock adaptation finance. These actions include accelerating climate-relevant policies, implementing climate risk management, developing adaptation metrics, building financial sector capacity, highlighting investment opportunities and leveraging public institutions to accelerate adaptation investment. 
Retailers Prepare for Physical Climate Risk
Women's apparel store, A'gaci, filed for bankruptcy in January 2018 after most of its stores were hit by hurricanes in Texas, Florida and Puerto Rico. Hurricanes can affect retail operations by causing building damage, merchandise loss and supply chain disruptions, and Hurricane Irma caused an estimated $2.8 billion loss for the sector. Retail Dive explores the implications of climate change for the retail sector at large, using Four Twenty Seven's data on retail site exposure. With over 17,000 retail facilities exposed to floods in the U.S., some businesses are beginning to prepare, reorganizing their distribution patterns and supply chains. Some retail stores, such as Home Depot, can also see increases in demand after extreme events, and will particularly stand to benefit if their facilities are resilient to climate hazards and can accommodate the associated surge in business. 

New research by a Federal Reserve Board Economist, finds that weather variability impacts retail sales. On average, sales tend to increase with temperature and decrease with rain and snowfall. Overall there is not a clear shift in shopping habits from outdoor stores to indoor venues during extreme weather, but these patterns do show regional variation, suggesting that the impacts of extreme weather events vary by region. The impact of extreme events on sales will have an impact on retail employees and local economies depending on these companies. Businesses can leverage this research, alongside data on climate risk exposure, to plan for these shifts in consumer behavior. 
Inside the Office at Four Twenty Seven

Meet Operations Coordinator, Naoko Neishi 

Four Twenty Seve welcomes Naoko, who supports senior management and works with the Operations Manager to achieve operational excellence. Naoko has over 16 years of experience as a sales assistant and office manager in the United States and Japan, working in the financial and engineering industries.
Upcoming Events

Find Four Twenty Seven at Climate Week NYC:

Join the Four Twenty Seven team at these events:
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Copyright © 2019 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for investors, corporations and governments. Fill in the form below to join our mailing list. As data controller, we collect your email address with your consent in order to send you our newsletter. Four Twenty Seven will never share your mailing information with anyone and you may unsubscribe at any moment. Please read our Terms and Conditions.
 

Our mailing address is:
Four Twenty Seven
2000 Hearst Ave
Ste 304
Berkeley, CA 94709








Newsletter: Bank of England Publishes First Stress Test for Climate Risks

Posted on by Natalie Ambrosio

Four Twenty Seven's monthly newsletter highlights recent developments on climate risk and resilience. This month we feature developments in scenario analysis for physical risks, highlight the European Union's guidance on climate risk disclosure and share the latest on financial climate risk and the need for resilience.
In Focus: Scenario Analysis for Physical Risk

Bank of England Publishes First Climate Risk Stress Test
Yesterday the Bank of England released specifications for integrating climate risk scenarios into its insurance industry's biennial stress tests. This "exploratory" exercise is an enormous step towards catalyzing a growing understanding of possible impacts of transition and physical climate risks on financial assets.

The guidance lays out potential impacts by providing sector-specific percentages of potential loss under three scenarios by sector and by region. These quantitative financial impact assumptions are not a projection but a starting point for the insurance industry to explore potential impacts of climate change on their portfolios.

The Bank of England leveraged Four Twenty Seven's analytics on climate risk exposure in equity and real estate markets to inform its assumptions about which sectors will experience the largest impacts. We explain how data on risk exposure in equities can be leveraged for this type of analysis in our new blog series on scenario analysis.

The Bank of England also recently released a practitioner's guide for assessing the financial impacts of physical climate change, to help the insurance sector address climate risks.

Blog Series: Scenario Analysis for Physical Climate Risk
Our new blog series provides our reflections on how corporations and financial institutions can integrate physical climate risk into scenario analysis. Scenario analysis for physical risk is fundamentally different from transition risk. Corporations and investors increasingly recognize the need to integrate physical risk into scenario analysis but are looking for guidance and best practices on how to proceed.

Our first blog focuses on the foundations, demonstrating how characteristics of climate science affect how climate data can be used to inform scenario analysis. We argue that because physical risks over the next 10-20 years are largely independent from policy decisions and emission pathways, investors would be better served by scenario analysis that focuses on the inherent uncertainty of projected impacts, independent from assumptions on GHG emission scenarios. 

The next blog focuses on Equity Markets, with concrete examples of how available data can inform financial stakeholders ready to start putting scenario analysis into action. We look at data on climate risk exposure by sector to explore how climate risk analytics can inform early developments of stress test assumptions, as done by the Bank of England.  
Read the Blogs
EU Technical Expert Group
Releases Guidance
Yesterday the European Commission released its final guidance on integrating climate change into corporate disclosures. This guidance applies to 6,000 companies, banks and insurers in Europe and maps to the TCFD recommendations. The guidance includes key recommendations from Advancing TCFD Guidance for Physical Risks and Opportunities, published by the European Bank for Reconstruction and Development (EBRD) and GCECA last year, for which Four Twenty Seven was a lead author. 
The EU also released the Technical Expert Group (TEG) report on a taxonomy for activities that contribute to climate adaptation and mitigation. The taxonomy aims to help investors and policymakers understand which economic activities contribute to the transition to a low-carbon economy, through both mitigation and resilience. It outlines qualitative screening criteria to identify adaptation of economic activities and adaptation by economic activities, providing activity-specific examples for a range of sectors. The proposed taxonomy is still under legislative review.
Second TCFD Status Report
While more firms are releasing TCFD disclosures, investors call for an increase in informative disclosure of the financial impact of climate risks. The Task Force on Climate-related Financial Disclosures (TCFD) released its second progress report earlier this month, emphasizing that the quality of risk disclosures must continue to improve as firms build their understanding and capacity to address climate risks. 91% of surveyed firms said they plan to at least partially implement the TCFD recommendations, but only 67% plan to complete implementation within the next three years. This progress must be accompanied by continued knowledge sharing and research on financial risk pathways for climate impacts, meaningful exposure data and best practices for reporting.

Even as TCFD reporting increases, quantitative assessment of physical risk exposure lags behind. Explore physical climate risk reporting by French firms in our analysis of physical risk in Article 173 reports and stay tuned for Four Twenty Seven's forthcoming analysis on physical risk disclosure in TCFD reports.
Investors Factor Climate Risk into Decisions
The past month has seen a flurry of news around the business risks of climate change and the financial sector response. CDP's annual climate change report estimates that 215 companies could incur around $1 trillion in climate-related costs if they don't prepare for these impacts. Companies expect these costs to begin accumulating in around five years. While some are not yet acting, others are, such as Japanese Hitachi Ltd preparing for increased rainfall in Southeast Asia and Brazilian Bank, Banco Santander, considering how increased water stress may damage borrowers' ability to repay loans. 

Alison Martin of Zurich Insurance Group told a meeting of CFOs that physical risks such as drought, extreme heat and flooding will be "incredibly meaningful." She emphasizes that the first step in integrating climate change into planning is for a company to understand its risk exposure. Meanwhile investors say they are increasingly factoring physical climate risk into their decision-making to minimize their risk and increase returns. Four Twenty Seven's on-demand scoring of real assets and analysis of asset-level risk in equity portfolios enables both corporations and investors to understand their exposure and strategically address physical climate risks.
Devastating Impacts Call for Preparation

Catastrophic Midwest Flooding Has Rippling Impacts
At the end of May only 58% and 29% of the U.S. corn and soy crops had been planted respectively. After persistent flooding beginning in Mid-March, inundated fields delayed planting. This means that some farmers will miss the planting window, which closes in June due to the heat and dryness of later summer months.
Those crops that do get planted will have to overcome soggy soil conditions and will remain at the peril of the summer's weather. It's already clear that this will be a below average crop yield, which translates into  more expensive corn in cattle feed and higher prices in grocery stores.

The Climate Connection
While the Mississippi River continues to swell, extreme precipitation has recently hit Houston and the Southeast with damaging floods. The past 12 months have been the wettest on record for the U.S. The national average of 37.7 inches since last June is 7.7 inches above average. 
A weak El Niño likely contributed to increased rainfall, but climate change also plays a role as warmer air holds more water. This month also saw record high temperatures in the western U.S., caused by a bulging jet stream making warm air flow south to north. While this does happen naturally, it may be happening more often due to warming ocean waters. This jet stream activity also contributes to other extreme events like the Midwest flooding.

The Need to Rethink Preparedness
From floods and heat waves to fires and hurricanes, federal recovery efforts for extreme events have cost almost half a trillion dollars since 2005. As disasters become more common and costs increase, there is an urgent need to invest in resilience proactively rather than spending billions on recovery. Last fall's Disaster Recovery Reform Act made an
important step by allowing FEMA to use a small portion of its disaster relief funding for risk mitigation ahead of disasters. However, this is the start of what must be a systemic shift in addressing extreme events. “If we don’t want to spend hundreds of billions of dollars on recovering for disaster, we need to spend tens of billions [on resilience],” Four Twenty Seven Strategic Advisor, Josh Sawislak, told Bloomberg.

"There is a silver lining to our climate challenges — economic growth. Americans are very good at innovating and building and we can leverage our need to be more resilient by growing the economy with good resilient and sustainable jobs," Sawislak wrote.
Upcoming Events

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Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for investors, corporations and governments. Fill in the form below to join our mailing list. As data controller, we collect your email address with your consent in order to send you our newsletter. Four Twenty Seven will never share your mailing information with anyone and you may unsubscribe at any moment. Please read our Terms and Conditions.
 

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Newsletter: Towards Adaptation Standards

Posted on by Natalie Ambrosio

Four Twenty Seven's monthly newsletter highlights recent developments in climate adaptation and resilience. This month, we release a new report to help corporations and investors understand local adaptive capacity, share initiatives to standardize adaptation and highlight resources on adaptation finance.
In Focus: Assessing Local Adaptive Capacity 

427 Report: Helping Corporations and Investors Understand
Local Adaptive Capacity 
Building resilient communities and financial systems requires an understanding of climate risk exposure, but also of how prepared communities are to manage that risk. From flooded or damaged public infrastructure hindering employee and customer commutes to competition for water resources threatening business operations and urban heat reducing public health, the impacts of climate change on a community will impact the businesses and real estate investors based in that community.

Our newest report describes Four Twenty Seven's framework for assessing adaptive capacity in a way that’s actionable for corporations seeking to understand the risk and resilience of their own facilities and for investors assessing risk in their portfolios or screening potential investments. We create location-specific analysis by focusing on three pillars: 1) awareness, 2) economic and financial characteristics, and 3) the quality of adaptation planning and implementation. This helps the private sector understand their assets' risks and provides an entry-point for collaboration on local resilience-building. 
Read the Report
Towards Adaptation Standards
While climate mitigation has traditionally been the focus of efforts to address climate change, the past few years have seen an increased recognition of adaptation as a critical element of confronting climate change. As efforts grow to understand, quantify and catalyze adaptation investment there is a growing need for standardization and metrics around resilience investments.

EU Technical Expert Group on Sustainable Finance  
The European Commission's Action Plan on financing sustainable growth lays out a two year timeline for implementation, with a goal to create a taxonomy for climate adaptation finance by the end of 2019. To accomplish this goal, the EU has launched a Technical Expert Group (TEG) on Sustainable Finance and is calling for expert feedback on what actions qualify as adaptation and mitigation.
This will contribute to the ongoing effort to identify investments that build resilience in specific industries. The TEG recently released its preliminary report outlining its current thinking and explaining where it is soliciting feedback. The report shows the current lack of consensus around adaptation metrics and the need to standardize resilience definitions.

Expert Group on Resilient Bond Standards
A parallel initiative by the Climate Bonds Initiative (CBI) is focused on strategically incorporating adaptation into green bond standards. While green bonds have tended to focus on mitigation to date CBI launched an Adaptation and Resilience Expert Group (AREG) in November, which will develop Adaptation and Resilience Principles for bonds.
These principles will be released for public consultation in June 2019 and will lay the foundation for the development of sector-specific adaptation and resilience criteria. Founder & CEO, Emilie Mazzacurati, and Strategic Advisor, Josh Sawislak, are members of AREG.
Science Suffers in Government Shutdown
Four Twenty Seven analysts Josh Turner and Colin Gannon attended the American Meteorological Society's annual meeting last week, where the absence of hundreds of federal scientists was sorely felt. Numerous sessions were cancelled or poorly attended, and information sharing was lost in both directions. 
 

 
Most Americans may not feel the shutdown's impacts on a daily basis, but there are long-lasting implications far beyond the lack of conference attendance. While only those employees responsible for "essential services" continue to work with limited pay, data collection for long-term climate studies will be hindered, research on wildfire impacts will be delayed and hurricane model improvements and emergency training aren't progressing as they should. Some federal data sites are not currently accessible and the dearth of economic monitoring means that key data used by investors and policy-makers, like agricultural production numbers, are no longer being reported. 

Despite these obstacles, the private sector is persevering in its efforts to understand and address climate impacts. IBM announced that it will release the world's first hourly-updating, highest-resolution global weather forecasting model later this year and McKinsey just added 121 weather-data variables to its agriculture analytics tool, refining crop yield predictions. This year also promises to see continued growth in publicly hosted data sets, satellite data, and machine learning techniques for climate projections.
Resources for Adaptation Finance

Plugging the Climate Adaptation Gap with High Resilience Benefit Investments
In this report S&P Global Ratings  highlights both the funding gap and the multifaceted benefits of resilience projects. It outlines both challenges and benefits of quantifying benefits of adaptation projects and the barriers to adaptation, providing a small case study on the economic benefits of adapting to sea level rise.  Lastly, the brief report emphasizes the need for private investment to support limited public funding.

Financing Climate Futures: Rethinking Infrastructure
This report outlines a vision for a realigned financial system, prepared for long-term climate risks and opportunities.  The OECD, World Bank and UN Environment explain the dire need to disclose climate-related financial information in infrastructure projects and to invest in low-emission, resilient infrastructure that is both prepared for a changing climate and able to catalyze economic growth. 

Money for Resilient Infrastructure
The ebook Money for Resilient Infrastructure: How to Finance America's Climate Changed Future, explains recent developments in the financial sector's understanding of climate-related risks and highlights the growing demand for resilient infrastructure. Joyce Coffee outlines infrastructure finance options, investment instruments and strategies for obtaining resilience financing. 
Emilie Mazzacurati Named Top 100 in Finance
The Top 100 Magazine includes Founder and CEO, Emilie Mazzacurati, in the 2018 Top 100 People in Finance. 

“I’m honored to be recognized by The Top 100 Magazine,” says Emilie.  “We’re pushing the boundaries of how the financial world thinks about climate change, and appreciate the recognition on how our work helps drive the conversation on climate risk.” The Top 100 Magazine writes that while climate data "may seem like a fairly novel niche within the financial sector, the demand for this data has grown exponentially over the past two years... [Four Twenty Seven's] analysis leverages best-in-class climate data at the most granular level, and scores assets based on their precise geographic location. This provides the financial industry with the most comprehensive overview of investment outcomes related to present and future climate changes."
Upcoming Events

Join the Four Twenty Seven team at these upcoming events:

  • January 23 – From Sciences Po to the Economic Risk of Climate Change, San Francisco, CA: Hear Founder & CEO, Emilie Mazzacurati, speak at this Sciences Po American Foundation event at 6:30pm. Use discount code 427 for a $10 ticket.
  • February 12 – Investing for Impact, New York, NY: Emilie Mazzacurati will present on adaptation as an impact investment opportunity at this annual convening hosted by The Economist.
  • March 20-22 – Climate Leadership Conference, Baltimore, MD: Emilie Mazzacurati will speak about the evolving landscape of climate risk disclosure.
  • April 10-12 – RI Asia Japan, Tokyo, Japan: Chief Development Officer, Frank Freitas, will present on climate analytics for investors and Emilie Mazzacurati will also join this convening.
  • April 13-16  – APA National Planning Conference, San Francisco, CA: Director of Advisory Services, Yoon Kim, and Director of Analytics, Nik Steinberg, will speak on a panel called, "Beyond Vulnerability: Innovative Adaptation Planning."
  • April 23-25 – National Adaptation Forum, Madison, WI: Editor, Natalie Ambrosio, will present on local adaptive capacity from a private sector perspective. 
  • April 29 - May 1  – Ceres Conference 2019, San Francisco, CA: The Four Twenty Seven team will join investors and corporations at this annual gathering.
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Copyright © 2019 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for investors, corporations and governments. Fill in the form below to join our mailing list. As data controller, we collect your email address with your consent in order to send you our newsletter. Four Twenty Seven will never share your mailing information with anyone and you may unsubscribe at any moment. Please read our Terms and Conditions.
 

Our mailing address is:
Four Twenty Seven
2000 Hearst Ave
Ste 304
Berkeley, CA 94709

Webinar: Building City-level Climate Resilience

Posted on by Natalie Ambrosio

This Four Twenty Seven webinar familiarizes participants with an approach for assessing city-level physical climate risks and provides insight into concrete actions that cities can take to more effectively attract investor financing for climate adaptation and resilience.

Speakers

  1.  Nik Steinberg (Director of Analytics, Four Twenty Seven) provides an overview of Four Twenty Seven’s approach to assessing city-level physical climate risks.
  2. Lisa Schroeer (Senior Director and Sector Leader, S&P Global) speaks about how the ratings agency is incorporating physical climate risks into its view of city and county  credit risk.
  3. Ksenia Koban (Vice President and Municipal Strategist, Payden & Rygel) offers insight into the factors that investors are looking at when determining whether to make city-level climate resilience investments and what cities can do more successfully to attract investor financing for climate adaptation and resilience.

Read Four Twenty Seven’s report on Assessing Exposure to Climate Change in U.S. Munies and learn more about our advisory services for risk assessments, adaptation finance and policy consulting.

Every City Has its Hazards: 427 Interview

Posted on by Natalie Ambrosio

Chief Development Officer, Frank Freitas, discusses Four Twenty Seven’s report on Assessing Exposure to Climate Risk in U.S. Municipalities on the Midday Briefing. During this brief interview Frank describes Four Twenty Seven’s work as a data provider for investors, highlights the ubiquity of climate hazards across United States munies and explains the impact of both acute events like hurricanes and more subtlety destructive chronic stresses such as drought.

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

Posted on by Natalie Ambrosio

 

 

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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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:
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2000 Hearst Ave
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Berkeley, CA 94709Add us to your address bookWant to change how you receive these emails?
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