blog Market Intelligence /marketintelligence/en/news-insights/blog/large-us-bank-meets-strategic-climate-and-investment-goals-via-broad-single-provider-solution content esgSubNav
In This List
Case Study

Large US Bank Meets Strategic Climate and Investment Goals via Broad, Single-Provider Solution

Podcast

Private Markets 360° | Episode 1: The role of ESG in Private Equity

Blog

Spotlight on sustainability: How banks can overcome the challenges of achieving net-zero emissions by 2050

Blog

Climate Scenario Analysis: Embracing Uncertainty with Conviction

Blog

Insight Weekly: Stocks endure more pain; bank branch M&A slows; debt ratios fall


Large US Bank Meets Strategic Climate and Investment Goals via Broad, Single-Provider Solution

Highlights

THE CLIENT: A large commercial bank

USERS: Capital Markets, Wealth Management, Sustainability, Credit, Lending, and Risk teams

Our industry-leading data coupled with state-of-the-art technology and delivery channels, allowed us to be a single source of ESG solutions for multiple groups throughout this large commercial bank.

Natural disasters are becoming more frequent, resulting in more significant catastrophes. The ongoing effects mean banks in the U.S. have no choice but to pay closer attention to climate issues. From debt and equity capital markets to physical losses from default and the entire risk spectrum, a comprehensive sustainability framework is increasingly critical.

Pain Points

Conversations with this large commercial bank began within their Capital Markets and Wealth Management teams around sustainability-related issuances and investments. In particular, their Risk Management team wanted to look at the impact of different scenarios for transition pathways and risks on the bank’s corporate clients involved in high carbon-emitting sectors to understand how this would affect the creditworthiness of obligors. This team also needed transparency into the model output, as well as documentation to back our proposed approach. However, as additional groups from the bank were brought into the conversation, it became clear they would benefit from incorporating a broad sustainability framework together versus a piecemeal approach. A multi-vendor approach could have solved their needs, but they would then face the challenge of integrating different data sources, products, and solutions.

In particular, the bank was suffering from three central problems:

  1. Unreliable Data: public reporting of granular emissions data to adhere to disclosure recommendations
  2. Inaccurate Credit Decisions: unable to correctly calculate transition-adjusted credit risk
  3. Shareholder Trust: ensuring that ESG performance data is published to meet shareholder scrutiny

The Solution

The client issued an RFP to review its ESG-related data and research and to address the bank's strategic climate and investment goals. We authored a deep-dive proposal supported by numerous demos, product and subject matter expert sessions, and other proofs-of-concept. S&P Global Market Intelligence was able to present a solution that solved many of the customers’ challenges, with key differentiators including:

  • Breadth: One-stop-shop for ESG scores, environmental & climate data, and climate credit analytics
  • Depth: Hundreds of data points on thousands of public and private companies and sovereign debt issuers
  • Integration: 200+ complementary datasets across S&P Global Market Intelligence and other divisions
  • Technology: State-of-the-art data feed and platform solutions, including Xpressfeed™ and the S&P Capital IQ Pro platform
  • Reputation: Unparalleled reputation of S&P Global and ESG specialist teams within our Sustainable1 organization

We provided the bank's teams with a sound bottoms-up methodology to evaluate transition paths to net zero under different climate scenarios, an automated approach to produce portfolio-wide results, the ability to capture industry-specific variables, and access to extensive and reliable financial and environmental data required for the analysis.

From a transparency perspective, the financial institution can now realize variables used in the models under Network for Greening the Financial System, European Central Bank, and Global Carbon Tax scenarios with the ability to override variables with internally developed scenarios. They also receive a full output of financial statements to understand changes in client profitability and cash flow while modeling the output of credit scores and probability of default with insight into variables driving firm risk.

Product Mix

With an expansive suite of products and datasets, the client now has a single data provider for its ESG-related solutions – the client recognized the financial benefit and economies of scale by investing in higher-quality data on a single platform. Additionally, they can use the same solution for internal analytics, corporate reporting, and regulatory compliance. Their client-facing use case includes derived portfolio-level client reporting and de minimis advisory.

Dataset Coverage Content Datafeed / Platform

S&P Global ESG Scores

10,000+ companies

One total ESG score, three-dimension scores (E+S+G), and an average of 23 criteria-level scores.

Xpressfeed or Snowflake

CIQ Pro

Trucost Environmental

17,000+ public companies 7,000+ private companies 158 GICS sub-industries

Environmental metrics (carbon, water, waste, pollution, and natural resources) and priced externalities.

Xpressfeed or Snowflake

CIQ Pro

Sector revenue data

15,000+ public companies

Revenue data ($, %) based on a 464-sector typology

Xpressfeed or Snowflake

CIQ Pro

Fossil fuels & energy data

~1,200 public companies

Fossil fuel reserves and CAPEX, power generation per technology, and embedded carbon.

Xpressfeed or Snowflake

CIQ Pro

Trucost Sector Average Emission Factors

158 GICS sub-industries

Sector average carbon intensity factors for GICS sub-industries covering Scopes 1,2, and 3, derived from our Environmental data and activity weights.

SFTP or EDX

Trucost Paris Alignment

15,00+ public companies

Alignment with the Paris Agreement using the SDA-GEVA approach recommended by SBTi.

Xpressfeed or Snowflake

CIQ Pro

Trucost Carbon Earnings at Risk

14,000+ public companies

TCFD transition risk / value-at-risk indicators derived from region- and sector-specific revenue exposure to carbon pricing under three scenarios (low, medium, high).

Xpressfeed or Snowflake

CIQ Pro

Trucost Physical risk

2.95M+ asset locations linked to 195,000+ companies

Physical risk scores for 7 hazards (heatwaves, coldwaves, drought, wildfire, hurricanes, riverine flooding, sea-level rise) and three IPCC scenarios.

Xpressfeed or Snowflake

CIQ Pro

Climanomics™ Real Assets Platform

240+ asset types

Financial impact metrics including Modeled Average Annual loss related to climate physical risk of real assets for 7 hazards and 4 RCP scenarios.

Climanomics™ Platform

Climate Credit Analytics

5x sector models and 1x generic sector covering 1.6M+ companies

Model focused on climate stress testing, scenario analysis, and impacts on credit risk in compliance with regulatory and voluntary disclosure requirements.

API

Excel Plugin

Sovereign ESG data

211 countries

ESG metrics at the country level including 3x composite E, S, and G pillar scores, 12x composite theme scores, and 44x detailed indicator scores.

-

Sovereign Platform

Key Benefits

Financed emissions are a proportional measure of the emissions funded by a financial firm’s investments in another firm, based on a formula that includes financial exposure (loan data), greenhouse gas emissions, and the financials. With S&P Global Market Intelligence solutions, the bank's users can cross-reference greenhouse gas (GHG) emissions and financial data on the same platform, saving time and money.

We supplied all the necessary data through channels they already used, including S&P Capital IQ Pro, Snowflake, and XpressFeed™.

The commercial bank was able to:

  • Establish a Corporate Strategy: Quantify financed emissions and set targets in alignment with the Partnership for Carbon Accounting Financials (PCAF); Conduct climate stress-testing and scenario analysis to figure out impacts on credit risk in compliance with regulatory and voluntary disclosure requirements.
  • Implementation to Achieve Targets: Empower front-line teams with the data and insight to help their clients achieve net-zero targets.
  • Quantify Risk: These areas include transition risk, physical risk, and credit risk.
  • Establish the Financial Impact of Physical Risk: The average annual loss related to climate physical risk of tangible assets.
  • Measure the environmental exposure of investments in the portfolios.

Click here to explore some of the datasets and solutions used in this case study.

Learn more about Market Intelligence
Click Here