ICE Sustainable Finance Monthly Report
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President, Sustainable Finance & Chief Regulatory Officer, ICE
COP28 & Global Sustainability Forum
Our team participated at many of the official COP28 sustainability events, including co-hosting with ADNOC and the Posterity Institute a Global Sustainability Forum. The event brought together over 100 Chief Sustainability Officers and climate leaders from across the world. We were delighted to be joined by special guests, H.E. Ohood Al Roumi, the UAE (United Arab Emirates) Minister of State for Government Development and the Future, and the next generation of climate leaders from the UAE Sustainability Fellowship.
Our other conversations with clients and attendees at COP28 showed an enthusiasm for tackling the climate challenge. Discussions with local financial industry clients in Dubai focused on climate target setting and broadening emission reduction ambitions to Scope 3 emissions (investments). COP28 appears to have provided a boost to the climate ambitions of our clients in the region.
Insights
Temperature alignment - who's on track, and who's come off the rails
ICE Sustainable Finance recently published an article examining how to track the climate (decarbonization) performance of companies against their own published targets. Using ICE’s On-Track with Targets Indicator, recently launched on the Climate Transition Analytics Tool, the article highlights examples where companies are more likely on track to meet their stated climate ambitions and those which are more likely to miss their targets by a significant amount.
Source: Animation of annual projected property value at risk from inland flooding by school district across New York state under the IPCC’s RCP8.5 emissions scenario from 2021-2060. (Source: ICE Sustainable Finance as of 11/15/2023).
Municipal bond markets: the implications of rising inland flood risk
Many school districts across New York state are exposed to significant flood risk. By 2050, expected property value at risk due to inland flooding across New York state is estimated at over 2.5% and expected GDP impairment is over 6.5% - a ten-fold rise from 2023. These risks have implications for the municipal bond market and could become increasingly relevant for investors.
ICE Muni Bonds monthly report
In November, there was over $2.1B in high physical climate risk1 (ICE Climate Risk Score ≥ 3) municipal issuance across the 48 contiguous states, the majority concentrated across Florida, Alabama, and Texas.
All numbers and charts are sourced from ICE Sustainable Finance data and models as of 12/07/2023 and are available via product offerings. Municipal issuances outside of the 48 contiguous states are not included along with other issuances that cannot be associated with a specific geographic location.
Product enhancements
New Climate Transition Analytics and Metrics
The Net Zero Alignment analysis and the TCFD reporting capabilities of ICE’s Climate Transition Analytics Tool have been enhanced further, providing clients with a deeper understanding of potential portfolio climate misalignments and more detailed stakeholder and regulatory reporting.
Net Zero Analysis Module Enhancements
The latest enhancements to the Net Zero Analysis Module on the ICE Climate Transition Analytics Tool include the ability to select multiple climate scenarios, the introduction of a new Sector Subplot tab showing the historical and aligned emissions of a portfolio at sector level and the ability to include/exclude targets from the trajectory estimations. The analytics have been further enhanced by an expansion of the Temperature Targets Dataset.
TCFD & Portfolio Analytics Reporting Enhancements
The TCFD and Portfolio Reporting functionality on the ICE Climate Transition Analytics Tool have been further enhanced by the introduction of more granular carbon footprinting metrics, such as per asset class reporting, the ability to compare portfolio alignment against three climate scenarios (Net Zero 2050, Delayed Transition & Current Policies) and more detailed data tables, including the Top 10 portfolio holdings by Intensity.
Source: ICE Climate Transition Analytics Tool
Source: ICE Climate Transition Analytics Tool
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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