Combined Solution Will Set the Industry Standard for Climate Analytics
Integration of Baringa’s Climate Change Scenario Model Will Enhance BlackRock’s Aladdin Climate to Help Companies Assess Climate Impact
BlackRock, Inc. (NYSE: BLK) and Baringa Partners today announced their entry into a definitive agreement for BlackRock to acquire and integrate Baringa’s industry-leading Climate Change Scenario Model into BlackRock’s Aladdin Climate technology. The new long-term partnership is a significant milestone for both firms, as they collaborate to set the standard for modelling the impacts of climate change and the transition to a low carbon economy on financial assets for investors, banks and other clients.
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Baringa and BlackRock will bring together their expertise to develop climate risk models underpinning Aladdin Climate, as well as innovating other climate analytics solutions. Through the partnership, Baringa will use the core Aladdin Climate capabilities as part of its growing global consulting work in advising financial services, governments, regulatory bodies, and clients across all sectors on climate risk and developing net zero strategies.
While the reallocation of capital to sustainable investment strategies continues - with over USD$2.3 trillion of assets under management in sustainability funds globally as of the first quarter of 20211 - understanding the potential impacts of climate change and the transition to a low carbon economy on their portfolios remains a complex challenge for investors. With the number of governments and companies making commitments to achieve net-zero continuing to grow alongside increased regulatory requirements for climate-related disclosures, companies and investors alike are seeking solutions to help assess climate risk.
Sudhir Nair, Global Head of the Aladdin Business at BlackRock comments, “Investors and companies are increasingly recognising that climate risk presents investment risk. Through this partnership with Baringa, we are raising the industry bar for climate analytics and risk management tools, so clients can build and customise more sustainable portfolios. The integration of Baringa’s models and the ongoing collaboration between our firms will enhance Aladdin Climate’s capabilities, helping our clients understand transition risks in more sectors and regions than ever before.”
Colin Preston, Global Head of Climate Solutions at Baringa said, “Climate change is the number one challenge and opportunity of our generation. Having developed the leading Climate Change Scenario Model, we are excited to partner with BlackRock to accelerate the adoption of this solution by organisations across the globe. The integration of Baringa’s Climate Change Scenario Model into BlackRock’s Aladdin platform will inform the reallocation of capital across the global economy, accelerating the transition to net zero.”
Baringa developed its market-leading climate scenario modelling capabilities on 20 years of experience. Baringa’s solutions support net zero commitments, TCFD reporting, regulatory reporting, investment and capital allocation strategies, as well as developing climate risk management capabilities. As the leading solution in the financial services sector, Baringa’s Climate Change Scenario Model is informing clients with assets totalling more than $15 trillion; supporting the management of climate risk and the reallocation of capital to achieve net zero.
BlackRock began developing Aladdin Climate to fill a void in climate risk analytics by creating technology to help clients better understand and mitigate the financial impacts associated with climate change on their portfolios. Aladdin Climate is offered through the Aladdin platform and is used by BlackRock’s Financial Markets Advisory (FMA) group to deliver sustainability advisory services to clients. It measures both the impacts of physical risks, like extreme weather events, and transition risks - such as policy changes, new technology, and energy supply – at the financial instrument and portfolio levels.
BlackRock’s purpose is to help more and more people experience financial well-being. As a fiduciary to investors and a leading provider of financial technology, we help millions of people build savings that serve them throughout their lives by making investing easier and more affordable. For additional information on BlackRock, please visit www.blackrock.com/corporate
Baringa Partners is an independent business and technology consultancy which operates globally with offices in the US, Asia, Europe, the UK, and Australia. Baringa has developed the world’s leading climate scenario modelling and temperature alignment capability. For more information, please visit www.baringa.com/climaterisk or e-mail ClimateChange@baringa.com
Aladdin is BlackRock’s end-to-end portfolio management, risk management and operations platform used by institutional investors including asset managers, pension funds, insurers, banks and corporate treasurers. It combines sophisticated risk analytics with comprehensive portfolio management, trading and operations tools on a single, unified platform. Also customised for wealth managers, Aladdin provides a common language across the investment lifecycle and enables a culture of risk transparency among users.
About Baringa’s Climate Change Scenario Model
Baringa has developed market-leading climate scenario modelling capabilities through the firm’s specialist experience advising governments, energy, and financial services clients on climate risk over the past 20 years. The Climate Change Scenario Model is used by clients who have assets totaling more than $15 trillion. (pre-announcement with BlackRock)
1 Sources: Simfund, Morningstar “Sustainable Investment –Overall” for US MFs; Broadridge “RI–Screened”, “RI –Embedded” for Non-US MFs, GBI “Sust.”, “Sustainability related” for global ETFs; data as of Mar 2021. Excludes FoFs and closed-end funds. US Sustainable Money Market funds not included in Morningstar’s flagging methodology.