Climate: the rating agencies' race for climate intelligence

On Wall Street it was rushed to acquire companies specialized in modeling climate risks. In the last period, large rating agencies such as Moody’s and S&P Global and various financial companies, in fact, are concentrating their investments in the purchase of the so-called “climate intelligence”.

The latest This acquisition in chronological order is precisely the one carried out by S&P which brought The Climate Service, a consultancy firm on climate risk, into its network. The Climate Service, in detail, deals with analyzing the physical risks of the climate: extreme temperatures, coastal flooding and water stress, in addition to the so-called transition risks, which include changing regulatory and market conditions.

As the American news site Axios explains, the purpose of the two rating agencies in particular is to “feed their environmental, social and governance (ESG) investment lines”, as well as to “report any systemic risks for the financial system linked to climate change “. By incorporating climate risk analysis into their ratings of companies, sovereign wealth funds and more, Moody’s and S&P are meeting the growing market demand for ESG funds, Axios pointed out.

Ad August 2021 Moody’s invested $ 2 billion to purchase a leading risk modeling firm, RMS, which is based in London. Specifically, the rating agency has launched several climate products for institutional investors, banks, private equity firms and individuals looking to invest in companies ready for a lower-carbon world. The RMS acquisition follows Moody’s steps to secure majority stakes in two other ESG and climate intelligence companies, 427 in July 2019 and VE in April of that same year.

S&P has also proved very prolific on this front in recent years with investments in similar consulting firms, such as Measurabl, TealBook and Novata. “These investments and acquisitions are part of our ESG strategy in action: to be at the forefront of the ESG climate and space to meet the evolving needs of our clients,” Christopher Bennett, S&P Global Head of ESG Strategy, explained in a statement. .