Global asset manager BlackRock has launched a software application via its flagship investment operations platform Aladdin to allow investors to quantify climate risk within their portfolios.
Known as Aladdin Climate, the application will provide investors with measures on the impact of climate change and the transition to a low-carbon economy with adjusted security valuations and risk metrics.
Aladdin Climate, which BlackRock’s operating chief described as a dramatic step forward in filling the gaps for investors to build sustainable portfolios, is available as an add-on for existing Aladdin users globally. Asset class coverage is set to be rolled out for the add-on gradually throughout next year.
“There is no single issue that clients ask us more about than the impact of climate risk on their portfolio,” Rob Goldstein, COO at BlackRock, commented. “Yet, while lots of people are talking about climate risk today, what investors need to make informed decisions is data tied to specific securities in their portfolio.”
BlackRock added that Aladdin Climate will also provide tools for investors to stress test investments and calculate how their portfolios would have performed in various climate scenarios, such as the Paris Agreement.
Elsewhere, BlackRock has expanded access to environmental, social and governance (ESG) data and indicators on Aladdin through new partnerships with data and analytics providers Refinitiv and Sustainalytics. The platform includes more than 1,200 performance indicators for sustainability risks.
“Aladdin Climate analyses climate risk alongside traditional risk metrics for a holistic view of risk across the investment process, all integrated into existing Aladdin workflows,” said Mary-Catherine Lader, head of Aladdin Sustainability at BlackRock. “Investors can now analyse tough questions about rising sea levels’ potential impact on their portfolios, or how a rapid shift to low-carbon policies could affect specific companies.”
BlackRock onboarded several new clients to its Aladdin platform earlier this year despite almost all of its employees working from home due to the coronavirus pandemic. The asset manager said it also processed record volume during the turbulent period of volatility.