Morningstar Sustainalytics Expands Climate Risk Tools with XDI and Veridion Partnership
Event summary
- Morningstar Sustainalytics is collaborating with XDI and Veridion to enhance its physical climate risk product for asset managers and owners.
- The partnership aims to translate physical hazard exposure into financially relevant insights, addressing a key gap in existing climate risk tools.
- A group of asset managers and owners will act as partners, providing input on use cases and data needs.
- Morningstar Sustainalytics will integrate the capabilities through its proprietary investment research framework, including a new Asset Materiality Assessment.
The big picture
The partnership underscores the growing demand for sophisticated climate risk tools in asset management. As physical climate hazards become more frequent, investors seek ways to quantify financial impacts at both the asset and portfolio levels. Morningstar Sustainalytics' move reflects broader industry trends toward integrating sustainability factors into core investment strategies.
What we're watching
- Integration Success
- How effectively Morningstar Sustainalytics integrates XDI's hazard impact analysis and Veridion's geolocation data into its existing framework.
- Market Adoption
- The pace at which asset managers and owners adopt the enhanced physical climate risk product in their investment workflows.
- Regulatory Alignment
- Whether the new Asset Materiality Assessment aligns with evolving industry frameworks like TCFD and ISSB.
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