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Portfolio Analytics
 

We translate climate models and macro trends into an integrated view of the physical impact of climate risk on a given location.

 

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Portfolio Analytics applies machine learning to a wide array of datasets to calculate the location impact of climate volatility at the portfolio and asset level. 

Our toolkit enhances market forecasts, supports due diligence for underwriting and guides future investment strategies.

Portfolio Analytics Overview - Climate Alpha

Heatmaps

Physical Risk & Resilience Adjusted Valuations

Indicators

Quantify Location Impact...

across different timelines and climate scenarios to modify hold/sell periods, protect yield and ensure exit liquidity 

Measure Risk and Resilience...

for any location by climate risk (heat stress, hurricane wind, flood, wildfire, drought and sea level rise) as well as its preparedness to manage those disruptions

Generate Heat Maps...

to visualize risk and/or resilience clusters within a given portfolio of fixed assets

Competitive Edge

Global Climate Risk

Physical risk data for any location across the globe

Wide Data Approach

Public and private market datasets offering climate risk, real estate and socioeconomic intelligence

Multiple Climate Change Scenarios

Deploy the latest IPCC models to forecast impact annually until 2100

Opportunity Focused

Target underpriced and resilient markets with a differentiated investment strategy

Quantifying the Location Impact of Climate Change

Climate Alpha is unique in capturing both the physical climate risk and the resilience-adjusted impact of climate change.

 

The Total Physical Impact and Resilience-adjusted Impact are coefficients that explain the divergence of a location’s financial performance under a given climate scenario from its baseline (one that assumes no climate change).

Total Physical Impact...

is the sum of the individual physical impacts caused by exposure to climate risk. Physical Impact is an estimate of the potential economic impact of climate risks on a given location under the selected climate change scenario and time period.

 

Resilience-adjusted Impact... 

modifies Total Physical Impact by accounting for mitigation and adaptation measures.
 

Highly resilient locations will have a more positive Resilience-Adjusted Impact compared to their Physical Impact, indicating that the true cost of climate change is less than its forecasted risk exposure.

Physical and Resilience Adjusted Impact - Climate Alpha

Benchmarking Locations to Establish Risk and Resilience Profiles

Different markets respond uniquely to climate hazards and resilience measures.

 

A location's coefficients are determined by its historic sensitivity to hazards multiplied by its relative risk and resilience profile. The greater the divergence, the higher or lower the coefficients. 

 

Sensitivity to hazards refers to the historical impact of climate hazards on real estate performance. This is calculated by the difference in the ROI of assets in areas exposed to risk versus the mean ROI of its larger real estate market (e.g., Zip codes versus CBSAs).

Relative risk and resilience profile is the future risk and resilience rating of a location indicated by its Z-score against the national distribution obtained by standardizing all indicators.

 

The greater the divergence from the mean, the better or worse its profile will be. 

Impact Coefficient Climate Alpha
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Impact Coefficient Climate Alpha

Assessing the Impact of Climate Change 

Both Physical Impact and Resilience-adjusted Impact can be applied to the value of assets to estimate their future economic performance.

 

For example, if the estimated value of a property is forecasted to be $10M in 2030 based on historical returns, a Physical Impact coefficient of –5% yields a risk-adjusted value of $9.5M. Yet if the location boasts robust readiness traits to offset climate risk, the Resilience-adjusted Impact could be just –1%, resulting in a projected 2030 valuation of $9.9M

 

Locations that exhibit low risk, high resilience, and proximity to under-performing areas may achieve accelerated growth forecasts as a result of their "anti-fragility," gaining investment and migration at the expense of under-performing areas.

Portfolio Analytics Climate Alpha
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