Through a new long-term partnership, BlackRock will acquire Baringa Partners' climate change scenario model

BlackRock's Aladdin Climate will be improved by the integration of Baringa's climate change scenario model, and the combined solution will establish the industry standard for climate analytics.

In a legally-binding agreement announced today, BlackRock, Inc. and Baringa Partners agreed that BlackRock will purchase Baringa's market-beating Climate Change Scenario Model and incorporate it into its Aladdin Climate platform. The new long-term partnership is a significant turning point for both organizations as they collaborate to set the standard for modeling the consequences of climate change and the transition to a low-carbon economy on financial assets for investors, banks, and other clients.

Baringa and BlackRock will use their respective skills to develop the climate risk models that support Aladdin Climate and develop new cutting-edge climate analytics products. As a result of the partnership, Baringa will utilize the core Aladdin Climate capabilities as part of its growing global advisory business, offering guidance on climate risk to clients in all industries, financial services, governments, and regulatory bodies.

Investors continue to face a complex challenge in understanding the potential effects of climate change and the transition to a low-carbon economy on their portfolios, even though there has been a continued reallocation of capital to sustainable investment strategies, with over USD$2.3 trillion1 of assets managed globally in sustainability funds as of the first quarter of 2021. As more governments and organizations pledge to go net-zero and as the legal requirements for climate-related disclosures increase, both businesses and investors are looking for solutions to help assess climate risk.

Sudhir Nair, Global Head of the Aladdin Business at BlackRock comments

“Investors and companies are increasingly recognising that climate risk presents investment risk. Through this partnership with Baringa, we are raising the industry bar for climate analytics and risk management tools, so clients can build and customise more sustainable portfolios. The integration of Baringa’s models and the ongoing collaboration between our firms will enhance Aladdin Climate’s capabilities, helping our clients understand transition risks in more sectors and regions than ever before.”

Colin Preston, Global Head of Climate Solutions at Baringa said

“Climate change is the number one challenge and opportunity of our generation. Having developed the leading Climate Change Scenario Model, we are excited to partner with BlackRock to accelerate the adoption of this solution by organizations across the globe. The integration of Baringa’s Climate Change Scenario Model into BlackRock’s Aladdin platform will inform the reallocation of capital across the global economy, accelerating the transition to net zero.”

Using its 20 years of experience, Baringa developed its top-tier climate scenario modelling capabilities. Net zero commitments, TCFD reporting, regulatory reporting, capital allocation plans, and the expansion of capacity for managing climate risk are all made possible by the solutions offered by Baringa. With assets over $15 trillion, Baringa's Climate Change Scenario Model is the leading industry tool for educating clients and assisting in capital reallocation to achieve net zero and climate risk management.

BlackRock founded Aladdin Climate to fill a market vacuum for climate risk analytics by giving customers access to tools that would help them better understand and manage the financial impacts of climate change on their portfolios. Customers can receive sustainability consulting services from BlackRock's Financial Markets Advisory (FMA) group by using the Aladdin platform, which is made available via Aladdin Climate. It evaluates the implications of both physical risks, such as extreme weather events, and transition risks, such as policy changes, new technologies, and energy supplies, at the level of the financial instrument and portfolio.

Source: BlackRock newsroom