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MSCI expands climate efforts with real estate risk tool

A new system will allow investors to better gauge climate-related risks pertaining to their allocations.

MSCI expands climate efforts with real estate risk tool

Research giant MSCI has launched a new tool designed to help real estate investors better monitor their exposure to climate risk, in an expansion of its monitoring efforts.

The new tool, called MSCI Real Estate Climate Value-at-Risk (VaR), follows the launch of a similar climate-focused tool in February, which was MSCI Climate Value-at-Risk.

Both tools are designed to allow investors to better manage and plan for risk, which is done through a forward-looking, returns-based valuation assessment.

This is broken down into several specific areas of risk. For example, the risks surrounding legislative change, known as transition risk, or the impact of extreme weather, known as physical risk.

It is designed to provide investors – investment managers, asset managers, banks and insurers - a better understanding of how these factors could weigh on performance.

MSCI said the framework is closely aligned to the G20’s Financial Stability Board’s Taskforce on Climate-Related Disclosures.

Commenting on the launch, Remy Briand, head of ESG at MSCI, said: ‘With this new offering, MSCI offers climate solutions across every area of our business, from ESG research to analytics, index, and now real estate.

The MSCI Climate VaR was developed from MSCI’s Climate Risk Center in Zurich. The aim of this group is to serve as a focal point for the development of climate change risk analytics and tools, and to forge strong partnerships with leading academic and research institutions around the world to advance the use of climate science for financial risk analysis.

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