How one bank uses data to start customer conversations about climate-ready assets

As financial institutions begin to weigh up increased risk from climate change, this Oceania bank turned to EY climate modellers for innovative tools and insights.

Overview

Financial institutions face an uncertain future as climate change impacts create both physical and transition risks. An increase in extreme weather events and higher temperatures can reduce the value or insurability of assets, while shifts in policy, technology or consumer behaviour can present material transition risks.

The EY client is committed to the wellbeing of its customers and communities – and that means protecting the environment and reducing its climate impact. But with climate change presenting risks across its lending and investment portfolios, the bank needed tools that would improve decision-making and support its customers’ transition to net zero by 2050.

Actions

EY teams brought together our climate risk and policy professionals, who understand emissions trajectories and climate scenarios, with macro-economic and environmental modelling teams who could build new decision-making tools.

EY climate modellers measured the client’s three biggest physical risks down to postcode level. Assessing the severity of climate change and extreme weather risk which then informed customer specific risk mitigation and adaption strategies.

Outcomes

The EY team developed geospatial models and checklists for 10 sectors that gives the client insight into potential transition and physical climate risks and methods to increase resilience. The checklists are a valuable risk management tool and a conversation starter that connect and educate customers.