ICE Sustainable Finance Monthly Report
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President, Sustainable Finance & Chief Regulatory Officer, ICE
Force of nature
As the owner of the New York Stock Exchange (NYSE), ICE is proud of the NYSE’s participation in this year’s Climate Week NYC, from hosting the ICE Climate and Capital Conference, to providing the platform for important announcements such as the launch of the Task Force on Nature-Related Financial Disclosures (TNFD) framework.
Indeed, natural capital played a leading role at the conference this year within our Adaptation, Innovation, Regulation (AIR) themes. Conversations ranged from identifying nature risks in portfolios and the listing of Natural Asset Companies (NACS), to how carbon markets can be used to finance, compensate, and abate during the energy transition. The focus on a more climate positive approach extended through our Innovation thread with discussions on how climate risk data and analytics can be used to build planet positive portfolios.
I would like to thank our co-hosts, Gitterman Asset Management, FinTech TV and Accenture, speakers, attendees, and others who contributed to making the ICE Climate and Capital Conference, and other Climate Week events, a success. All the sessions will be available to watch shortly.
Research
ECB uses ICE Emissions Data for second economy-wide climate stress test research
The European Central Bank (ECB) has released its second research paper regarding Economy-Wide Climate Stress Testing, using ICE (cited as Urgentem) company level Emissions Data. The ECB also used ICE (Urgentem) Emissions Data in its first Economy-Wide Climate Stress Testing research. The ECB’s research in this area is setting the standards for financial system climate stress testing, with many central banks around the world now adopting and carrying out similar exercises. This latest research paper “The Road to Paris: stress testing the transition towards a net-zero economy” has some interesting analysis using shorter-term transition scenarios and a recalibration for recent geopolitical events. This aligns with financial markets’ investment time horizons and recent risk events assessments.
Product enhancements
ICE and DeltaTerra Announce Joint Climate-Informed Credit Risk Analytics Solution for Mortgage-Backed Securities Investors
The new joint offering integrates ICE’s Physical Climate Risk Data with DeltaTerra’s climate analytics, financial risk models, and market data to deliver risk impact estimates for investors in the residential and commercial mortgage-backed securities markets. By combining key data from both firms, the service offers a climate risk analytics solution that provides insights at the property, loan, deal, and bond levels, which is easily translated into investment analysis.
Insights
Who’s On-Track to meet their temperature target?
ICE has launched further enhancements to the Net Zero Analysis module on the Climate Transition Analytics Tool, including the On-Track with Targets indicator. This metric shows whether individual companies (as well as portfolios and sectors) are On-Track to achieve their own published decarbonization plans. The On-Track analysis also provides metrics on the percentage of a portfolio covered by decarbonization targets and compliments the Implied Temperature Rise. Collectively, these tools, including the emission pathway projections through to 2050, within the Net Zero module help to assess a company or portfolio's alignment and progress towards a chosen climate scenario.
Source: ICE Climate Transition Analytics Tool. The Net Zero Module features the new On-Track with Targets Indicator.
The Red Indicator suggests this sample portfolio is likely to miss its decarbonization targets by more than 20%.
ICE Muni BondsMonthly Report
How can the U.S. municipal bond market be used for positive social impact? And what should we understand about how physical climate risk is dispersed? Subscribe for monthly updates.
Featured Events
Solution spotlight
Mortgage-Backed Securities gain ESG data coverage
We recently launched ESG data coverage on over 1.5M mortgage-backed securities (MBS) boosting our total fixed income coverage to over 3M instruments. ICE’s MBS data set accounts for ~95% of all outstanding securitized real estate loan volume in the U.S. and provides CUSIP-linked climate and socioeconomic data for single-family, multi-family and commercial mortgage-related securities
Helping meet SFDR requirements
The European Union’s Sustainable Finance Disclosure Regulation (EU SFDR) requires financial market participants to identify and disclose certain sustainable impacts. To help clients meet their obligations, our data solution offers event-triggered updates for all mandatory adverse sustainability indicators applicable to investments in companies, sovereigns and supranationals.
Mortgage-Backed Securities gain ESG data coverage
We recently launched ESG data coverage on over 1.5M mortgage-backed securities (MBS) boosting our total fixed income coverage to over 3M instruments. ICE’s MBS data set accounts for ~95% of all outstanding securitized real estate loan volume in the U.S. and provides CUSIP-linked climate and socioeconomic data for single-family, multi-family and commercial mortgage-related securities
Helping meet SFDR requirements
The European Union’s Sustainable Finance Disclosure Regulation (EU SFDR) requires financial market participants to identify and disclose certain sustainable impacts. To help clients meet their obligations, our data solution offers event-triggered updates for all mandatory adverse sustainability indicators applicable to investments in companies, sovereigns and supranationals.
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