MSCI reaches agreement to acquire Carbon Delta

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09.09.2019
Climate Risk: Depression

Founded in 2015, Carbon Delta is a global leader for climate change scenario analysis. MSCI Barra (Suisse) has entered into a definitive agreement to acquire the Zurich-based environmental fintech and data analytics firm. MSCI is a leading provider of critical decision support tools and services for the global investment community, including indexes and portfolio analysis tools.

Together, MSCI and Carbon Delta will create an extensive climate risk assessment and reporting offering for the institutional market, providing global investors with solutions to help them better understand the impact of climate change on their investment portfolios and comply with mandatory and voluntary climate risk disclosure initiatives and requirements. Voluntary reporting initiatives are being led by entities such as the Task Force on Climate-related Financial Disclosures (TCFD) and the United Nations-supported Principles for Responsible Investing (UNPRI), while mandatory disclosure requirements are quickly developing across the European Union and North America.

The Zurich office will act as MSCI’s Climate Risk Center, the focal point for the development of climate change risk analytics and tools. The aim will be to develop strong partnerships with leading academic and research institutions around the world to advance the use of climate science for financial risk analysis, building on the relationships already forged by Carbon Delta.

Thanks to a CHF 1.7 million seed round in June 2018 led by Swiss ICT Investor Club (SICTIC) and Zürcher Kantonalbank (ZKB), the Carbon Delta team could extend its board, hire more specialists and strengthen its sales team. It won further institutional customers, which use its Climate Value-at-Risk assessments and partnered with MSCI.

“A larger group of SICTIC investors was involved in the seed round and with just 15 months from investment to exit, we’ve set a new record for speedy exits at our angel club. Our investors are very happy about the deal. The fact that Carbon Delta had multiple bidders in the acquisition process underlines the high quality of this startup. It was my pleasure to help the founders not only during the seed round but also during the exit negotiations”, says Thomas Dübendorfer, President and co-founder of Swiss ICT Investor Club (SICTIC).

Daniel Schoch, Head of Start-up Finance at Zürcher Kantonalbank, remarks: "The impact of climate change on portfolio companies is an increasingly important issue for asset managers. Carbon Delta enables them to comprehensively assess these future costs and therefore enhance their investment decisions. We are proud that this compelling solution has prompted MSCI to build a Climate Risk Center in Zurich. Congratulations to the team – working with you has always been a pleasure."

Innovative new climate risk metric
The Carbon Delta integration will expand MSCI’s robust suite of climate risk capabilities with state-of-the-art modeling technology that supports climate scenario analysis and forward-looking assessment of transition and physical risks, as well as extensive company-level analysis of publicly traded companies globally. This will be offered as MSCI Climate Value-at-Risk, an innovative and pioneering climate risk metric that calculates the impact of climate change on a company’s market value and helps investors understand and quantify these risks within their portfolio.

“We believe climate change will become one of the most important investment factors over the long term. Institutional investors should be able to analyze the exposure of their portfolios to climate risk while also being able to report on their climate strategy,” said Remy Briand, Head of ESG at MSCI. “We are pleased to come together with Carbon Delta to provide our clients with state-of-the-art climate risk analysis capabilities that can help shape investment management practices of the future.”

 “Carbon Delta has aimed to create the best climate change scenario analytics for financial institutions,” said Dr. Oliver Marchand, CEO of Carbon Delta. “We are very excited to join forces with MSCI to mature and grow our products. Combining Carbon Delta’s scenario analysis and MSCI’s products is what institutional investors have been asking for.”

The transaction is expected to close within the next month, subject to customary closing conditions. The business is expected to add approximately $4 to $5 million of recurring expenses to the ESG operating segment within MSCI’s “All Other” reporting segment. The purchase will be funded through existing cash on hand.

 (Press release)

 

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