Climate risk resources & tools
There is a growing need for information, advice and guidance to support the finance sector in mobilising and mainstreaming ESG thinking and practice across various institutions.
Climate Risk Integration
Are you accounting for sustainability, value and equity? ESG integration combines ESG data, research and analysis together with traditional financial analytics in the investment decision-making process.
Risk: Are the underlying assets and investments at risk of being damaged or destroyed, or becoming stranded, or are they otherwise at risk of not being able to generate returns in future?
Integrating risk-related aspects of Sustainability:
- Consider best-established ESG management approach and focus on risk and harm prevention
- Identify, manage and disclose ESG risk
- Methods and tools are evolving and more holistically cover both physical and transition climate risk
- Integration is evident when capital is diverted from activities with ESG risk and detrimental impacts
- Simultaneously one identifies activities that performs well
Here are some examples of ESG integration best practices in EMEA markets.
Opportunity: Are the underlying assets actively seeking and positioning themselves to capture opportunities that could be presented in a more sustainable future?
Integrating an assessment of the sustainability opportunity
- Considered the next step in maturity
- Opportunities for ESG advancement to be given some weight when evaluating investment and financing opportunities
- Capital is deployed toward activities in the real economy that align with societal and development goals, and capture and promote the opportunity created by the transitioning economy
- A mandate is evident that pursues innovation and investment in ESG aligned sector and activities leading to product innovation and opening new markets
MSCI demonstrate Integrating Net-Zero Solutions Into the Investment Process.
Next steps
Next immediate considerations should include:
Integration into company governance
Integration into strategy considering risks and opportunities
Integration into investment decision making
Effective disclosure and appropriate metrics and targets to consider