BlackRock has agreed to acquire Baringa Partners’ Climate Change Scenario Model and integrate it into the investment firm’s Aladdin Climate technology.

Through the partnership, the two firms aim to set the standard for modelling the impacts of climate change and the transition to a low-carbon economy on financial assets for investors, banks and other clients.

Baringa and BlackRock will bring together their expertise to develop climate risk models underpinning Aladdin Climate, as well as innovating other climate analytics solutions. Baringa will use the core Aladdin Climate capabilities as part of its growing global consulting work in advising financial services, governments, regulatory bodies, and clients across all sectors on climate risk and developing net zero strategies.

While the reallocation of capital to sustainable investment strategies continues – with over US$2.3 trillion of assets under management in sustainability funds globally as of the first quarter of 2021– understanding the potential impacts of climate change and the transition to a low-carbon economy on their portfolios remains a complex challenge for investors.

With the number of governments and companies making commitments to achieve net-zero continuing to grow alongside increased regulatory requirements for climate-related disclosures, companies and investors alike are seeking solutions to help assess climate risk.

Sudhir Nair, global head of the Aladdin business at BlackRock, says: “Investors and companies are increasingly recognizing that climate risk presents investment risk. Through this partnership with Baringa, we are raising the industry bar for climate analytics and risk management tools, so clients can build and customize more sustainable portfolios.”

Colin Preston, global head of climate solutions at Baringa, adds: “Climate change is the number one challenge and opportunity of our generation. Having developed the leading Climate Change Scenario Model, we are excited to partner with BlackRock to accelerate the adoption of this solution by organizations across the globe. The integration of Baringa’s Climate Change Scenario Model into BlackRock’s Aladdin platform will inform the reallocation of capital across the global economy, accelerating the transition to net zero.”