In mid-July 2015, the startup CARBON DELTA was officially founded in Zurich, Switzerland. The founder is the computer scientist Dr. Oliver Marchand. The company develops Carbon Ratings, which calculate the economic risks of climate change for company values. Analysts and investors are now able to use the ratings as a factor in their analysis and to better assess climate risks. CARBON DELTA has already won a renowned partner with Independent Credit View (I-CV) and was awarded the innovate4climate prize.
CARBON DELTA cooperates with the rating agency Independent Credit View (I-CV) in developing carbon ratings that help investors to improve the assessment of the climate risks in their portfolios. Carbon ratings measure how much a company value is possibly affected by climate change. The three main areas of the evaluation are: changing climate, legal regulations and shifting technologies. The main element of the rating model is a geographical and sector-based risk distribution model of company structures. By these means, e.g. the risks of agriculture in California can be analyzed. Data for the entire value chain are collected in big-data style from various data sources. CARBON DELTA then employs algorithms from machine learning to calculate the risk distribution. That way, the individual climate risks can be matched to individual companies.
Recent events, such as the negative development of the coal industry, the new ambitious Chinese climate targets and the upcoming climate negotiations in Paris, are relevant news for investors. But what effect do these trends have on their investments? Unlike current data available on the market that mainly focus on the CO2 emissions of companies, CARBON DELTA’s model considers a far greater number of factors and also integrates the latest results of climate change research. By integrating the entire value chain as well as industry and country information in the model, shortcomings in the analysis can be avoided. Many industry sectors are already strongly economically affected by local droughts or storms, ever-increasing sea level rise or other climate effects and future regulations.
In addition to identifying risks related to climate change, carbon ratings also provide an opportunity for investors. Carbon ratings can identify companies that, compared to their competitors, are very well prepared for climate change or hardly affected at all. This is valuable information for investors when it comes to the identification of leaders within a business sector.
“With this approach, CARBON DELTA is part of a trend away from historical analysis to more complex models about the present,” says Georg Eisel, longtime representative of ISO for standardization of financial data in Germany. Carbon ratings are the building block for determining climate risks. CARBON DELTA is independent and the analysis is carried out without mandate of the evaluated companies.
PARTNERSHIP WITH INDEPENDENT CREDIT VIEW (I-CV)
A partnership with I-CV allows CARBON DELTA to develop the carbon ratings together with experts in the field of corporate ratings. I-CV has an experienced team of 14 specialists in the field. Their established robust analytical methods are proven to be an accurate early warning indicator.
MARKET ENTRY Q1 2016
The model is currently being evaluated on a number of test companies from various industries. With the help of independent analysts, results are verified and the model is calibrated. In the first quarter of 2016, the delivery of the first official carbon ratings will start.
THE FOUNDER OLIVER MARCHAND
The company was founded by Dr. Oliver Marchand (CEO). As a board member and Head of IT of Fisch Asset Management AG, he was responsible for the development of the internal portfolio management and risk analysis software. His Ph.D. from the ETH Zurich was related to mathematical methods, supercomputers and weather models. His research at different weather services also included the development of a thunderstorm warning system.