Insights from the UN Climate Risk Landscape Report 2024 — Part 1
Disclaimer: This blog post represents a personal interpretation and analysis of the United Nations Environment Programme Finance Initiative’s 2024 Climate Risk Landscape Report. The views expressed are those of the author and do not necessarily reflect those of the United Nations.
The original report can be accessed at: UNEP FI 2024 Climate Risk Landscape Report.
The landscape of climate risk assessment tools has undergone significant transformation in recent years, marked by technological advancement and increased market sophistication. The United Nations Environment Programme Finance Initiative’s (UNEP FI) 2024 Climate Risk Landscape Report reveals several groundbreaking developments that are reshaping how financial institutions evaluate and manage climate-related risks.
The Rise of Strategic Partnerships
One of the most notable trends has been the emergence of enhanced synergistic collaborations across industries. Major market players have been actively pursuing strategic integrations through mergers, acquisitions, and partnerships. For instance, MSCI’s acquisition of Burgiss in August 2023 substantially expanded its coverage to include over 7,000 private investment funds across 195 countries. Similarly, ICE’s acquisition of Black Knight strengthened its sustainable finance solutions in the mortgage sector.
These consolidations are complemented by strategic alliances based on complementary strengths. Morningstar’s Sustainalytics partnership with XDI, for example, has enhanced its Physical Climate Risk Metrics through advanced statistical and probabilistic modelling. Such collaborations extend beyond tool vendors to include data providers and service providers, creating a more comprehensive ecosystem for climate risk assessment.
Artificial Intelligence Integration
The integration of artificial intelligence (AI) into climate risk assessment represents another pivotal development in 2024. AI’s role is multifaceted, enabling:
- Maximization of existing data and information
- Identification of high-risk zones
- Enhanced adaptation strategy development
- Improved natural disaster prediction accuracy
Tool vendors like Riskthinking.AI are leveraging AI algorithms to research complex network structures between companies and their physical assets. Similarly, Intensel employs AI across multiple hazard types and uses AI-powered models to compute energy use correlations with temperature increases.
Enhanced Data Access and Open-Source Innovation
The democratization of climate data through open-source initiatives and enhanced data access platforms marks another significant trend. Government agencies, universities, and NGOs are increasingly making their data available, revolutionizing how organizations approach climate-related challenges.
Notable examples include:
- The World Bank Group’s Climate Change Knowledge Portal (CCKP)
- The Resilient Planet Data Hub’s Global Systemic Risk Assessment Tool (G-SRAT)
- WWF’s Risk Filter Suite
- World Resources Institute’s various open-source tools
Refined Assumptions and Enhanced Functionalities
The industry has shown increased focus on data precision and assumption refinement. Tool vendors like ICE have implemented strict quality assurance processes for emission data validation, combining human oversight with statistical outlier assessment. Morningstar’s Sustainalytics has added transition plan evaluation capabilities to its Low-Carbon Transition Ratings product, moving beyond simple acceptance of self-disclosed targets.
Market Coverage Expansion
A notable 41% of vendors featured on UNEP FI’s Climate Risk Dashboard now cater to companies in Latin America, Asia-Pacific, and Africa. This expansion addresses the crucial need for enhanced data availability across diverse regions and asset classes. Vendors like Brazil’s WayCarbon and Hong Kong’s Intensel bring specialized regional expertise to the market.
Looking Forward
The evolution of climate risk assessment tools reflects the financial sector’s growing recognition of climate change as a critical risk factor. As these tools continue to develop, we can expect:
- Further integration of AI and machine learning capabilities
- Enhanced regional coverage and specialized solutions
- Improved data quality and validation processes
- Greater emphasis on open-source collaboration
The transformation of the climate risk tool market represents a significant step forward in our collective ability to assess and manage climate-related risks. However, continued innovation and collaboration will be essential to meet the growing demands of financial institutions and regulatory bodies.
Abbreviations and Acronyms
- AI: Artificial Intelligence
- CCKP: Climate Change Knowledge Portal
- G-SRAT: Global Systemic Risk Assessment Tool
- ICE: Intercontinental Exchange
- ML: Machine Learning
- NGO: Non-governmental Organisation
- UNEP FI: United Nations Environment Programme Finance Initiative
- WWF: World Wildlife Fund
References
- UNEP FI (2024). 2024 Climate Risk Landscape Report
- MSCI (2023). MSCI announces acquisition of Burgiss
- ICE (2023). Intercontinental Exchange Completes Acquisition of Black Knight
- Morningstar (2022). Morningstar Sustainalytics announces strategic agreement with XDI
- World Bank (2023). Climate Change Knowledge Portal
- WWF (2023). The Risk Filter Suite
