S&P Global Market Intelligence and management consultancy Oliver Wyman have collaborated to deliver Climate Credit Analytics, a sustainability solution designed to help financial institutions and corporations assess how transition to a low-carbon economy will impact the creditworthiness of their counterparties and investments. UBS will be the first European-headquartered bank to use Climate Credit Analytics for transition risk assessment.
The solution translates climate scenarios into scenario adjusted financials and scores at the company level by combining S&P Global Market Intelligence’s Credit Analytics risk models and datasets with Oliver Wyman’s climate scenario and stress testing expertise. It covers more than 700,000 public and private companies across all non-financial sectors of the global economy and comprises carbon intensive sector specific models, such as airlines, automotive manufacturing, metals and mining, oil and gas, and power generation.
The models should help clients understand the impact of climate change on financial exposures, including for climate stress testing and reporting in line with the requirements of the Task Force on Climate-related Financial Disclosures (TCFD).
Specific S&P Global datasets used in the models include:
- Financials and industry-specific data from S&P Global Market Intelligence, including oil and gas, coal production, airline passenger volumes, and electricity capacity
- Quantitative credit scoring methodologies from Credit Analytics, S&P Global Market Intelligence’s credit and counterparty risk solution
- Company-level greenhouse gas emissions and environmental impact data from S&P Global Trucost.
Liselotte Arni, UBS portfolio underwriter for sustainability and climate risk, says: “Partnerships such as this one that bring together the best of capabilities across data, methodologies, and analytics are critical for furthering our understanding of climate-related financial risk.”