ISS ESG Enhances Climate Physical Risk and Scenario Analyses in Climate Impact Reporting Solution
Institutional Shareholder Services’ (ISS) responsible investment arm, ISS ESG, announced today enhancements to its Climate Impact Reporting Solution, with new Climate Physical Risk and Climate Scenario Analyses. According to ISS ESG, the new Climate Physical Risk Analysis, provides investors with in-depth, proprietary financial analysis to help assess the financial impact of physical climate risks on assets, issuers and portfolios, while the new Climate Scenario Analysis can help investors align their portfolios in accordance with the International Energy Agency’s (IEA) World Energy Outlook.
ISS ESG’s Climate Physical Risk Analysis aims to give investors a holistic overview of its exposure to physical climate risks, utilizing granular corporate data is to understand an issuer’s geographical activity profile and its resulting hazard exposure, and proprietary financial data is used to assess the Value at Risk from hazards. The assessment covers five of the most costly physical climate hazards across three scenarios, historical, most likely, and worst case. According to ISS ESG, the data can be used to assist with reporting according to the TCFD and other reporting frameworks.
ISS ESG stated that in response to the recent publication of third party research on climate scenario analysis, the company enhanced the existing methodology and underlying scenarios to reflect the most up-to-date data available for its Climate Scenario Analysis. According to ISS ESG, the solution now includes new scenarios based on the Paris-aligned Sustainable Development Scenario (SDS), Stated Policies Scenario (STEPS) and Current Policies Scenario (CPS).
In addition, the Climate Impact Reporting solution now includes the ISS ESG temperature score at both a company and portfolio level and looks at the relationship between the increase in emissions vs. the increase in temperature for the scenarios available in the IEA World Energy Outlook, as well as a new Climate Target Assessment leveraging science-based & company-specific targets.
Dr. Maximilian Horster, Managing Director, Head of Climate Solutions at ISS ESG said:
“As investors seek to gain a better understanding of their exposure to climate-related risks, ISS ESG’s Climate Impact Reporting Solution’s enhancements provide investors with up-to-date, decisive data and actionable intelligence for assessing and managing the impact of climate-related risks on their investments, supported by fully automated reporting available at the click of a mouse.”