Broadstone, a leading independent financial services consultancy, has partnered with Ortec Finance to add climate scenarios, developed using their award-winning modelling framework, to its suite of ESG Advisory capabilities.
The service supports all asset owners from insurers across the General Insurance and Life Insurance sectors to defined benefit (DB) and defined contribution (DC) pension schemes, as well as banks, asset managers and any asset owners.
With global sustainability reporting frameworks moving towards harmonisation and placing double materiality at the forefront, it is crucial to robustly assess the financial materiality of climate change on portfolios.
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 made1. 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.
As a result, asset owners must conduct financial materiality assessments to comprehend the impact of potential climate scenarios on their 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.
Deon Dreyer, Investment Director at Broadstone, said: “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.”
Marc Devereux, Head of Investment Consulting at Broadstone, said: “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, said: “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.”