Financial institutions agree to say that climate risks and related impact on every market sector are increasingly spreading. Responsible investment and lending activities are key to unlock the system-wide change needed to reach zero-carbon future. However, in the current context, it is worth considering the global picture and pay attention to ESG (Environmental, Social and Governance) issues. Financial institutions are now increasingly embedding ESG screening in their due diligence process to identify related risks and opportunities and make responsible investment choices. This has not gone unnoticed at CO2logic and we have developed a set of services to guide the actors in the financial sector (such as banks, asset managers/owners, private equity, family offices, etc.) in managing several inherent challenges in this sphere.
Portfolio carbon footprints
CO2logic is a pioneer in climate analytics from supporting clients to publish their first carbon footprints back in 2007, to our extensive experience with guiding companies achieving carbon neutrality. Our portfolio carbon footprints inform a broad range of questions about portfolio exposure to climate change factors including carbon emissions, low-carbon transition, dependency on fossil fuels and contextualizing reduction ambitions. We have developed a methodology to calculate the footprint based on either primary data or modeled data. Both approaches allow to understand the carbon intensity of the companies within the portfolio and to actively engage with them to reduce their climate impact.
Climate Change financial risk assessment from physical and transition risks
Together with one of our partners we help investors and companies understand the exposure of business’ assets to rising physical risks from climate change and understand the exposure of business’ bottom-lines to rising transitional risk such as carbon pricing schemes (carbon taxes, emission trading schemes, etc.). The approach and analysis have been designed to allow companies to report in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), an initiative by the Financial Stability Board to help companies and investors respond to climate change risks.
ESG due diligence
We have developed a customized approach of ESG screening for investors to identify the environmental, social and governance risks and opportunities of companies in which they plan to invest or in which they are already investing. Our funnel approach looks into the investor’s expectations, sector requirements and insights, sites’ locations, review of academic opinions, benchmarking and finally the company performance. We avoid underbuilding our analysis on modeled data; but perform targeted research to obtain case specific data and insights which really add value to the investment decision process.
Supporting Net-Zero Commitments
The financial sector is either voluntarily or through regulation increasingly pledging to Net-Zero commitments. Financial institutions can approach Net-Zero Commitments in two ways: Reducing their operational carbon footprint and decarbonizing lending and investment portfolios. CO2logic has been working for over 13 years to fight climate change and its socio-economic consequences. We have build-up significant expertise in both calculating operational and portfolio footprints but also in developing climate projects to offset incompressible emissions. Moreover, CO2logic supports financial institutions in their journey to set science-based targets to align their lending and investment activities with the Paris Agreement. We help financial institutions assess the temperature alignment of current emission reduction targets, commitments, and investment and lending portfolios.