Re/insurance broker Aon is collaborating with The Climate Service (TCS) to help clients understand and manage climate risks.
Aon noted that the COVID-19 pandemic has tested the resilience of economies and is providing an example of how systemic changes can impact financial, economic and social stability.
To better prepare companies across all sectors for the impact on climate, the broker has therefore entered into an exclusive broker relationship with TCS that aims to measure, monitor and manage the financial impacts of climate on business and investments.
As part of the collaboration, client data such as property location, type, value and greenhouse gas emissions will be uploaded to TCS’s Climanomics platform.
It then runs different climate scenarios to explore the impact of physical risks such as changes in temperature, flooding and wildfire as well as transition risk such as shifts in carbon pricing, law and reputation.
Aon’s analysts will also interpret data to create a customised risk framework that outlines how changes in financing strategies can help mitigate climate-related impacts.
Then, Aon will look to optimise the client’s long-term balance sheet resilience using capital through risk transfer and/or asset placement.
“As we support our clients with their insurance placements, we are very much aware of the immediate physical damage to an asset and the financial impacts to supply chains, customers and investors,” said Greg Lowe, Head of Resilience and Sustainability at Aon.
“We are excited that our collaboration with The Climate Service will drive greater awareness of climate risks and the opportunities for clients to reduce earnings volatility and improve balance sheet resilience.”
James McMahon, CEO of The Climate Service, also commented: “As climate risk reshapes financial and insurance markets, support for the Taskforce on Climate-Related Financial Disclosures continues to grow along with the demand for tools to measure and manage climate risk.”
“Through our collaboration with Aon, we are excited to scale our offering of actionable, financial insights based upon the most advanced climate science available, with the goal of helping organizations move from business as usual to action.”