Business
Morningstar Sustainalytics Enhances its Physical Climate Risk Assessments for Public Companies
Physical Climate Risk Metrics enables investors to assess the financial impacts of portfolio companies' direct and indirect climate risks CHICAGO and TORONTO,
About this update from Morningstar, Inc.
[{"type":"text","content":"Physical Climate Risk Metrics enables investors to assess the financial impacts of portfolio companies' direct and indirect climate risks \nCHICAGO and TORONTO, June 22, 2023 /PRNewswire/ -- Morningstar Sustainalytics, a leading global provider of ESG data, research, and ratings, announces enhancements to its Physical Climate Risk Metrics product, including the addition of two new reports offering deeper views into companies' exposure, loss, and financial resiliency as it relates to physical climate risk. Within these reports, new indirect risk metrics have been added to better meet the Task Force on Climate-related Financial Disclosures (TCFD) recommendations of disclosing on both direct and indirect physical risk and providing insight across the entire business value chain.\nIn a hot house world scenario where climate policy efforts are insufficient to stop global warming, leading to irreversible climate change and severe consequences from related physical risks, companies with average physical climate risk exposure within Physical Climate Risk Metrics universe may lose an equivalent of $0.45 for every $1 of cumulative operating cash, between now and 2050. As part of Morningstar Sustainalytics' evolving set of climate-focused solutions for investors, the comprehensive Physical Climate Risk Metrics dataset provides visibility into the financial impacts of physical climate risks, considering a company's revenue, physical asset value, and operating cash flow.\n\"With the increasing global adoption of climate-related regulation to accelerate decarbonization and within the limited time to mitigate the effects of global warming, investors need data and insights to understand their exposure to financial risks stemming from the increasingly frequent and devastating climate events,\" said Azadeh Sabour, senior vice president of Climate Solutions at Morningstar Sustainalytics. \"With net-zero insights from our recently launched Low Carbon Transition Ratings coupled with asset-level data-based insights from our Physical Climate Risk Metrics, we empower investors with a suite of climate solutions that align with the TCFD's guidance.\"\nThe Physical Climate Risk Metrics are a bottom-up assessment of climate change-related adverse impacts from physical hazards, including major storms, wildfires, floods, and others. The dataset can support i...