BlackRock offers climate risk tool

BlackRock has created Aladdin Climate, a new software that should allow financial institutions and investors to quantify climate risk in their portfolios.

Aladdin Climate is the first software application to offer investors measures of both the physical risk of climate change and the transition risk to a low-carbon economy on portfolios with climate-adjusted security valuations and risk metrics. Using Aladdin Climate, investors can analyse climate risk and opportunities at the security level and measure the impact of policy changes, technology, and energy supply on specific investments.

“There is no single issue that clients ask us more about than the impact of climate risk on their portfolio,” said Rob Goldstein, BlackRock’s COO (pictured). “Yet, while lots of people are talking about climate risk today, what investors need to make informed decisions is data tied to specific securities in their portfolio. Aladdin Climate is a dramatic step forward to begin filling the information gap necessary to build truly sustainable portfolios.”

BlackRock has also expanded access to ESG data through new partnerships with data providers Sustainalytics and Refinitiv. Aladdin now offers over 1,200 key performance indicators to help portfolio and risk managers identify sustainability-related risks in their exposures and make informed asset allocation decisions. By providing all Aladdin clients a set of ESG scores across a broad universe of companies, BlackRock is making it easier for investors to incorporate ESG metrics in their investment process.

The announcement comes as BlackRock’s Global Client Sustainable Investing Survey reports that the health and economic challenges this year have not slowed investor demand and the company has raised the outlook for sustainable investing. In fact, investors plan to double their allocations to sustainable products over the next five years, and 20 per cent said that the pandemic would actually accelerate their sustainable investing allocations.

“The tectonic shift we identified earlier this year has really taken hold, as the convergence of political and regulatory pressures, technological advancements and client preferences have pushed sustainability into the mainstream of investing,” said Mark McCombe at BlackRock. “The results of our survey show this sustainable transition is occurring all around the world.”

The survey gathered insights from 425 investors in 27 countries, including corporate and public pension plans, asset managers, endowments, foundations, and global wealth managers with nearly $25tr in assets under management (AUM).

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