S&P Global’s ESG and sustainability-focused business Sustainable1 has launched physical risk exposure scores and financial impact dataset.
The aim is to enable companies and investors to assess and measure the exposure to climate hazards such as floods, hurricanes and drought.
The new solutions cover over 20,000 companies and over 870,000 asset locations, with the physical risk exposure scores describing the exposure of the companies and assets to climate change-related hazards.
The financial impact dataset reflecting the projected future financial cost of changing hazard exposure, as a percent of the exposed assets’ value.
The dataset brings together the data capabilities of S&P Global’s carbon and environmental data and risk analysis business, Trucost, and the recently acquired climate risk analytics solutions and tools provider The Climate Service.
It will initially cover exposure to 8 hazards, including extreme heat, extreme cold, wildfire, water stress, drought, coastal flood, fluvial flood and tropical cyclone.
“More than ever, investors and companies are seeking advanced analytics to respond to the financial impact of climate change,” says James McMahon, CEO of The Climate Service.
He added, “Essential to this, is the ability to quantify the financial impact of climate change at asset level to enable meaningful mitigation and adaptation planning.”
Along with the launch of the new solutions, Sustainable1 conducted research which showed that 92% of S&P 1200 companies have at least one asset at high exposure to a physical climate hazard by the 2050s, rising to 98% by the 2090s, under a business-as-usual scenario.
In addition, under this scenario, more than 70% of companies in the utilities, energy and materials sectors have at least one asset with physical risk equivalent to 20% or more of that asset’s value.
“In 2022, many countries have experienced unprecedented weather conditions, including heat waves in the UK; wildfires in the US and record temperatures in China,” said Steve Bullock, managing director, global head of ESG innovation and solutions, S&P Global Sustainable1.
He added, “Against this backdrop, this new dataset uses the best available climate models and integrates a new climate change hazard, drought, to ensure market participants have access to high quality data and evidence-based insights as they seek to understand and adapt to their exposure to the physical risks of climate change.”