BlackRock, institutions join Norwegian climate research initative

The new initiative will pair scientists and the world’s leading investors to analyse how climate change will affect investments.

BlackRock, AP2 and the Norwegian sovereign wealth fund are collaborating with Norway’s Center for International Climate and Environmental Research-Oslo (CICERO) on a programme to improve understanding of climate-related risks.

CICERO’s researchers will work with the Climate Finance Initiative’s advisory board, which includes institutional investors, banks, pension funds and insurances, the centre’s director Kristin Halvorsen said. Among others, the World Bank Group, SEB and the Oslo Stock Exchange have joined the initiative.

The climate research institution has created the initiative to “bridge the gap between global climate models and information needed by investors”, according to Halvorsen.

Halvorsen, Norway’s deputy prime minister from 2005 to 2012 and a former finance minister, told sister publication Low Carbon Energy Investor that “climate change policies will affect all sectors of our economies. We need to adapt to possibly drastic impacts, while also cutting our greenhouse gas emissions drastically”.

She said the advisory board will “steer the research” to better understand global climate models “where predictions often come with a big degree of uncertainty”.

One area Halvorsen said the initiative will focus on is water risk. She explained researchers and investors will look at global models for rising sea levels, extreme weather and changing rainfall patterns to better understand information that is useful for insurance, supply chain planning and infrastructure investors.

In April, the Task Force on Climate-related Financial Disclosures, led by Michael Bloomberg, identified three main issue hindering investors from making good decisions about climate risk: the lack of a consistent framework, fragmented and non-comparable reporting for existing disclosures and an unclear definition for what is relevant.

“With CICERO Climate Finance, we are primarily focusing on understanding climate risk. Yet from our work with green bonds and research on climate finance, we have learned that understanding climate risk will also result in more climate-friendly investments,” Halvorsen said. “We hope our work will contribute to raising awareness about climate risk in the financial sector in general.”

Reporting by Jordan Stutts.