Axa’s first TCFD aligned report showcases Carbon Delta’s Climate VaR analysis and how it can help uncover climate risks and opportunities within investment portfolios.

Axa used “Climate Value-at-Risk” (Climate VaR) to assess future portfolio level impacts from climate change.  Climate VaR represents the percentage of a company’s market value that is poised to decrease or increase given the occurrence of a climate change scenario, based on the accrual of costs or revenues related to each scenario over time.  It therefore balances both climate-related financial risks and opportunities.

The report also explores a new, security-specific “Warming Potential” methodology, developed by Carbon Delta, to test AXA’s portfolios’ alignment against a 2°C long-term climate stabilization scenario. This methodology computes the Warming Potential of a security’s issuer, namely a temperature value that signifies which level of climate change the issuer’s current activities are aligned with.

AXA’s message is clear: climate change requires both collective action and leadership by example. Ultimately, their commitment is to strive to align their businesses and investments with a 2°C or less climate change trajectory, which science has been calling for to avoid major, long-term impacts from climate change.

We at Carbon Delta very much enjoyed working with AXA on this study.

Read the full report here.