Category: Data & Models

Newsletter: 38% of companies associated with habitat loss

Posted on by Natalie Ambrosio

Four Twenty Seven, a part of Moody's ESG Solutions, sends a monthly newsletter highlighting recent developments in climate risk and resilience. 
In Focus: Assessing Biodiversity Risk for Financial Stakeholders

Moody's ESG Solutions Analysis: Integrating Biodiversity into a Risk Assessment Framework
Biodiversity loss has emerged as a concern for responsible investors, financial regulators and companies whose activities have an impact and depend on natural capital, with scientists warning that the world is in the midst of a sixth mass extinction. Moody’s ESG Solutions launched two new reports on biodiversity, powered by Four Twenty Seven and V.E. The first outlines our framework for assessing biodiversity risk, which can provide a foundation from which to understand the biodiversity risks of companies in investment and lending portfolios. 
 
The report shares a case study evaluating company facilities associated with habitat loss globally, as one indicator of a company's impact on biodiversity. Out of 5,300 publicly-traded global companies, we find over 2,000 entities have at least one facility associated with habitat loss.

A second case study reviews company disclosures on their commitments and measures to address biodiversity, as an indication of their biodiversity governance. We find 61% of assessed companies in the heavy construction sector disclose commitments to address biodiversity. Yet less than 10% of the sector receives a "robust" or "advanced" score in terms of implementation.
Read the Report

Controversy Risk Assessment: a Focus on Biodiversity

The second report in our series focuses on controversies, as another indication of a company's governance of biodiversity risks. We found that 7% of analyzed controversies from Dec. 201 - Apr. 2021 were related to biodiversity allegations.  Geographically, they have been most frequently observed in the US, Indonesia  and Malaysia. The report explores the severity of identified controversies and discusses how companies responded to them.
Read the Report
Biden's Executive Order on Financial Risks of Climate Change

Sweeping Order Calls for Comprehensive Climate Risk Assessment 
On May 20, Biden issued an executive order, calling all government agencies to identify physical and transition risks, report on mitigation plans, and develop a financial strategy to reach net-zero by 2050. The Director of the National Economic Council Brian Deese and the National Climate Advisor Gina McCarthy, have 120 days from the order to develop a strategy covering the “measurement, assessment, mitigation, and disclosure of climate-related financial risk to Federal Government programs, assets, and liabilities.”
Janet Yellen, as Treasury Secretary and head of the Financial Stability Oversight Council (FSOC), has 180 days to report on progress and to coordinate with the Federal Insurance Office to identify any potential for significant disruptions due to climate impacts on insurance. The Labor Department is mandated to revise a rule from the Trump era that banned pensions from considering ESG and climate concerns.

Meanwhile, the SEC is expected to make a formal proposal on climate risk disclosure in June after the deadline for public inputs to its questionnaire on the topic. 
 

Investing in Climate Resilience

Biden's Order also reinstates the Federal Flood Risk Management Standard, which was revoked under President Trump. This is a critical step in improving resilience nationwide. It "will require new buildings and facilities built with federal money in flood-prone areas to be elevated 2 to 3 feet above projected flood levels or to have equivalent flood protection."  Earlier this week Biden also announced that FEMA would invest $1 billion to prepare for extreme events before hurricane season, which is twice the amount provided last year. Investing in resilience before disasters strike is an essential way to save lives and also save on long-term recovery bills.
Financial Regulators Acting on Climate Beyond the US

European Central Bank Reports on Climate Risks to Financial Stability
As part of its Financial Stability Review, the European Central Bank released a detailed report on quantifying the financial system's exposure to climate risks, including scenario analysis of the banking sector and assessing finance for the transition to a low-carbon economy. The report leverages data from Moody's ESG Solutions, powered by Four Twenty Seven, to assess the physical risk exposure of banks' lending portfolios

Singapore Taskforce Releases Guidance on Climate Risk Disclosure
Singapore's Green Finance Industry Taskforce released a guide for financial institutions to disclose their climate risks in line with the TCFD Recommendations. It's meant to help financial institutions comply with the Guidelines on Environmental Risk Management for banks, asset managers and insurance companies issued by the Monetary Authority of Singapore in December 2020 to improve the financial sector's resilience to environmental risks and position the industry to support the transition to a sustainable economy.

Canada Launches Council Focused on Financial Climate Risk
Canada launched a Sustainable Finance Action Council to support a sustainable finance system focused on mobilizing capital to meet Canada's 2030 Paris Target, supporting the transition to net zero by 2050 and maintaining a resilient economy. The council's first meeting will be in early June and its initial focus will be on improving public and private sector climate risk disclosures in line with the TCFD recommendations.
Unipol Gruppo Selects Moody's Analytics Climate Pathway Scenario Service
Italian insurance group Unipol Gruppo has selected the Moody’s Analytics Climate Pathway Scenario Service to facilitate its efforts to embed climate risk into its Own Risk and Solvency Assessment (ORSA). Moody’s Analytics will provide Unipol Gruppo with climate-aligned scenarios for a range of temperature pathways to help the group assess transition risk exposure.

As climate change creates new demands on insurers to understand their exposure to financial impact from climate risk the Moody’s Analytics Climate Pathway Scenario Service helps power insurers’ and pension funds’ asset and liability projections by providing climate-aligned scenarios that capture physical and transition risks from climate change.
We're Hiring! Join us at
Moody's ESG Solutions
There are several opportunities to join Moody's ESG Solutions' dynamic team. See the open positions below and visit Moody's Careers page for more information.
  • AVP/VP – Regulatory Analyst (Climate) – we’re looking for an individual with deep expertise in climate risk to inform product development in line with global regulatory developments related to climate risk disclosures and climate stress tests.
  • Product Strategist – Climate Solutions – we’re looking for an experienced product strategist to help drive the delivery of our climate risk solution suite.
  • Data Content Analyst - we're seeking a motivated problem solver to help develop and manage the processes that ensure the accurate, timely delivery of financial and business data to support the development of climate and ESG products. 
Upcoming Events

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

  • Jun 2-4 – Green Swan 2021: Founder & CEO and Global Head of Moody's Climate Solutions, Emilie Mazzacurati, Emilie Mazzacurati will present during the session on climate-related risks data and accounting. Invitation only. 
  • Jun 3 –  Moody's Analytics Predictive Analytics Virtual User Form: Emilie Mazzacurati will discuss climate risk analytics for investors and lenders.
  • 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
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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








Goldman Sachs Selects Moody’s ESG Solutions Dataset on Sovereign Climate Hazards

Posted on by Natalie Ambrosio

Goldman Sachs is leveraging Moody’s ESG Solutions data on sovereign physical climate risk, powered by Four Twenty Seven, to inform its fixed income strategy. Read the press release from Moody’s:

LONDON – (BUSINESS WIRE) – Moody’s ESG Solutions Group announced today that Goldman Sachs Asset Management (Goldman Sachs) has selected Sovereign Climate Risk Scores powered by Moody’s affiliate Four Twenty Seven for use in its ESG evaluation of sovereign risk. The dataset provides a detailed view of the future exposure of the global population, the economy, and agriculture to a range of physical climate hazards.

As the impact of climate factors such as higher temperatures, drought, rising sea levels, and more extreme weather events are expected to increase over time, Goldman Sachs will use the dataset as an input to its own proprietary Sovereign ESG framework. This assessment of climate risk exposure will be combined with qualitative analysis by Goldman Sachs’ investment teams on countries’ capacities to adapt to physical risks.

“Sovereign bonds are an integral part of our fixed income portfolios, but intrinsic uncertainties make it challenging to quantify the long-term impact of climate change on countries,” said Prakriti Sofat, Executive Director at Goldman Sachs Asset Management. “Using this dataset will help us assess this evolving risk and reflect it in our investment decisions.”

The Sovereign Climate Risk Scores launched in December and are the only known dataset matching physical climate risk exposure to population location, GDP (Purchasing Power Parity) and agricultural areas within countries, with detailed metrics including both percent exposed and total amount exposed to each climate hazard. Understanding multiple dimensions of sovereigns’ exposure to floods, heat stress, hurricanes & typhoons, sea level rise, water stress and wildfires informs targeted risk management strategies.

“Understanding exposure to physical climate hazards is critical for investors and credit institutions in order to price climate risk, and also to help direct finance flows towards adaptation and resilience where they’re most needed,” says Emilie Mazzacurati, Global Head of Moody’s Climate Solutions in Moody’s ESG Solutions Group. “We’re extremely pleased that Goldman Sachs has chosen to use our new dataset to enhance its ESG evaluation of sovereign risk.”

———————————-

Read our report, Measuring What Matters: A New Approach to Assessing Sovereign Climate Risk to learn more about Four Twenty Seven’s physical climate risk data for sovereigns.

Moody’s Launches Comprehensive Suite of Climate Solutions

Posted on by Natalie Ambrosio

Moody’s launches its new Climate Solutions Suite incorporating physical and transition climate risk data into Moody’s best-in-class risk management solutions and economic models. Read the press release from Moodys:

LONDON- (BUSINESS WIRE) – Moody’s ESG Solutions Group today announced the launch of Climate Solutions, a comprehensive product suite that provides market participants with enhanced risk measurement and evaluation tools to better understand, quantify and manage climate risks and opportunities. Climate Solutions incorporates physical and transition risk into Moody’s best-in-class risk management solutions and economic models to enable banks, insurers and investors to better assess climate risks and comply with the emerging regulatory requirements for stress testing and disclosures.

“Climate change has a profound impact on the world’s economies and societies,” said Mark Kaye, Chief Financial Officer and Executive Sponsor of Moody’s ESG Solutions Group. “Moody’s is committed to offering science-driven, objective analytics to advance strategic resilience and to help market participants navigate the transformation to a low-carbon, climate-resilient future.”

Powered by Moody’s affiliates Four Twenty Seven, a leader in climate risk data, and V.E, a leading global provider of ESG research, data and assessments, Moody’s Climate Solutions includes:

  • Forward-looking, physical and transition climate risk assessments for over 5,000 listed companies and more than 10 million real estate properties; dynamic, on-demand scoring for listed and unlisted companies, and SME support in risk identification, reporting and screening are also available;
  • Climate-adjusted Probability of Default (PD) for listed and unlisted companies that leverage Moody’s Analytics award-winning Expected Default Frequency (EDFTM) model to provide consistent, transparent and customizable analysis of the credit impact for physical and transition risk;
  • Macroeconomic Climate Risk Scenarios, based on Moody’s Analytics Global Macroeconomic Model and the Network for Greening the Financial System’s representative designations, for assessing physical and transition changes, including an 80-year forecast horizon to support stress testing and risk management needs;
  • Climate Pathway Scenarios to help power insurers’ and pension funds’ asset and liability projections with climate-aligned scenarios to facilitate customers’ efforts to align with Own Risk and Solvency Assessment (ORSA) and Task Force on Climate-related Financial Disclosures (TCFD) reporting practices; and
  • Powerful, but easy to use TCFD reporting solutions and analytics for banks, pension funds and insurance companies.

“Combining advanced climate know-how with proven models for credit risk and economic forecasts has enabled us to create a sophisticated set of climate risk analytics to support the systematic integration of climate change into investment and risk management decisions,” said Emilie Mazzacurati, Global Head of Moody’s Climate Solutions. “Our solutions support growing market needs for robust modelling of climate risks and their financial impacts.”

To learn more, visit Moody’s Climate Solutions.

Four Twenty Seven Announces Partnership With Lockton

Posted on by Natalie Ambrosio

March 8, 2021 – BERKELEY, CA – Four Twenty Seven’s data is now available through Lockton, a global independent insurance broker.

As part of a long-term commitment to protect clients as the effects of climate change take their toll, Lockton works with insurers to develop and deliver innovative insurance products, designed to meet the needs of the future. Lockton’s broker partnership with Four Twenty Seven enables clients to make decisions based on climate science. The service provides data and analytics required to build resilience and mitigate the risks of climate change.

The partnership will benefit many of Lockton’s clients:

  • Real estate investors can evaluate the long-term risk exposure of portfolio holdings and engage with asset operators to improve resilience and bolster risk management capabilities
  • Property and asset managers can enhance portfolio analysis and monitor risk as investment appetite can change over time. They will also be able to screen assets for their exposure to climate hazards pre-acquisition
  • Banks can identify the climate-related risks in commercial and residential mortgage portfolios, incorporating these risks into their loan acquisition appraisals

Steve Rust, Global Real Estate and Construction Partner at Lockton, commented: “Right now, it’s more important than ever for the real estate and construction sectors to better prepare themselves for the great risk that climate change holds globally. By harnessing the power of data, especially in relation to locations, Four Twenty Seven can help us additionally support clients with invaluable awareness of long-term climate risks, allowing them to make better informed decisions, and plan a strategy for the future. This is an exciting opportunity and we look forward to building a productive, forward-thinking partnership.”

Emilie Mazzacurati, Global Head of Moody’s Climate Solutions and Founder & CEO of Four Twenty Seven, commented: “Understanding an asset’s exposure to hazards such as floods, storms and wildfires is critical to risk management processes, including decisions around insurance and asset-level resilience investments. We’re delighted to partner with Lockton to help a broader range of stakeholders access forward-looking information on their climate risk exposure.”

Read Lockton’s announcement.

Newsletter: The US prioritizes climate change

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. This month we discuss the Biden Administration's climate policy, share new climate change records and include recent books on climate risk in the financial sector. 
In Focus: Climate Risk a Priority in the US

First Week Signals Biden Administration's Commitment to Climate Action 
The Biden Administration has named climate changes as one of four top priorities, alongside the COVID-19 pandemic, racial justice and the economic crisis. Beyond rejoining the Paris Agreement, several of Biden's executive orders in his first week in office relate directly to climate, while others have significant implications for the environment. For example, in an executive order on public health and the environmental, federal agencies are mandated to comply with Obama-era regulations prioritizing climate change adaptation and resilience rolled back by Trump. Further, one of his first executive orders stated that regulatory reviews should promote concerns such as public health, environmental stewardship, racial justice and the interests of future generations rather than focusing on a cost-benefit analysis, which typically fails to fully recognize non-economic  benefits. There have been several key climate appointments and climate has emerged as a critical issue across many agencies, so this will remain a space to watch in the coming months.

The US Financial Regulators Begin to Move on Climate
On Monday the Senate approved Janet Yellen for treasury secretary, after she committed last Tuesday that the Treasury would examine the financial risks of climate change and appoint a senior official to lead climate initiatives. Meanwhile, this week the Federal Reserve announced a climate committee with a mission to "assess the implications of climate change for the financial system — including firms, infrastructure and markets in general." The central bank has slowly been increasing its participation in the dialogue on climate risk and this step signals that it may be starting to truly prioritize the issue.

The Federal Housing Finance Agency (FHFA), which regulates Fannie Mae, Freddie Mac and the Federal Home Loan Banks, issued a Request for Input on climate risk for its regulated entities. The consultation asks about identifying climate risks and about options to integrate climate risk management into the FHFA's regulatory framework. Respond by April 19.
Climate Records Broken Repeatedly
There was a record 50 billion-dollar extreme weather events endured globally in 2020, with a total of $268 billion in total economic losses according to Aon. While the most costly disaster last year was the summer monsoon flooding in China, causing $35 billion in damage, the majority of the damage from extreme weather was in the US.

It's thus fitting that this past year also ties with 2016 for the hottest year on record, even during a La Niña event, which is a phase in the global climate cycle that typically leads to cooler years. The seven years we just experienced are the seven warmest years on record.

Meanwhile, scientists continue to increase our understanding of glacier dynamics and the implications for global sea level rise. A paper published on Monday found that global sea ice, glaciers and ice sheets are melting 57% faster than they were three decades ago.
Physical Climate Risk for Sovereigns

Four Twenty Seven Analysis: Over 25% of the world's population in 2040 could be exposed to severe heat stress and 57% of the economy could be exposed to flooding 
More frequent and severe extreme events driven by climate change pose a significant threat to populations and economies around the world and understanding who and what is exposed to climate hazards is essential to pricing this risk and preparing for its impacts. Four Twenty Seven's report, Measuring What Matters: A New Approach to Assessing Sovereign Climate Risk, builds on new analytics assessing sovereign exposure to floods, heat stress, hurricanes and typhoons, sea level rise, wildfires, and water stress based on the only known global dataset matching physical climate risk exposure to locations of population, GDP (Purchasing Power Parity) and agricultural areas within countries. 
Read the Analysis
The Latest Books on Climate Risk & Sustainable Finance 

Values at Work: Sustainable Investing and ESG Reporting,
This recent book highlights the latest research on sustainability topics of growing interest to investors, including climate change, pollution, diversity, governance, economic inequality and others. Four Twenty Seven wrote a chapter titled “Asset-Level Physical Climate Risk Disclosure.” The chapter discusses the need for consistent, comparable metrics for physical risk disclosure, using the pharmaceutical sector as a case study to examine climate risk disclosure versus climate risk exposure. 

Carbon Risk and Green Finance
This new book provides a comprehensive primer on both physical and transition climate risks as financial risks. It covers the emergence of reporting frameworks and mandatory disclosure laws in recent years. The latter portion examines the datasets and approaches that can be leveraged to assess and report climate risk, including emerging topics such as climae stress testing and scenario analysis, citing Four Twenty Seven.
Climate Change, Real Estate and
the Bottom Line

Webinar Recording
How will climate hazards like sea level rise and flooding affect real estate and how is the industry preparing? In this webinar in the Goodwin and MIT Center for Real Estate series, The Path to Tomorrow, Global Head of Climate Solutions at Moody's and Founder & CEO of Four Twenty Seven, Emilie Mazzacurati, joins insurance and finance professionals to discuss climate risk for real estate developers, investors and owners.
What the Recording
Upcoming Events

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








Moody’s Launches DataHub, Collating Billions of Data Points for Decision-Makers to Explore and Analyze

Posted on by Natalie Ambrosio

Moody’s launches a new data platform, DataHub, providing data on corporates, real estate and macroeconomic variables, including climate, ESG and credit risk across asset classes. Read the press release from Moody’s:

NEW YORK–(BUSINESS WIRE)–Moody’s Corporation (NYSE:MCO) today announced the launch of Moody’s DataHub, a new cloud-based analytical platform that integrates data from across Moody’s, including its affiliates. Moody’s DataHub enables financial and risk decision-makers to explore, analyze and consume a wide range of relevant information seamlessly and efficiently.

“With Moody’s DataHub, we are bringing our vast assets together to support today’s data science and analytic needs,” said Stephen Tulenko, President of Moody’s Analytics. “Moody’s is helping customers seamlessly analyze financial and nonfinancial information, combining structured and unstructured data to support better decisions.”

Moody’s DataHub provides access to billions of data points to inform more holistic risk management and investment decisions. Coverage includes:

  • Over 4.5 million active and historical ratings from Moody’s Investors Service
  • Default and recovery data dating back to 1920 covering more than 800,000 securities and 59,000 issuers
  • Probabilities of default for more than 60,000 publicly traded firms from Moody’s CreditEdge
  • Nearly 400 million private and public entities from Bureau van Dijk’s Orbis database
  • More than 5,000 ESG assessments from V.E, part of Moody’s ESG Solutions Group
  • Climate risk scores for over 5,000 companies and 200 sovereigns from Four Twenty Seven, part of Moody’s ESG Solutions Group
  • Over 40 million loans underlying US RMBS, CMBS, and CDO transactions
  • 30-year forecasts of more than 2,100 major macroeconomic variables from Moody’s Analytics U.S. Macro Forecast Database

Moody’s DataHub delivers cross-referenced datasets in a centralized area with sophisticated analytical capabilities. The platform facilitates a holistic view of risks and opportunities related to credit, real estate investments, and climate, and provides essential inputs for Know Your Customer (KYC) onboarding and compliance screening, master data management, and entity resolution.

Easily accessible data previews, along with a readily available data dictionary and documentation, allow users to explore and efficiently interact with Moody’s datasets. Using Moody’s DataHub’s advanced tools, customers can discover and transform data while collaborating in secure environments, blending Moody’s data with their own to create engineered products and services.

“Moody’s DataHub gives customers transparency and control, and the platform was designed to facilitate rigorous data analysis while being straightforward to use,” said Mr. Tulenko. “We will continue to add datasets to the platform and will enhance its analytical capabilities in line with our commitment to deliver market-leading solutions for decision-makers.”

For more information on Moody’s DataHub and a full list of the datasets currently available through the platform, please visit the website.

Webinar Recording: Climate Change, Real Estate and the Bottom Line

Posted on by Natalie Ambrosio

This webinar on Climate Change, Real Estate and the Bottom Line  features a discussion on the interactions between climate change and real estate investment, development and operations. It’s part of the webinar series The Path to Tomorrow, hosted by Goodwin and the MIT Center for Real Estate.

Speakers

  • Emilie Mazzacurati, Global Head of Moody’s Climate Solutions and Founder and CEO of Four Twenty Seven
  • Carl Hedde, Head of Insurance Practice, One Concern and Principal, CGH Consulting, LLC
  • Rose Marie E. Glazer, Senior Vice President, Corporate Strategy and Deputy General Counsel, AIG
  • Steve Weikal, Head of Industry Relations, MIT Center for Real Estate
  • Minta Kay, Partner and Chair, Real Estate Industry Group; Co-Chair, PropTech Group, Goodwin

Measuring What Matters: A New Approach to Assessing Sovereign Climate Risk

Posted on by Natalie Ambrosio

December 3, 2020 – Four Twenty Seven Report.  More frequent and severe extreme events driven by climate change pose a significant threat to nations around the world and understanding who and what is exposed to climate hazards is essential to pricing this risk and preparing for its impacts. This new report and underlying analytics assess sovereign exposure to floods, heat stress, hurricanes and typhoons, sea level rise, wildfires, and water stress based on the only known global dataset matching physical climate risk exposure to locations of population, GDP (Purchasing Power Parity) and agricultural areas within countries. 

Read the full report.

Globally, increasingly severe climate conditions impose growing pressure on populations and economies. The implications on economic growth, welfare, production, labor, and productivity are large, with potential material impacts on sovereign credit risk. However, assessing sovereign climate risk presents significant challenges. While most approaches to quantifying future climate risk exposure for sovereigns measure the average exposure over the entire territory of a country, this doesn’t capture whether the populated or economically productive areas are exposed to extremes. Likewise, averages of exposures to several climate hazards can mask extreme exposure to a particular hazard in a certain area of a country.

We’ve mapped the co-occurrence of hazards and exposures, explicitly factoring in the spatial heterogeneity of both climate hazards and people and economic activities across a country. This new report, Measuring What Matters – A New Approach to Assessing Sovereign Climate Risk, provides an analysis of the data. We find that all nations face meaningful risks despite their variation in size and resources. Explore sovereign climate risk in the interactive map below, based on both total and percent of a nation’s population, GDP (PPP) and agricultural areas exposed to climate hazards in 2040.

 

Key Findings:

  • By 2040, we project the number of people exposed to damaging floods will rise from 2.2 billion to 3.6 billion people, or from 28% to 41% of the global population. Roughly $78 trillion, equivalent to about 57% of the world’s current GDP, will be exposed to flooding.
  • Over 25% of the world’s population in 2040 could be in areas where the frequency and severity of hot days far exceeds local historical extremes, with negative implications for human health, labor productivity, and agriculture. In some areas of Latin America, climate change will expose 80-100% of agriculture to increased heat stress in 2040
  • By 2040, we estimate over a third of today’s agricultural area will be subject to high water stress. In Africa, over 125 million people and over 35 million hectares of agriculture will be exposed to increased water stress, threatening regional food security.
  • By 2040, nearly a third of the world’s population may live in areas where the meteorological conditions and vegetative fuel availability would allow for wildfires to spread if ignited.
  • Over half of the population in the most exposed small island developing nations are exposed to either cyclones or coastal flooding amplified by sea level rise. In the United States and China alone, over $10 trillion worth of GDP (PPP) is exposed to hurricanes and typhoons.

Read the full report.

Read the press release.

Contact us to learn more about accessing this unique dataset or explore our other physical climate risk data for banks and investors.

 

*Erratum: In Table 1 of a previous version of this report the “Agriculture Area at High Risk” column was said to be in units of 1 billion hectares. However, it is in units of 100 million hectares. 

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.