Dive Brief:
- Bloomberg has expanded its risk management solution offerings with the launch of MARS Climate, a tool designed to help portfolio managers and investors assess and manage the financial risks associated with climate change.
- The financial news and information company unveiled MARS Climate Thursday as part of its Multi-Asset Risk Management suite, or MARS. The MARS suite is used by over 900 firms globally and offers finance professionals a broader range of risk management and mitigation tools, per a press release announcing the tool.
- Bloomberg’s Global Head of Risk Product Dharrini Bala Gadiyaram said in the release that portfolio managers are increasingly looking to "perform climate risk analysis alongside other financial risk assessments to manage risk and regulatory reporting,” and the new tool will enable them and other users to "assess portfolio vulnerabilities and opportunities related to climate change.”
Dive Insight:
A flurry of global natural disasters and temperature spikes have dotted the past year, with the United States alone experiencing 27 individual weather or climate-driven disasters in 2024, according to the National Oceanic and Atmospheric Administration. A recent analysis from NOAA’s National Centers for Environmental Information found at least $1 billion in damages were incurred by each of these 27 climate disasters. The total price tag attached to these disasters is approximately $182.7 billion, per the NOAA report.
As a consequence, regulators and central banks across the globe are increasingly asking financial firms to evaluate their exposure to climate risks, according to Bloomberg. This need for assessment is further driven by recent regulatory moves, both in the U.S., as well as abroad, that are asking companies to disclose how climate change impacts their business and how they plan on mitigating those risks.
“As the climate risk regulatory landscape evolves, coupled with the need to integrate climate into risk management systems, firms need tools to manage climate-related risk and comply with regulatory reporting requirements,” Bloomberg’s Feb. 20 release said.
Bloomberg said MARS Climate’s offerings will help address this need by allowing buy-side and sell-side firms to “assess, quantify and manage climate risk and opportunities across portfolios.” The tool will help users analyze a range of climate-driven scenarios based on diverse integrated assessment models, all of which will be in alignment with frameworks set by the Network for Greening Financial System. NGFS has created several frameworks that help central banks and supervisors navigate the challenges posed by climate change and nature-related financial risks. Several U.S. banking regulators have left NGFS since President Donald Trump’s election.
MARS Climate’s transition risk model is backed by BloombergNEF’s Transition Risk Assessment Company Tool, or TRACT, Bloomberg said. TRACT “projects company revenue risk and opportunities” and links them to companies’ activities, exposures to the supply chain and regional footprint modeled under different NGFS climate scenarios, according to the financial information company.
Bloomberg said finance professionals that use MARS Climate will initially be provided with a report that evaluates the financial impact of climate-related risk of their portfolios “down to security level, split out by physical acute, physical chronic and transition risk.” The company said the tool will be accessible through the Bloomberg Terminal.
