Linux Foundation Launching Open Source Initiative For Financial Sector to Address Climate Risk and Opportunity
The Linux Foundation (LF) announced that it launching the LF Climate Finance Foundation (LFCF), an initiative aimed at empowering investors, banks, insurers, companies, governments, NGOs and academia with AI-enhanced open source analytics and open data to address climate risk and opportunity. The LFCF planning team consists of representatives from the World Wide Fund for Nature (WWF), Ceres and the Sustainability Accounting Standards Board (SASB), and Allianz, Amazon, Microsoft and S&P Global have already committed to be founding members.
The LFCF is being formed in response to the substantial capital flows and financing that will be needed to avoid catastrophic levels of global warming, which the Intergovernmental Panel on Climate Change (IPCC) estimates could reach $2.4 trillion annually. According to LF, achieving this dramatic increase in investment requires better data and analytic tools to fully account for climate-related risk and opportunity.
Truman Semans, CEO and Planning Team Chair at OS-Climate, said:
“There is a clear call from major pension funds, banks, governments and civil society for public access to corporate climate data and other data needed for finance to support Paris Climate Accord goals, as well as for better tools to inform financial decisions.”
The LFCF will host the OS-Climate platform, which is being developed with the goal of enabling asset owners, asset managers and banks to manage climate risk and identify the climate-aligned companies, infrastructure, capital projects and technologies that will thrive in a low-carbon economy. The platform will consist of multiple physical and economic scenarios, a global and open Data Commons and economic and financial models that accelerate predictive analytic tools and investment products that manage climate-related risk and finance climate solutions across every geography, sector and asset class.
The platform is intended for use by multiple users across the financial sector, governments, regulators researchers and NGOs. Investors and banks could use the platform to analyze portfolios and individual financings and investments, while governments could use it for investments in resilient infrastructure, and to develop effective policy and regulators to manage market-related climate risk.
Martina Cheung, President of S&P Global Market Intelligence, said:
“Businesses and investors are acknowledging the global climatic changes and its impact on the future performance of companies. There is an increasing demand from pension funds, asset managers and governments for climate related data to incorporate into their decision-making. Now more than ever, there’s a need for greater company disclosure of climate and environmental data as well as continued advancement in data and analytical tools to better assess climate risks and opportunities.”
According to the LFCF, development work on technology to be incorporated into the OS-Climate platform has already begun, including the Science-Based Targets initiative’s (SBTi) recently released beta version of its open source Finance Tool, which is being developed by OS-Climate and Ortec Finance. The Finance Tool is expected to be integrated into the platform, and further built out with community-based development.
Jim Zemlin, executive director of the Linux Foundation, said:
“The cost and complexity of analytics for climate-related investments require highly organized collaboration and resource sharing across hundreds of users and contributors. The LF Climate Finance Foundation will enable neutral governance, shared development costs and technical leadership from many of the world’s leading financial institutions, multilateral organizations, academia, governments and NGOs.”