BlackRock has launched Aladdin Climate to help investors quantify climate risk and low-carbon opportunities relating to their portfolios, as the physical toll of climate change mounts and the global transition to net zero emissions accelerates.
Aladdin Climate is the first software application to offer investors measures of both the physical risk of climate change and the transition risk to a low-carbon economy on portfolios with climate-adjusted security valuations and risk metrics.
Using Aladdin Climate, investors can now analyse climate risk and opportunities at the security level and measure the impact of policy changes, technology, and energy supply on specific investments. Aladdin Climate is initially available as an add-on for existing Aladdin clients globally with asset class coverage rolled out gradually over the course of 2021.
There is no single issue that clients ask us more about than the impact of climate risk on their portfolio
BlackRock's operating chief described Aladdin Climate as a dramatic step forward in filling the gaps for investors to build sustainable portfolios. The investment giant has worked with data providers Sustainalytics and Refinitiv to develop the software and claims it offers more than 1,200 key performance indicators relating to environmental, social and governance (ESG) metrics.
"There is no single issue that clients ask us more about than the impact of climate risk on their portfolio," Rob Goldstein, COO at BlackRock, commented. "Yet, while lots of people are talking about climate risk today, what investors need to make informed decisions is data tied to specific securities in their portfolio."
BlackRock added that Aladdin Climate will also provide tools for investors to stress test investments and calculate how their portfolios would have performed in various climate scenarios, such as the Paris Agreement.
BlackRock has historically faced criticism over its handling of the sustainability performance of the firms it invests in.