Broadstone has partnered with climate specialist Ortec Finance to add additional modelling options to its suite of ESG advisory capabilities.
Ortec offers climate modelling, developed using its own framework, allowing assets owners to better understand the potential impact of climate change on their investment portfolios and balance sheets.
This service can be utilised by DC and DB pensions schemes as well insurers, banks, asset managers and other large asset owners.
Broadstone says the scenarios enable it to measure, monitor and manage “financial materiality” on portfolios, informing their investment strategies and mitigating risks.
This approach enables investors to quantify key macroeconomic changes and assess the impacts on asset class returns under various climate change scenarios.
Broadstone pointed out that Professor Jim Skea, the IPCC’s Climate Chief, recently warned that the world risks experiencing 3⁰C of global warming above pre-industrial levels by 2100 unless significant changes are made. Limiting this warming to 1.5⁰C is now considered nearly unachievable.
Asset owners and regulators are increasingly recognising the additional risks posed by climate change and are focusing on understanding the physical and transition risks that portfolios and corporates face.
Broadstone investment director Deon Dreyer says: “Climate change has the potential to cause significant economic disruption and asset owners will need to assess the financial impact from potential economic scenarios, and their impact on the environment. We are confident this solution will prove invaluable in helping asset owners navigate this.”
Broadstone head of investment consulting Marc Devereux adds: “Climate scenario modelling is critical to helping asset owners understand how climate change may impact their investment portfolios.
“Broadstone’s new offering in the UK market will help improve access for firms of all sizes to Ortec Finance’s award-winning service so institutions can begin to make the necessary adaptations to their investment strategy.”
Maurits van Joolingen, managing director, Climate Scenarios & Sustainability at Ortec Finance, adds: “We are excited to be working with Broadstone to help their clients better understand the financial impacts of climate change under a range of plausible futures, while also enabling them to manage associated risks and identify opportunities.”
