McKinsey & Company's sustainability-focused platform McKinsey Sustainability and Moody's financial intelligence and analytical tools unit Moody's Analytics announced the launch of a suite of solutions designed to assist banks in identifying, measuring, and acting upon climate change-related risks and opportunities.
According to McKinsey, the collaboration will assist banks in navigating difficulties associated to the large-scale capital reallocation required to decarbonize the global economy, including the more than $9 trillion in expected annual average spending on physical assets through 2050.
Cindy Levy, McKinsey's senior partner for sustainability, stated:
"We are happy to be partnering with Moody's Analytics to increase banks' resilience to current and future climate change risks and to align their portfolios with net-zero routes."
McKinsey and Moody's new solutions will commence with "Climate-risk-aware credit assessment," "Climate stress testing and scenario analysis," and "Climate disclosures."
The collaboration will combine Moody's capabilities in modelling the physical risks of climate change and translating them into credit risk impact via its RMS unit with McKinsey's expertise in transition risk modelling and advising banks on integrating climate risk into business processes and reducing financed emissions via its Planetrics business.
The partnership showcases each company's recent acquisitions in climate analytics. Moody's purchased RMS, a provider of climate and natural disaster risk modelling and analytics, in August 2021, and McKinsey acquired Planetrics, a climate analytics platform, in March 2021.
Moody's Analytics' General Manager of Banking Solutions, Jacob Grotta, stated:
"Banks are seeking improved methods to include climate risk into their decision-making, regardless of whether they are evaluating credit risk, doing stress testing and scenario analysis, or addressing regulatory requirements. By partnering with McKinsey Sustainability, we are able to provide clients with broader, more comprehensive solutions - assisting them in understanding what needs to be done with advice and consultancy and how to use the tools, data, and analytics for which Moody's is renowned."