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Climate RiskGauge

Evaluate the impact of climate-related scenarios on your portfolios to better understand the possible risks and opportunities that may arise on the journey to a low-carbon economy.

Undertake a Market-Valuation Approach to Assess the Impact of Climate-Related Risks

Climate RiskGauge estimates the financial impact of climate transition and physical risks by looking at a compact set of financials, projected emissions as well as a firm’s implied market capitalization, to arrive at the estimation of a credit score change1 over a given time horizon for public and private companies.

1S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence. Lowercase nomenclature is used to differentiate S&P Global Market Intelligence credit model scores from the credit ratings issued by S&P Global Ratings.

We Support
  • The Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations on forward-looking scenario analysis.

  • Climate-related stress testing that regulators are increasingly expecting from financial institutions, at both a single counterparty and portfolio level.

  • Incorporation of climate related risks into credit-related policies, procedures, strategies and overall risk appetite of a financial institution.

  • Climate risk-adjusted valuations of companies for the purpose of capital markets issuances, mergers and acquisitions and other types of corporate financing and investment activities.

  • Comprehensive Coverage
  • Aligned to Renowned Agencies/Associations

Comprehensive solution.

Climate RiskGauge leverages S&P Global Trucost’s database of company-specific Scope 1 and 2 emission details and company pledges to transition from Trucost’s Paris alignment datasets to provide a granular assessment for 45,000+ public companies (financial and non-financial) and several million private companies across industries.2

The model’s primary outputs include the main financial impacts (i.e., additional costs, revenues, total liabilities and change in earnings) and the future market capitalization of each company in the chosen sector, scenario and year. The current and future market capitalization for private companies leverages standard market-valuation techniques.

Future market capitalization is then used within an enhanced Merton approach to determine the change in creditworthiness of those companies.

It is delivered via S&P Capital IQ/Market Intelligence Excel® templates which help automate financial spreading and provide ease in integration, as these are not dependent on any software or technology.

Aligned to renowned agencies/associations

Aligned to Renowned Agencies/Associations

The tool enables users to select between:

  • A slow, moderate, or fast scenario developed by S&P Global Trucost, spanning a period of 30 years, from 2020 to 2050.
  • A user-defined scenario applying a global carbon price risk premium, where the severity of the overall tax increase from current levels is assumed to be independent of the industry sector, the geography, and the time horizon.
  • It has the flexibility to align with the scenario values from both, the International Energy Agency (“IEA”) and the Network for Greening the Financial System (NGFS). The tool is also regularly updated to reflect the continued evolution in climate-related risk trends. Reflect the continued evolution of climate-related risk trends.

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