What it is
MSCI Climate Solutions provides portfolio-level climate analytics including Climate Value-at-Risk (CVaR), implied temperature rise (ITR), and transition pathway analysis. It models how climate scenarios (1.5C, 2C, 3C+) would affect portfolio valuations through policy risk, technology shifts, physical hazards, and stranded asset exposure. Available to institutional investors through MSCI's analytics platform.
Why we picked this
With EU Allowance prices projected to reach 400-630 EUR/tonne by 2050 (from approximately 68 EUR/tonne in 2026), EU ETS annual cap reductions of 84-86 MtCO2e/year through 2030, and CBAM phasing free allocation down to 14% by 2033, climate scenario modeling has shifted from optional to essential for portfolio construction. MSCI's tools are among the most widely adopted for this purpose.
Key takeaways
- Climate Value-at-Risk quantifies the potential portfolio loss under different warming scenarios, translating climate science into financial risk metrics.
- The implied temperature rise metric assigns a temperature score to each company and portfolio, answering 'what warming pathway does this investment support?'
- MSCI's data covers 10,000+ companies, enabling portfolio managers to identify specific holdings driving climate risk concentration.