UN Environment Finance Initiative Report

Altogether 11 countries' institutional investors (20 in number) convened by the UN Environment Finance Initiative and Supported by Carbon Delta. They have worked to analyze, evaluate and test the methodologies to enable 1.5 degree Celsius, 2 degree Celsius and 3 degree Celsius based scenario analysis for the portfolio. These are based on the Financial Stability Board's Task Force on Climate-related Financial Disclosures.

This is considered to be a pilot project and a model for the companies to account for the risk of climate change for their business activities. The guidelines proposed can be adopted by any company based anywhere in the world.

The report that is based on the 1.5 degree Celsius scenario, by the Intergovernmental Panel on Climate Change, exposes companies to a significant level of transition risk, affecting as much as 13.16% of overall portfolio value. The largest 500 investment managers in the world – 81.2 trillion dollars represent a value loss of 10.7 trillion dollars.

Policy risks arise in the fields of utilities, transportation, agriculture as well as mining and petroleum refining sectors. Low carbon technologies which support the transition have a profit potential of 2.1 trillion dollars. Besides, it will also help companies to offset costs from complying with the greenhouse gas. Under the UN environment, Finance Initiative is a partnership between the UN Environment and the Global Financial Sector created in the wake of the 1992 Earth Summit with a vision to promote Sustainable Finance. 

 More than 200 financial institutions, including banks, insurers, and investors, work with UN Environment to understand today's environmental, social and governance challenges, why they matter to finance, and how to actively participate in addressing them. Carbon Delta is a climate change data analytics firm that quantifies investment risks for more than 30,000 companies along with numerous climate change scenarios.

It has formed the Climate Value at Risk (CVaR) model that empowers financial institutions with the tools necessary to protect assets from the worst effects resulting from the climate change and helps identify new, innovative low carbon investment opportunities.