Financial establishments are beneath elevated strain from regulatory our bodies to grasp their environmental footprint and that of the businesses they finance or put money into, in any other case referred to as financed emissions.
To assist banks higher assess local weather threat Oracle as we speak introduced Oracle Climate Change Analytics Cloud Service. With built-in AI, the brand new reporting and analytics resolution is designed to assist monetary establishments perceive financed emissions, deal with statutory compliance, and mitigate local weather change-related dangers.
Jason Wynne, world VP for finance, threat, and compliance product improvement, Oracle Financial Services, stated: “While banks work on climate-related financial risks that could affect them directly through their operations, they also need to be cognizant of their effect on climate indirectly through the businesses they finance. This dual responsibility requires the critical management of both risk and their own Net Zero commitments, which demands a significant effort from banks.
“Oracle Climate Change Analytics Cloud Service enables financial institutions to calculate, and analyze the impact of their carbon emissions, as well as climate targets on current and planned investments to get a full picture of the bank’s resiliency and risk around climate change.”
According to a National Oceanic and Atmospheric Administration report, the worldwide common atmospheric carbon dioxide in 2023 set a brand new report excessive at 419.3 elements per million. The Financial Stability Board (FSB) provides that “these risks are global in nature, and will have effects across all entities, sectors, and economies….the breadth of climate-related risks – including their possible simultaneous occurrence across multiple jurisdictions and sectors – also has implications for the resilience of the financial system”.
With climate-related dangers on the rise, it’s crucial that banks can higher perceive and account for the affect of their holistic portfolio of property from each a regulatory and enterprise technique perspective. With pre-built calculation fashions and dashboards, the service will help save banks effort and time, deal with world local weather change reporting necessities, and incorporate local weather threat into their future threat and funding selections.
‘Climate Risk’ evaluation made simpler
Banks are challenged to adjust to a number of frameworks throughout a number of jurisdictions, and accumulating and storing the info vital to satisfy these necessities may be daunting. This is very true when coping with giant and sophisticated world clients. With built-in AI and Natural Language Processing (NLP) instruments Climate Change Analytics can scour the web for publicly obtainable details about local weather change initiatives by firms that the financial institution has invested in, which may help of their general evaluation of local weather threat.
Also in accordance with CDP, a frontrunner in aggregating world local weather disclosures on banks’ portfolios, portfolio emissions are over 700x bigger than direct emissions – and the dangers of inaction are large. Financial establishments should urgently decarbonize their portfolios, by disclosing the affect of their financing actions, setting science-based targets, and aligning all financing exercise with the Paris Agreement.
Oracle’s new cloud service allows monetary establishments to calculate emissions throughout numerous asset courses and jurisdictions. This encompasses not solely greenhouse gasoline emissions throughout a corporation’s operations and worth chain but additionally financed and facilitated emissions from its clients. This permits for the computation of a local weather score at a counterparty degree throughout the financial institution’s buyer portfolio and incorporates local weather change threat into different risk-management capabilities, comparable to venture planning and threat audits and evaluation.
Key characteristic capabilities of Oracle’s Climate Change Analytics Cloud Service embrace:
- Performing carbon accounting by calculating greenhouse gasoline emissions based mostly on The GHG Protocol Corporate Accounting and Reporting Standard.
- Calculating and disclosing emission numbers for financed, facilitated, and prevented emissions and emissions removing based mostly on the Partnership for Carbon Accounting Financials tips.
- Integrating local weather threat into general enterprise threat and funding decision-making with an in-house Climate Scorecard framework, likelihood of default (PD) and loss given default (LGD) fashions, and heatmaps.
- Accessing greater than 100 prebuilt, cross-jurisdictional local weather change reporting disclosures, analytics, and visualizations to deal with necessities for requirements boards and regulators.
- Using superior evaluation to supply, configure, retailer, and analyze buyer local weather change knowledge with wealthy knowledge fashions for analytics.
- Helping to cut back IT funding with cloud-native know-how that may meet the ever-changing local weather change reporting necessities.
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