S&P Global and Oliver Wyman add physical risk to climate analytics

S&P Global Market Intelligence and Oliver Wyman expanded their Climate Credit Analytics solution to incorporate climate-related physical risks alongside transition risk scenarios. As Indian financial institutions face emerging climate stress-testing expectations, such granular tools shape how credit risk from climate exposure is quantified for counterparties and investments.

Climate Credit Analytics, launched in June 2021 as a joint S&P Global Market Intelligence and Oliver Wyman offering, translates climate scenarios into scenario-adjusted financial data and company-level credit scores. The enhanced version adds NGFS Phase III scenarios and regulatory scenarios from the European Central Bank, Monetary Authority of Singapore and the U.S. Federal Reserve. It also incorporates company-specific transition targets, automotive energy-transition forecasts from S&P Global Mobility, and commodity-asset cost curves from Platts.

The solution serves banks, insurers, asset managers, asset owners and corporate risk managers seeking to quantify climate risks across counterparties and investments. The tool combines S&P Global Market Intelligence's Credit Analytics risk models and industry datasets with Oliver Wyman's climate scenario and stress-testing capabilities. The capability draws on S&P Global's acquisition of The Climate Service and merger with IHS Markit, providing sector-tailored granularity for regulatory climate stress testing and scenario analysis.

Indian banks, insurers and corporates evaluating climate exposure in their portfolios should monitor how such physical-risk-inclusive analytics align with domestic supervisory expectations on climate scenario analysis. Financial institutions should assess whether their counterparty creditworthiness models account for both transition and physical climate risks under multiple scenarios. Corporate risk managers can use these capabilities to integrate climate-adjusted financial assessments into business decisions, client engagement and stakeholder reporting with greater confidence and sector specificity.

Key figure — Original launch: June 2021 (S&P Global Market Intelligence and Oliver Wyman joint solution)