BlackRock, the world’s largest asset manager, announced today an agreement with business and technology consultancy Baringa Partners to acquire Baringa’s Climate Change Scenario Model, and to integrate the model into BlackRock’s Aladdin Climate technology.

Understanding the potential impact of climate change, and the transition to a low carbon economy, on investments and portfolios is an emerging focus area for investors, and climate scenario analysis is a key tool to manage and assess this risk. Baringa’s Climate Change Scenario Model is a fully integrated transition and physical risk model, enabling users to see climate impacts at portfolio down to individual asset levels, across multiple asset classes, using multiple bespoke scenarios. The solution informs clients with assets totalling over $15 trillion, supporting the management of climate risk and the reallocation of capital to achieve net zero.

Aladdin is BlackRock’s end-to-end operating system for investment professionals. Last year, BlackRock announced the launch of Aladdin Climate, a software-based solution enabling financial institutions and investors to quantify and measure the physical risk of climate change and the transition risk to a low-carbon economy on their portfolios, using climate-adjusted security valuations and risk metrics.

Sudhir Nair, Global Head of the Aladdin Business at BlackRock said:

“Investors and companies are increasingly recognising that 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. The integration of Baringa’s models and the ongoing collaboration between our firms will enhance Aladdin Climate’s capabilities, helping our clients understand transition risks in more sectors and regions than ever before.”

Under the new agreement, the companies will form a long-term partnership, aiming 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 other clients. Baringa will use the core Aladdin Climate capabilities as part of its growing global consulting work in advising financial services, governments, regulatory bodies, and clients across all sectors on climate risk and developing net zero strategies.

Colin Preston, Global Head of Climate Solutions at Baringa said:

“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. The integration of Baringa’s Climate Change Scenario Model into BlackRock’s Aladdin platform will inform the reallocation of capital across the global economy, accelerating the transition to net zero.”