How customers use our metrics and products
Finance: CLIMATE IMPACT ANALYSIS FOR BANKS Measuring Paris-Alignment Across Asset Classes GLS Bank
Dr. Laura Mervelskemper
Co-Lead "Impact Transparency and Sustainability"
Climate fund below 2°C
In 2019, GLS Bank started a climate impact analysis of its climate fund using the XDC Model. Some of the main challenges were:
- The coverage of different asset classes,
- data availability and
- a customized sector classification.
Through intensive collaboration between GLS Bank, Wuppertal Institute and right., the various challenges were addressed, and the climate impact analysis of the fund was successfully completed.
The result: the fund is demonstrably <2°C-compatible. The bank can communicate the Paris Alignment of the fund to customers and stakeholders.
After successfully piloting a Temperature Alignment approach in portfolio management, GLS Bank also extended the XDC analysis to include:
- its credit portfolio,
- customer portfolios, and
- the bank itself.
This methodologically consistent application of Temperature Alignment to all asset classes and areas is the key to consolidated customer communication and transparent reporting.
Within the framework of a strategic partnership, right. and GLS Bank are working on the continuous improvement of the methodological basis of the XDC analysis. The main topics are:
- full integration of Temperature Alignment into the portfolio management process,
- expanding the applicability of the methodology,
- scientific integrity,
- methodological transparency.
Experts from all divisions are involved on both sides – from climate science to investment research and communication.
In addition, right. and GLS Bank, together with other partners, launched a pilot project in 2020 to analyse the Temperature Alignment of real estate.
Looking Ahead: Risk Management
Beyond transparent and consistent reporting, the key objective is to be able to redirect capital towards 1.5°C on a larger scale: The integration of climate impact criteria into credit risk assessment and lending processes.
GLS Bank is now tackling the integration of XDC analyses as part of the lending process – determined to act as a pioneer, sending the message “It can be done!”
Business: INTEGRATED CLIMATE IMPACT MANAGEMENT Shaping Transition Processes Continental AG
Head of Group Environmental & Climate Protection
Transition strategy with the Scenario Explorer
Working with right.’s software solutions empowers experts and decision makers to prepare business models for the transition to a low-carbon economy.
Continental is using the cloud-based Scenario Explorer to
- calculate the company’s climate impact (“temperature alignment”),
- identify Paris-compatible target pathways,
- quantify different business development strategies using scenario analysis,
- identify Paris-compatible investments, and
- position itself credibly as a transition company.
Decoupling success and emissions
Solutions would have to be developed that enable the company to
- manage its climate strategy,
- evaluate future investments and
- create acceptance among internal stakeholders.
New KPI: Climate impact
With the help of cloud-based software solutions from right., Continental conducted an initial analysis of its temperature alignment. In more in-depth analyses, different business development strategies were simulated and evaluated.
Options for implementing the climate strategy were developed together with internal stakeholders from the Rubber Technologies division and Controlling. The focus was on evaluating investments using a new KPI – the XDC. The XDC was used to check which investments support the company in achieving its goals in the medium and long term.
Outlook: Supply Chain Analysis
In further cooperation with right., Continental is examining the evaluation of trend-setting investment projects. In addition, the application of the XDC model for the evaluation of supplier portfolios is to be developed.
Real Estate: CLIMATE METRICS FOR NEIGHBORHOODS AND BUILDINGS Planning Temperature-Optimised Modernizations Vonovia | GLS Bank | d-fine
Dr. Lars Dittmann
Head of Department, Carbon-neutral Building Stock, Vonovia SE
Paris-aligned Real Estate Development
A software solution to measure the climate impact of buildings and real estate portfolios is being developed in a cross-sectoral project partnership. The software will reflect the economic and environmental aspects of decarbonization, expressed as tangible and actionable °C values.
The real estate sector is a major contributor to global greenhouse gas emissions, while also being exposed to significant financial risks resulting from climate change.
The software is designed to facilitate Paris-aligned portfolio management and planning of 1,5°C-optimized modernizations. It will also enable financial institutions to steer real estate financings in alignment with the Paris Goal and provide direct access to climate-related information for customer consultations, valuation, and risk management.
Cross-sector Stakeholder Council
By including a council of stakeholders across industries from Q1 2021, including state-owned and private pension funds as well as a leading energy supplier, the software will be developed along user requirements. It is intended to provide all stakeholders with a differentiated view of real estate portfolios. In addition to emissions accounting, this also includes the objective evaluation of climate effectiveness in relation to energy-efficient modernization and energy supply.
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