Latest news with #climaterisk
Bloomberg
09-07-2025
- Business
- Bloomberg
Mastering Climate Risk: Essential Strategies for Asset Owners and Asset Managers
The financial industry faces escalating global regulatory demands concerning climate risk. This session cuts through the complexity, providing asset owners and asset managers with the essential knowledge and practical tools to navigate this critical landscape. We will discuss how to define and integrate ESG and climate risk into your investment framework, drawing on the latest insights from the Network for Greening the Financial System (NGFS) scenarios. Gain practical lessons from real-world climate scenario analysis implementations, including the crucial application of Climate VAR. Equip yourself to strategically manage climate-related risks and opportunities within your portfolio. Speakers Nick Burrough Sustainable Finance Market Specialist, Sydney Bloomberg Nick Burrough joined Bloomberg in 2015 and is based in Sydney. Nick over 30 years of experience across Sell Side Fixed Income Trading, Consulting and most recently Bloomberg. Nick has worked in London, Toronto and now Australia, and now as the Bloomberg Sustainable Finance Specialist for Australia & New Zealand helps clients understand Bloomberg's solutions and develop these solutions as the market and regulations develops. Nick graduated from Durham University with a BSc in Mathematics & Physics, is an Associate of Corporate treasurers and holds CFA ESG Valuation & Investing and CFA Climate Risk certification. Ben Carr Global Head of Climate Risk Products Bloomberg Ben Carr leads climate risk product development at Bloomberg. He is a climate-related financial risk expert with over two decades of financial services experience working in both the public and private sector including at the Bank of England, the European Commission and Aviva. He has run several sustainable finance fora including the Scenario Analysis Working Group of the Climate Financial Risk Forum, co-chaired by the Bank of England and UK Financial Conduct Authority. He has led the Monitoring, Reporting and Verification (MRV) track of the UN convened Net Zero Asset Owner Alliance and the Sustainability Working Group of the CRO Forum. Ben is also a Senior Visiting Fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and holds a PhD in Mathematics from the University of Carr leads climate risk product development at Bloomberg. He is a climate-related financial risk expert with over two decades of financial services experience working in both the public and private sector including at the Bank of England, the European Commission and Aviva. He has run several sustainable finance fora including the Scenario Analysis Working Group of the Climate Financial Risk Forum, co-chaired by the Bank of England and UK Financial Conduct Authority. He has led the Monitoring, Reporting and Verification (MRV) track of the UN convened Net Zero Asset Owner Alliance and the Sustainability Working Group of the CRO Forum. Ben is also a Senior Visiting Fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and holds a PhD in Mathematics from the University of Warwick. Anthony Lee Risk Specialist Sales Bloomberg Anthony worked as a derivatives trader and PM for over 15 years in Hong Kong. He's been with Bloomberg for the past 8 years. His current role covers insurance companies, hedge funds, asset managers and corporations on risk and regulatory solutions.
Japan Times
04-07-2025
- Business
- Japan Times
How much does a heat wave cost? Insurers and CEOs want to know.
When a hurricane or a wildfire strikes, the economic damage is usually very visible — roofs are ripped off or charred homes line roads. Heat waves cause financial damage, too, but it's more diffuse: Farm crops might wither, construction workers pause or data centers sputter out, forcing customers offline. Climate risk models, which are widely used in the insurance industry, can estimate the likelihood that fires or floods will affect a specific place in the U.S., even down to the address level, and how much damage that would wreak. So far, the models don't typically make detailed projections for extreme heat. For one thing, heat is less of a threat to real estate than it is to health, energy infrastructure and the food supply. But cities, businesses and insurers need the financial risks to be outlined more clearly, and some believe a new market for heat insurance — driven in part by artificial intelligence and the need to cool data centers — is around the corner. Hedging against heat The property information firm Cotality, previously known as CoreLogic, recently started offering heat-hazard modeling on its widely used risk-analysis platform. And Mercer, a unit of Marsh & McLennan Cos, in May launched a climate health cost forecaster tool evaluating how extreme heat and other risks could impact companies' health insurance costs. It draws on historical incidence data, medical claim codes associated with climate events and published research. "The health cost is but one of many,' said Tracy Watts, Mercer's U.S. leader for healthcare policy. "You've got increased workers' compensation cost, disability issues, life insurance, absentee issues.' These newer tools follow the emergence of hedging instruments like weather derivatives, forward contracts and parametric insurance. Using a forward contract, for example, a utility might agree to buy extra electricity from a producer at a certain price for the summer. If temperatures stay low, they lose; if they soar, they win. Parametric insurance pays out only if predetermined physical criteria are reached — say, temperatures above 35 degrees Celsius for five days running. Corn crops that died due to extreme heat and drought during a heat wave in Austin, Texas, on July 11, 2022. | Bloomberg "I think when we look more closely at extreme heat,' said Garrett Bradford, a principal at Milliman, an actuarial and management consulting firm, "we will find the risk often isn't taken sufficiently into account' in insurance, "and the downside of a major heat event is potentially significant.' Last year was the hottest ever recorded, and the U.S. has experienced deadly heat waves this decade such as the 2021 heat dome in the Pacific Northwest that killed hundreds of people. Heat waves in U.S. cities have become more frequent and the heat season has gotten longer, according to the U.S. Environmental Protection Agency. As doctors and public officials tackle the rise in dangerous health effects, there are early efforts to assess heat's financial toll. In California alone, the state found in a study published last year that seven extreme events over a 10-year period from 2013 to 2022 caused $7.7 billion in economic harm, including $44 million in lost milk production from a single 2017 heat wave in the Central Valley (cows produce less milk in very hot conditions). 'Bespoke' predictions One challenge for predicting a heat wave's impacts, says Anand Srinivasan, a Cotality executive who develops climate change-related products, is that heat damage is relatively complex to model. Many different variables determine its impact. For starters: How long does the heat wave last? Is it dry or wet heat? Does it cool down at night? And the risks are industry-specific. A business with an outdoor workforce has much more to worry about than one whose employees have air-conditioning. As of last year, Cotality models not just "acute' perils like wildfires and floods but also "chronic' ones: extreme heat, drought, cold waves and extreme precipitation. The first edition of its chronic-peril modeling tool offers risk indices for heat down to an address level, but doesn't estimate the monetary impact of a heat event. "What we can do is provide the analytics and data for people,' says Srinivasan. "That way, a typical [company] risk manager would say, 'Okay, do I keep my office open during this heat wave? What kind of extra support do I need to provide to my personnel?'' Srinivasan says he expects modeling of heat waves' financial consequences, industry by industry, will follow eventually. The data firm Skyline Partners, which has offices in Colorado and the U.K., has developed metrics for a custom parametric insurance policy covering dairy cows stressed by heat. Laurent Sabatié, Skyline's co-founder and executive director, says figuring it out required a "substantial amount of analysis.' Wildfire and hurricane models have been "commoditized' to a certain extent, he said, but heat prediction is still "bespoke' since it is industry-specific as much as place-based. In the past, insurance companies have sometimes perceived changes in climate risk too late and ended up paying out dearly after outsized events. Two examples are Hurricane Andrew in Florida in 1992 and Northern California's Camp Fire in 2018. In both cases, insurers sustained losses far outside the expected parameters; each disaster led to investments in far more accurate modeling of hurricanes and wildfires, respectively (and then in higher premiums for customers). The technology to run a full hazard analysis on heat for any industry or city is there, says Cole Mayer, who runs parametric products for Aon PLC, a risk management firm. But clients' appetite to pay for more insurance is still limited. "There's a risk perception evolution that needs to happen,' says Mayer. AI and crypto, with their dependence on heat-sensitive data centers, may propel the growth of the market, he adds: "These are exposures that didn't exist to the same extent 10 years ago.' Dave Bigelow, a climate risk advisor for Aon, thinks time alone will do it. "We've got hundreds of years of records of floods and hurricanes and acute perils,' he notes. "But for heat, we're just starting to see it' in the data.
Bloomberg
25-06-2025
- Business
- Bloomberg
Declining Climate Funding Spurs Index of Most Vulnerable Nations
A new climate risk index seeks to help get the dwindling pool of aid for climate adaptation to the countries that need it most. The Climate Finance Vulnerability Index combines factors measuring a country's exposure to climate hazards with indicators of its financial resilience, including access to loans and level of debt. It's designed to help funders direct grants and low-interest loans to countries that are both most exposed to climate perils and less able to access funds through other means.
Bloomberg
17-06-2025
- Business
- Bloomberg
ECB Amends Bank Capital Reviews to Reflect Extreme Weather Risks
The European Central Bank is embedding climate risk into regular reviews of how well banks can absorb losses, marking a new chapter in its supervisory approach. The intention is to 'incorporate, more decisively and in a more business-as-usual way, climate change and nature-related risks' in the ECB's methodology for its so-called Supervisory Review and Evaluation Process, Patrick Amis, director general for specialized institutions and less significant institutions, said in an interview.
Associated Press
10-06-2025
- Business
- Associated Press
Why a Corporate Climate Strategy Is Essential for Future Business Success
Businesses across the globe are facing increasing pressure to build a thorough corporate climate strategy to manage physical risks like floods and droughts, and transition risks related to shifting regulations and customer demands. Investors, regulators, and customers are all driving the need for change, as well as meaningful and measurable results. A robust climate strategy is no longer optional; it's essential for staying resilient, competitive, and trusted in a fast-changing world. This article will detail the needs for corporate climate strategy, key elements to include, and the benefits that businesses can achieve. Climate Risk is Business Risk A corporate climate strategy helps companies manage climate-related impacts that disrupt operations and drive up costs. Physical risks may include natural disasters such as floods, extreme weather , and droughts. These events can disrupt global supply chains through impacts to production and storage facilities, interruptions to transportation, and marketplaces. Businesses are already feeling the financial and operational impacts of climate risk. 28 billion euros'chocolate crisis'commercial real estate Evolving climate-related regulatory requirements such as emissions reduction targets, energy efficiency mandates, and building codes also pose new challenges to businessses. Shifts in carbon pricing can significantly increase operational costs if production methods are emissions-intensive. Companies that delay action risk losing market share, investor confidence, or falling out of regulatory compliance. Regulatory and Market Drivers are Accelerating Change New corporate climate regulations, such as the Corporate Sustainability Reporting Directive ( CSRD ) in the EU and the California bill 261 and other state bills in the U.S. accelerate the need for corporate climate strategy. These laws require reporting on: Beyond regulatory reporting requirements, climate-related aspects are also being integrated into standardized management systems. In February 2024, the International Organization for Standardization (ISO) amended ISO 9001, ISO 14001, and ISO 45001, to incorporate direct and indirect impacts related to climate change. Organizations certified under these standards are now required to assess climate-related risks and opportunities as part of their risk management processes. Additionally, Investors have come to prioritize climate-related disclosures and decarbonization strategies. within their portfolios. Transparent reporting on climate risks and mitigation efforts is becoming a critical factor in investor assessments. The Business Case for a Corporate Climate Strategy Developing and adopting a climate strategy empirically benefits businesses. Climate action supports operational efficiency, energy savings, and cost control. Green buildings, for example, can enhance return on assets and profits due to savings in utility operating costs. The use of sustainable components/materials in building construction can increase overall property value. Businesses of any size can take meaningful action to achieve climate goals. Public and high-profile initiatives, such as achieving climate neutrality, gain the favor of employees, customers, and partners who want to be part of the solution to climate change. Organizations that take a proactive approach will reap the greatest benefits by anticipating market shifts and future-proofing their business models. Key Elements of an Effective Corporate Climate Strategy Comprehensive climate strategies must be actionable and aligned with global standards, including: 1. Comprehensive Greenhouse Gas (GHG) Inventory A a full GHG inventory encompasses: Tools like life cycle carbon assessments can provide a more complete picture of emissions across a product's or service's lifespan. 2. Science-Based Emissions Reduction Targets The Science Based Targets initiative (SBTi) provides a framework to meet investor and regulatory demands for credible decarbonization commitments, such as: 3. Actionable Decarbonization Roadmap A successful roadmap translates targets into actionable plans with timelines, investments, and accountability. This can look like: 4. Governance Structures Embedding Climate Risk into Business Planning Integrating climate considerations into corporate governance involves: Such integration ensures that climate strategy is not siloed, but is a core component of business decision-making processes. 5. Routine, Transparent Reporting and Stakeholder Engagement Transparency in reporting and active stakeholder engagement are critical for building trust and demonstrating progress. This includes: recognized frameworks Global Execution Requires Local Expertise Implementing a corporate climate strategy across multiple countries presents complex challenges. Multinational organizations must navigate a patchwork of regulatory frameworks, cultural nuances, and technical requirements that vary significantly by region. That's why local expertise is essential to deliver results that meet regional regulations and cultural expectations. The Inogen Alliance offers a single point of contact and access to 6,000+ local environmental, health, safety, and sustainability consultants to support effective global climate strategies aligned to best practices and client organizational needs. Assessing Readiness Corporate climate strategy is critical not just for compliance, but for long-term resilience, competitiveness, and value creation. Businesses that take action immediately will be able to manage the accelerating changes and increasing pressure from regulators, investors, and customers. Companies should assess their current climate readiness as a starting point to begin or refine their strategic planning. For more valuable insights, subscribe to the Inogen Alliance blog and keep up to date with the latest news. Visit 3BL Media to see more multimedia and stories from Inogen Alliance
