Global management consulting firm McKinsey & Company’s sustainability-focused platform McKinsey Sustainability and Moody’s financial intelligence and analytical tools unit Moody’s Analytics announced today the launch of a suite of solutions aimed at helping banks identify, measure, and act on climate change-related risks and opportunities.

According to McKinsey, the collaboration comes to help banks navigate issues related to the large-scale capital reallocation needed to decarbonize the global economy, including more than $9 trillion in annual average spending on physical assets through 2050 estimated by the firm’s research.

McKinsey Sustainability Senior Partner Cindy Levy said:

“We are thrilled to be collaborating with Moody’s Analytics to strengthen banks’ resiliency to the present and future risks from climate change, and to align their portfolios to net-zero pathways.”

The new offerings from McKinsey and Moody’s will begin with “Climate-risk-aware credit assessment,” “Climate stress testing and scenario analysis,” and “Climate disclosures.”

The collaboration will combine Moody’s capabilities in modeling the physical risks of climate change and translating them into credit risk impact through its RMS unit, and McKinsey’s transition risk modeling expertise and advising banks on integrating climate risk into business processes and reducing financed emissions through its Planetrics business.

The partnership highlights each company’s recent climate analytics-focused acquisitions. Moody’s acquired climate and natural disaster risk modeling and analytics provider RMS in August 2021, and McKinsey acquired climate analytics platform Planetrics in March 2021.

Jacob Grotta, General Manager, Banking Solutions at Moody’s Analytics, said:

“Banks are looking for better tools to integrate climate risk into their decision-making, whether they are looking at credit assessment, stress testing and scenario analysis, or regulatory needs. By working with McKinsey Sustainability, we are able to provide broader, comprehensive solutions to clients – helping them understand what needs to be done with advisory and consulting and how to do it with the tools, data, and analytics Moody’s is known for.”