Climate Risks and Scenario Analysis

Assess the climate risks of your portfolio quickly and efficiently and count on in-depth advisory for a detailed scenario analysis

We provide investors with a way to integrate forward-looking, and decision-friendly climate data and analysis in investment strategies and disclosure practices.

Climate risks impact financial returns with varying degrees across sectors and geographies. Furthermore, stakeholders are demanding Task Force on Climate-related Financial Disclosures (TCFD)-aligned risk assessments and disclosures and it will become mandatory for PRI signatories in 2020. In order to future-proof their investments, asset owners and asset managers need to act now to assess the risks in their portfolios.

South Pole enables the assessment of those risks as well as forward-looking scenario analysis in order to align investment strategies. The South Pole Climate Risk Assessment Tool offers a quick and flexible screening combined with in-depth advisory from our consultants. It has been designed in line with the recommendations of the TCFD.

The TCFD recommendations

A major innovative element of the TCFD recommendations is application of scenario analysis to assess the risks and opportunities from the shift to a low-carbon economy, and the risks from physical impacts of climate change. Examples include the impact of changing policies and consumer markets on existing and future product portfolios, "stranded assets" in fossil fuels, and crop and infrastructure damage.

The Tool

The South Pole Climate Risk Assessment Tool categorises and plots the major risk 'hotspots' through operations and along the supply chain, identifying areas for attention. The Tool also highlights solutions for mitigating these risks and for adapting longer term climate strategies.

South Pole's analysis enables investors to understand investments' vulnerability to the impacts of physical and transition risks resulting from climate change. It includes assessments of how strategic investment decisions perform under a range of climate scenarios. Our services include:

Measurement of investment portfolios' global climate risk exposure (transition & physical risks)
Scenario analysis - compare climate risk exposure of underlying holdings across different climate change mitigation scenarios
Compare holdings' risk exposure across sectors and geographies portfolio

Climate Change Investment Risk

Bethan Halls

Business Development Manager

b.halls@southpole.com

The Task Force on Climate-related Financial Disclosure (TCFD)

The recommendations provided by the Financial Stability Board's (FSB) Task Force on Climate-related Financial Disclosures (TCFD) is one of the most significant milestones on the journey towards integrating climate risks in financial decision-making.

The TCFD's final report explicitly states that large corporates, investors and banks should disclose their climate risk and opportunities, develop scenarios to understand climate impacts on their business and quantify the costs and upside on their bottom lines.