ICE Launches Innovative Climate Transition Risk Solution

ICE Launches Innovative Climate Transition Risk Solution

Intercontinental Exchange, Inc. (NYSE: ICE), a prominent global provider of technology and data, has announced an exciting new initiative. They are introducing a multi-asset class climate transition risk solution aimed at providing comprehensive emissions estimates and valuable portfolio analytics. This innovative solution focuses on various fixed income asset classes, specifically targeting Scope 1, Scope 2, and Scope 3 emissions related to municipal bonds, mortgage-backed securities (MBS), and real estate investments.

Addressing Emissions Data Gaps

ICE’s latest offering takes a crucial step in addressing significant gaps in emissions data. It offers coverage for often-overlooked sub-asset classes such as Residential Mortgage-Backed Securities (RMBS), Commercial Mortgage-Backed Securities (CMBS), and private corporates. By incorporating this data, ICE can provide clients with a unified portfolio metric that accurately tracks financed emissions across a multitude of asset classes. This is essential for effective climate risk reporting and enables a comprehensive overview of physical and transition risks.

Insights from ICE Leadership

"Our clients require high-quality transition risk data, especially in underserved segments like mortgage-backed securities. We have integrated physics-based simulations with building energy models alongside ICE’s existing data to derive emissions insights for RMBS and CMBS," stated Larry Lawrence, Head of ICE Climate. He highlighted that mortgages and mortgage securities often constitute over 20 percent of bank balance sheets. As a result, there's an escalating demand for reliable data that can assist in meeting regulatory disclosures and support stress testing for informed decision-making.

PCAF-Aligned Financing Emissions Data

The multi-asset class transition risk solution from ICE is aligned with the Partnership for Carbon Accounting Financials (PCAF) standards. It encompasses an impressive portfolio of over 110 million U.S. properties, along with more than 4.2 million fixed income securities worldwide. Clients utilizing this solution can leverage sophisticated portfolio analytics, allowing them to evaluate total emissions across diverse asset class portfolios effectively. This not only assists in transition risk strategies but also ensures adherence to climate regulatory reporting necessities through comprehensive emissions tracking, including carbon intensity metrics.

Broader Climate Data Offering

This novel solution is a vital segment of ICE’s expansive climate data offerings. Their services are specifically designed to quantify the impacts of transition and physical climate risks, which may involve extreme weather events that jeopardize investment portfolios. Such innovative solutions facilitate organizations in proactive risk management, ensuring that they remain competitive in the ever-evolving market landscape.

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) stands as a Fortune 500 entity dedicated to designing, constructing, and managing digital networks. These networks connect individuals and businesses to an endless potential for opportunity. ICE provides cutting-edge financial technology and data services across diverse asset classes, empowering customers to access essential workflow tools that enhance transparency and operational efficiency. Their exchanges, including the renowned New York Stock Exchange, alongside clearing houses, empower participants to invest, raise capital, and manage financial risks effectively.

Frequently Asked Questions

What is the new climate transition risk solution by ICE?

ICE's climate transition risk solution provides emissions estimates and portfolio analytics across various fixed-income classes, helping clients measure their financed emissions.

How does ICE's solution benefit its clients?

It allows clients to track emissions across multiple asset classes while supporting climate risk reporting and regulatory disclosures.

What are the emissions scopes covered by the new solution?

ICE's solution covers Scope 1, Scope 2, and Scope 3 emissions, ensuring a comprehensive assessment of a client's portfolio.

Why is the mortgage-backed securities sector significant?

Mortgages can represent a large portion of bank balance sheets, making accurate emissions data vital for regulatory compliance and decision-making.

What industries does ICE focus on for its data services?

ICE focuses on financial technology and data services across major asset classes, including fixed income, energy, and environmental products.

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