Services
Climate Risk Modeling
Market Intelligence, Research, and Analysis
Green Bonds Advisory
Background
Environmental Defense Fund (EDF), a leading United States-based nonprofit environmental advocacy group, is renowned for its multifaceted work addressing critical issues such as global warming, ecosystem restoration, oceans, and human health. Grounded in a commitment to leveraging sound science, economics, and law, EDF continuously seeks effective environmental solutions. Facing uncertainty surrounding the potential risks associated with a bond issuance, EDF aimed to assess both chronic and acute climate-related risks impacting their financial instruments.
Solution and Impact
In response to EDF's challenge, Responsible Alpha leveraged our integrated data framework to analyze multifaceted climate-related risks related to the EDF’s bond issuance. Within the short timeframe of three weeks, we conducted a comprehensive evaluation, providing EDF with invaluable insights into the climate-related analytics pertinent to their bond issuance. Our analysis calculated the interest rate risk spanning a 30-year horizon, distinguishing between chronic climate changes, such as sea-level rise, and acute risks, such as those stemming from severe weather events.
Leveraging our integrated data framework, we analyzed the climate-related risks and our multidisciplinary team of experts collaborated to ensure a thorough evaluation of both chronic and acute risks, providing EDF with a nuanced understanding of their financial exposure.
Results
The outcome of our collaboration with EDF was transformative. Our analysis revealed that the debt issuance, initially valued at $393 million, would, when adjusted for climate risk, be revalued at $300 million. This stark revelation underscored the critical importance of considering climate risk in financial decision-making processes. Armed with this newfound clarity, EDF was empowered to make informed decisions regarding their financial instruments, mitigating potential risks and ensuring alignment with their overarching mission of environmental advocacy and stewardship.