MSCI strengthens capability via acquisition of Carbon Delta
The Carbon Delta integration will expand MSCI’s robust suite of climate risk capabilities
MSCI Inc., a leading provider of critical decision support tools and services for the global investment community, announced that its subsidiary, MSCI Barra (Suisse) Sàrl, has entered into a definitive agreement to acquire Zurich-based environmental fintech and data analytics firm, Carbon Delta AG.
Founded in 2015, Carbon Delta is a global leader for climate change scenario analysis. Together, MSCI and Carbon Delta will create an extensive climate risk assessment and reporting offering for the institutional market, providing global investors with solutions to help them better understand the impact of climate change on their investment portfolios and comply with mandatory and voluntary climate risk disclosure initiatives and requirements.
Voluntary reporting initiatives are being led by entities such as the Task Force on Climate-related Financial Disclosures (TCFD) and the United Nations-supported Principles for Responsible Investing (UNPRI), while mandatory disclosure requirements are quickly developing across the European Union and North America.
The Carbon Delta integration will expand MSCI’s robust suite of climate risk capabilities with state-of-the-art modelling technology that supports climate scenario analysis and forward-looking assessment of transition and physical risks, as well as extensive company-level analysis of publicly traded companies globally. This will be offered as MSCI Climate Value-at-Risk, an innovative and pioneering climate risk metric that calculates the impact of climate change on a company’s market value and helps investors understand and quantify these risks within their portfolio.
“We believe climate change will become one of the most important investment factors over the long term. Institutional investors should be able to analyze the exposure of their portfolios to climate risk while also being able to report on their climate strategy,” said Remy Briand, head of ESG at MSCI. “We are pleased to come together with Carbon Delta to provide our clients with state-of-the-art climate risk analysis capabilities that can help shape investment management practices of the future,” he added.
The Zurich office will act as MSCI’s climate risk centre, the focal point for the development of climate change risk analytics and tools. The aim will be to develop strong partnerships with leading academic and research institutions around the world to advance the use of climate science for financial risk analysis, building on the relationships already forged by Carbon Delta.
“Carbon Delta has aimed to create the best climate change scenario analytics for financial institutions,” said Oliver Marchand, CEO of Carbon Delta. “We are very excited to join forces with MSCI to mature and grow our products. Combining Carbon Delta’s scenario analysis and MSCI’s products is what institutional investors have been asking for,” he added.
The transaction is expected to close within the next month, subject to customary closing conditions. The business is expected to add approximately US$4 to US$5 million of recurring expenses to the ESG operating segment within MSCI’s “All Other” reporting segment. The purchase will be funded through existing cash on hand.
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