Measuring Physical Climate Risks

Currently, companies are not able to quantify their exposures to physical climate risk.  In turn the financial institutions which loan and invest in these companies cannot measure the physical climate risk embedded in their portfolios. Climate disasters have a direct impact on corporate balance sheets, regulatory capital ratios, and investment returns.  But markets are struggling to price this risk. 

The Gro platform allows users to measure the exposures of assets to physical climate risks. Gro combines high resolution environmental data with machine-learning to create climate indices. With the geospatial computational capabilities in Gro, we can estimate sensitivities of specific physical assets (e.g., mining operations, farmland, data centers, ports) and markets (travel, fertilizer, real estate) to each climate index.


Uses in Climate Reporting and Risk Management

Companies such as publicly listed corporates, financial institutions, and asset managers can use the Gro platform to measure their physical climate risks:

  • Meeting regulatory disclosure requirements
  • Tying risk reporting to published Gro Indices for transparency
  • Allowing companies to hedge their climate risk exposures in a standardized manner with bilateral trades and market instruments linked to Gro Climate Indices

Gro’s Climate Indices and the computed loadings of individual securities to them can assist asset managers and financial institutions:

  • Add physical climate factors as a consideration to portfolio risk models
  • Generate investable equity and bond indices as a proxy for physical climate risks


Uses in Climate Planning

In addition to the Gro Climate Indices which measure realized changes in climate, the Gro Platform offers Scenario-based Climate Index Projections. We can also combine these with our geospatial computation engine to measure the expected impact of climate change on physical assets through the year 2100 under different GHG emission scenarios.

Modeling future climate: Change in 36-month average of daily high temperatures - Feb 1, 2020 to Jan 1, 2050 under a “business as usual GHG scenario.”.


Differentiators of Gro's Climate Indices

Gro is building a unique group of indices and sub-indices defined by three key attributes:

  • Global: underlying data is ingested at square kilometer scale and outputs are available for every district, province, and country worldwide.
  • Automated: index calculations and weights are automated ensuring absolute objectivity.
  • Holistic: each model looks beyond a single indicator and considers a complex mix of appropriate variables. This makes the indices robust to flaws in individual raw data points.


Interested in seeing applications for your team? Please contact us for a walk-through.

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