MSCI, one of the leading information and service providers for investors, announced today a new addition to its suite of ESG tools with the launch of MSCI Real Estate Climate Value-at-Risk. The new solution is designed to help investors assess and manage the exposure of the real estate assets in their portfolios to climate change and climate-related risks, by providing a forward-looking and return-based valuation assessment based on these factors.

The new tool approaches climate risk from a number of angles, calculating the financial impact changing legislation due to climate action (Transition Risk), as well as from extreme weather impacts caused by climate change (Physical Risk). It assesses these risks per real estate asset and per scenario, providing a value-at-risk framework aimed at a broad range of investors, including investment managers, asset owners, banks and insurers. MSCI announced that the new framework is closely aligned to the G20’s Financial Stability Board’s Taskforce on Climate-Related Disclosures (TCFD). The solution builds on MSCI’s toolset designed to enable investors to effectively manage and plan for risk, which includes MSCI Climate Value-At-Risk, launched earlier this year.

Commenting on the launch of the new solution, Remy Briand, Head of ESG at MSCI, said:

“MSCI has been a leader in helping investors incorporate climate change considerations in their investment process for over 20 years. Over this time, we have witnessed increased urgency from investors to quantify their climate risk exposures when constructing and analyzing portfolios.

“With this new offering, MSCI offers climate solutions across every area of our business, from ESG Research to Analytics, Index, and now Real Estate. Investors can today gain a fully representative picture of climate risks and opportunities across assets through a methodologically consistent model, with the aim of improving their own investments and empowering them to invest in a way that meaningfully tackles climate change.”

Jay McNamara, Head of Real Estate at MSCI, added:

“As more global investors are increasing allocations to real estate and other private assets, there is a growing need to identify and understand financial risks from climate change and take necessary action for risk management, portfolio performance optimization and regulatory reporting purposes. With this solution, MSCI provides these investors with the ability to not only quantify their risk exposures, but to scenario plan and take action in mitigating these risks.”