“Wall Street’s Biggest Banks Set for Fed Climate Impact Exercise – Wall Street banks including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Wells Fargo & Co. are set to kick off a Federal Reserve pilot program to measure how hurricanes, drought and other extreme weather events can affect their portfolios. “
For large financial institution, their investment portfolio tends to be larger, more stable, lower yield around 6-10% annual return investment choices, such as power plants, hospitals, forestry, fibre optic networks, agriculture planation. These are stable investment choices that would yield a good return for long term investment management.
But at the same time many of such projects are also affected by the climate, climate change, and severe weather events. One such investment choice, The Church Commissioners, for instance, owns a forestry portfolio worth £435.7m in its £9.2bn investment fund. The value of such lumber resources can be greatly impacted by drought. Also potentially impacted are Hydro -Power plants and agricultural farms which have seen severe impacts in the recent California droughts. Water levels have gotten so low along the Colorado River that entire communities are in danger of losing theirwater supply.
And that is why at Climatility we believe that firms should look at climate, weather impact in dollar context and model it has a very real risk. With our forecasting tools we can incorporate such effects into such daily operations.
For example in forestry investment/management firm, tools such as Climatility can help with
1.) Analysis of potential investment project – analyzing if weather/climate would impact the growth/risk of a forestry.
2.) Forecasting the risk of wild fire, if there is an increase then the management firm can increase caution.
3.) Forecasting drought, if there is a trend of drought that is starting, then management company can pre-plan and prepare ahead of time to minimize damage.
4.) As a dollar amount, each time an analyst or management looks at the specific item in the portfolio to have an estimate of current projected return, and each time for review with an automated updated estimate with changing weather forecast.
https://www.ft.com/content/2a4910ae-d8d0-426e-a1be-06d725c4d6fa
https://www.axial.net/forum/companies/forest-products-private-equity-firms/
Contact us at Climatility.com to learn more about what we can do to help your business understand their climate risk.
Climate Tech Blog 