Answers to common questions about our Carbon Diagnostics product

Our climate transition risk product offers unique advantages that can enhance your existing carbon data processes:

Multi-asset coverage: Our product extends beyond traditional asset classes, covering every major asset classes including public and private equities, fixed income, property and infrastructure.

Nowcasting of emissions: Unlike conventional data sources that typically rely on historical reported data, our product incorporates 'nowcasting'. This feature uses machine learning algorithms to provide near-real-time estimates of a company's emissions, offering a more current and dynamic view of carbon footprints.

Flexible and scalable scenario analysis: Choose from 10 templated scenarios (IPCC and NGFS) or create custom scenarios tailored to your specific needs. Our scenario analysis tool allows you to model various climate transition pathways and their potential impacts on your portfolio. This enables you to stress-test your investments under different climate scenarios, providing you with a more comprehensive understanding of the climate-related financial risk of your investments/portfolio.

By offering these additional capabilities, our product provides a more holistic view of climate transition risk, thereby enhancing decision-making and risk management within your organisation.
Our products are designed to align closely with all major climate disclosure standards, including ISSB, TCFD, and CSRD-aligned standards (i.e. ASRS, NZ CS and UK SDS). We provide robust emissions data, scenario modelling, and climate risk analysis with a transparent, step-by-step methodology. This auditable approach ensures fulfilment of the quantitative component of climate-related financial disclosures.

However, your organisation will need to fill out the qualitative elements such as the governance aspects and ensure it is externally assured as per your particular standards' demands.

Learn more here or contact us.
Carbon Diagnostics analytics primarily focuses on transition risk due to its higher materiality in the short to medium term. However, we can incorporate physical risk analysis upon request.

Here's why we emphasise transition risk:

Materiality: Transition risk is generally more material to investment portfolios in the near term. Societal and governmental responses to climate change can occur rapidly and dramatically affect asset values.

Impact timeline: Whilst physical risk has significant long-term implications, its financial impact at a portfolio level is often less material in the short to medium term.

Diversification: Physical risk tends to be more diversified across a portfolio, potentially reducing its immediate financial impact compared to transition risk.

While our focus on transition risk provides more actionable insights for investors based on materiality assessments, we recognise the importance of physical risk, particularly its long-term effects on infrastructure and natural resources. We can include physical risk in your portfolio assessment upon request.
Our product specialises in climate, focusing exclusively on measuring and analysing the financial risks associated with the transition to a carbon-constrained world. Here's why this focus is crucial:

Specialised risk assessment: We are team of climate and finance experts. Emmi’s climate risk analytics provide in-depth, financially material insights specifically on carbon transition risk.

Financial impact: Carbon transition risk has the potential to significantly disrupt financial markets, potentially wiping trillions of pounds off balance sheets if not properly understood and managed.

Future uncertainty: The path to a low-carbon economy is highly uncertain. Our specialised tool helps navigate this uncertainty by providing detailed scenario analysis and forward-looking assessments.

Beyond ESG box-ticking: Rather than serving as a general ESG tool, our product offers an in depth climate transition risk assessment, enabling more informed decision-making.

Strategic preparedness: By focusing on this critical aspect of climate risk, we help organisations prepare for one of the most financially material challenges in the coming decades.

Whilst we recognise the importance of comprehensive ESG evaluation, our product's targeted approach to carbon transition risk provides the depth of analysis needed for this particularly complex and potentially disruptive factor in the modern investment landscape.
Managing climate transition risk should be a top priority for two critical reasons:

Imminent mandatory reporting requirements: Climate-related financial disclosures are rapidly becoming mandatory across various jurisdictions. Organisations need to prepare now by developing robust data collection processes, scenario analysis capabilities, and reporting frameworks. This preparation isn't just about compliance; it's about building a deeper understanding of how climate change affects your business. Failure to comply could result in significant regulatory penalties, reputational damage, and loss of investor confidence.

Latent portfolio risks and strategic imperative: Climate transition risks are already embedded in investment portfolios and business strategies, even if not immediately visible. These risks stem from policy changes, technological disruptions, and shifting market preferences towards low-carbon alternatives. Early integration of climate risk considerations into decision-making processes is crucial for identifying vulnerable assets, mitigating potential financial losses, and capitalising on emerging opportunities in the green economy. This integration should span across asset allocation, security selection, and risk management practices. Moreover, it informs long-term business strategy, driving innovation and ensuring competitiveness in a rapidly changing business landscape. Delaying action may lead to abrupt value shifts, stranded assets, and missed strategic opportunities as the transition to a low-carbon economy accelerates.

By prioritising climate transition risk management now, your organisation can proactively adapt to regulatory changes, protect and enhance portfolio value, and position itself strategically for a carbon-constrained future. This proactive approach not only mitigates risks but also opens up new avenues for sustainable growth and resilience in an increasingly climate-conscious world.
Emmi's Carbon Diagnostics offers multiple flexible options for integrating climate transition risk data into your investment management process. Our product is designed to complement and enhance your existing analytics, providing seamless integration with your current tools and workflows.

You can access Emmi data via Excel, API, or through FactSet. This allows for easy incorporation into your existing analysis and reporting systems. Our flexible aggregation capabilities enable you to analyse climate transition risks at various levels of granularity, from individual securities to entire portfolios. This supports your investment process from the high-level strategic decision making, right down to the holdings-level analysis.

By integrating Emmi's data, you can enhance your Strategic Asset Allocation decisions and strengthen your overall risk management framework. This integration of Emmi Carbon Diagnostics into your investment management process not only supports regulatory compliance but also positions your organisation as a leader in sustainable finance, helping you navigate the complexities of the transition to a low-carbon economy.
Investing in carbon risk management leadership offers significant strategic advantages:

Regulatory readiness: Align with existing and emerging reporting requirements, prepare for potential mandates, and position your organisation ahead of evolving regulations.

Strategic integration: Incorporate carbon risk into your investment management processes and strategic asset allocation decisions, and enhance stock selection and due diligence processes.

Risk mitigation: Identify climate-related risks before they impact portfolio performance.

Long-term value creation: Balance short-term benchmark alignment with long-term risk management, creating a more resilient portfolio equipped for future market shifts.

Stakeholder engagement: Facilitate meaningful dialogue with companies, demonstrating proactive risk management to clients and investors.

Our solution offers unique advantages in achieving these benefits through timely and accurate data, comprehensive multi-asset class analysis, advanced scenario modelling capabilities, and flexible integration with existing processes and systems.

By investing in carbon risk management now, you're not just preparing for compliance - you're positioning your organisation as a forward-thinking leader in sustainable finance. This proactive approach can drive long-term value creation, while allowing for thoughtful integration with your current investment strategies and benchmarks.

Frequently Asked Questions