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AN INNOVATIVE METHOD FOR A UNIQUE SERVICE

CRIS IN FEW WORDS

The CRIS method enables the provision of a physical risk rating at both the issuer and portfolio level, which incorporates both a climate component and a sectoral and contextual vulnerability component.

 

The CRIS method allows asset managers and investors to know the level of risk of their portfolios so that they can manage this risk, track it over time and engage in dialogue with the underlying companies about their vulnerability to climate change.

 

Based on this method, Carbone 4 will release a unique service in early 2018 that will provide analyzes of 10,000 listed issuers for corporate equities and bonds. This service will also provide 210 countries’ analyzes for sovereign or similar securities. Infrastructure analyzes will be carried out on a case-by-case basis according to asset portfolios.

Portfolio

2bis

Sovereign

Corporate

Infrastructure

“Better information is needed for stakeholders to best integrate climate change-related issues in their analysis. That is why we need all economic actors to improve climate- related reporting, in ways that must be tailored and adapted for each of them.”

Emmanuel Macron – Président de la République Française

A rigorous approach

CRIS is based on a rigorous and recognized framework of analysis, which consists in combining a climate hazard rating with a vulnerability rating.

This approach is based on both climate data, derived from scientific models, and on financial data, which is publicly reported by companies.

A comprehensive approach

CRIS covers 7 direct, acute and chronic climate hazards. These hazards are studied for 3 IPCC climate change scenarios and 2 future time horizons.

CRIS analyzes 9 indirect climate hazards, which allows for the consideration of geophysical, economic and social factors that could increase the intensity of direct hazards.

CRIS covers all economic sectors, according to a classification of 60 sectors. CRIS takes into account an exhaustive list of financial impacts on fixed assets, expenses and revenues.

CRIS covers 210 countries for sovereign risk. The vulnerability of countries takes into account the exposure, sensitivity and adaptive capacity of each country to each climate hazard.

A bottom-up approach

Because the impacts of climate change are local, CRIS builds the portfolio risk rating based on the sectoral and geographic situations of each underlying asset.

An assessment

by business segment and geographic region

For a company operating in different geographic regions and sectors, CRIS builds a risk rating for each business and geographic segment of that company.

A risk rating

calculated at company level

The ratings calculated for each activity and geographic region are then aggregated at the company level in order to quickly identify the differences in risks incurred by companies.

An aggregate

risk rating for the financial portfolio

The ratings for each underlying asset are ultimately aggregated across the portfolio under review. This final rating helps to understand and manage the portfolio's level of risk.

“Increasing transparency makes markets more efficient, and economies more stable and resilient.”

Michael R. Bloomberg, Founder and Chairman of the TCFD

A user-oriented approach

CRIS provides simple and diverse indicators depending on the needs of each financial player.

Extending climate reporting to adaptation and physical risks

CRIS :

  • Provides access to a concise risk rating at portfolio level,
  • Facilitates comparisons of ratings according to the climate change scenario and time horizon,
  • Enables the identification of which hazard is causing the most risk for your portfolio.

The user benefits from a global evaluation of the physical risks, which makes it possible to integrate the analysis into the company’s reporting in accordance with TCFD recommendations and existing regulations (e. g. Article 173).

Risk management and dialogue engagement with the underlying assets:

CRIS also provides access to more in-depth evaluations, such as:

  • The top 5 values most and least at-risk
  • Risk ratings by underlying asset and comparisons with the sector,
  • The identification of the geography and sector most at risk for the asset under review.

The user thus benefits from a more detailed and exhaustive assessment, which enables the company to better manage climate risk and engage in a dialogue with the underlying companies.