Ortec Finance releases its 2023 ClimateMAPS standard climate scenario set in partnership with Cambridge Econometrics

In partnership with Cambridge Econometrics, Ortec Finance have released this year’s standard climate scenario set for ClimateMAPS. The latest release consists of key updates to the previous three climate scenarios released in 2022 and includes a new additional fourth scenario.

These scenarios are a key component of Ortec Finance’s ClimateMAPS climate scenario analysis solution, which identifies investment portfolio climate risk and opportunities to generate forward-looking risk return analytics. ClimateMAPs is an award-winning service that generates forward-looking risk-return analytics to map a portfolio’s exposure to climate risk and opportunities.

We are pleased to release the latest set of climate scenarios, which continue to reflect Ortec Finance’s independent views and assumptions. Our standard sets, now in their sixth update since its initial release in February 2021, continue to demonstrate innovation in modelling from our team of climate experts and our strategic partner, Cambridge Econometrics. These scenarios also reflect the rapidly evolving and emerging climate-related policy changes from key economies and updated economic projections.

Willemijn Verdegaal, Managing Director, Climate & ESG Solutions, Ortec Finance

What has been updated?

The three updated scenarios have been renamed as ‘Net-zero’, ‘Net-zero financial crisis’, ‘High-warming’, and the new fourth scenario is called ‘Limited action’.

‘Limited action’ explores a scaled-down government transition policies that leads to larger physical impacts. This new scenario is based on intermediate emissions and an average global warming temperature of 2.80C..

Both the updated ‘Net-zero’ and ‘Net-zero financial crisis’ scenarios reflects stronger short-term impacts, an indication of the diminishing timeframe faced by the world to reach net-zero by 2050.

All four scenarios include the latest macro-economic, market and scientific data and further explores the implications arising from key policy levers and physical risk impacts.

Our latest climate scenario updates with strategic partner Ortec Finance reflect significant developments found in the energy markets, the war in Ukraine, the EU ETS market and the updated long-term energy and economic outlooks by policy makers. For the first time this year, clients of the ClimateMAPS service will also benefit from more granular modelling insights of climate impacts on inflation from agricultural prices, as well as sensitivity analysis. 

János Hidi, Sustainable Investment Manager, Cambridge Econometrics

The scenarios have also been updated to include recently announced polices from key economies including China, the United States of America, United Kingdom, Canada and the 27 countries that form the European Union.

A wide range of asset classes are covered including fixed income, corporate credit, equities, real assets, alternatives, commodities, and currencies. Green and ESG bonds – both sovereign and corporate is now also covered by ClimateMAPS.

We are firmly committed to supporting financial institutions around the world with integrating climate risk and opportunities into their investment decision-making by providing insights in the form of quantified metrics analytics supplemented with qualitative narratives. These climate-related insights aim to support complex a financial institutions’ long-term decision making within an investment process.

Climate scenarios are not a forecasting tool and do not necessarily represent the most likely future outcomes or a comprehensive set of possible outcomes. Rather, they enable a structured exploration of a range of plausible future outcomes that can help build understanding of how certain climate-related financial risks could manifest for financial institutions and their investment portfolios in the future, and how these risks may differ from the past

Lisa Eichler, Managing Director, Climate & ESG Solutions, Ortec Finance

Find out more about ClimateMAPS.
Learn more about Cambridge Econometrics’ Sustainable Investment service.