A new long-term partnership will see the firms collaborate to set the standard for modelling the impacts of climate change and the transition to a low carbon economy on financial assets for investors, banks and clients.
BlackRock hopes the move will improve Aladdin Climate, which is part of its flagship portfolio management platform. It identifies climate risk in portfolios – by measuring impacts of physical risks, extreme weather events, and transition risks such as policy changes, new technology, and energy supply – so investors can take action to reduce their exposure.
Independent business and technology consultancy firm Baringa has developed its CCSM over two decades and will use Aladdin’s capabilities as part of its global advisory work for financial services, governments, regulatory bodies, and clients on developing net-zero strategies.
Sudhir Nair, global head of Aladdin, said: “Investors and companies are increasingly recognising climate risk presents investment risk. Through this partnership with Baringa we are raising the industry bar for climate analytics and risk management tools so clients can build and customise more sustainable portfolios.”
There was more than $2.3trn of assets under management in sustainability funds globally in the first quarter of 2021, but understanding potential impacts of climate change and a transition to a low carbon economy on portfolios remains a complex challenge for investors.
And with governments and organisations increasingly committed to achieving net-zero, companies and investors alike are seeking solutions to help assess that risk.
Colin Preston, global head of climate solutions at Baringa, added: “Climate change is the number one challenge and opportunity of our generation. Having developed the leading Climate Change Scenario Model, we are excited to partner with BlackRock to accelerate the adoption of this solution by organisations across the globe.”