TP Icap to launch Climate Index

Rick Steves

Most consumers, however, don’t trust ESG investment products. Still, an overwhelming majority of people expect sustainable financial services to become the norm (93%), and almost half expect this to be the case by 2025. 

ESG offerings

TP Icap has announced the upcoming launch of a climate index in partnership with environmental risk management outfit Speedwell.

The index uses global weather data to track climate change thereby allowing financial risk related to the rate of change to be traded.

The upcoming feature is designed to help market participants make better-informed investment and hedging decisions and manage the risks associated with climate change.

The Climate Index takes a representation of the average global temperature based on data taken from 50 independent, national weather stations from around the world.

Nicholas Ernst, Managing Director of weather markets at TP Icap, commented: “The introduction of the Index has the ability to dramatically change how people calculate the financial impact of global climate change, providing comprehensive data to quantify the impact of future temperature changes for the first time.

“Climate change is a significant financial risk and quoting markets in this way is an important step in not only measuring that risk, but also understanding the cost of climate change as we move towards a low-carbon economy.”

ESG has become one of the biggest buzzwords in the capital markets in recent times. Industry leaders are adopting the environmental cause as their own and are building solutions for investors.

Alveo and Cognizant have recently launched an ESG data management solution that includes mappings between data sources and regulatory requirements.

Financial institutions are being pressured by investor demand for transparency and regulation, such as the EU’s Sustainable Finance Disclosure Regulation (SFDR), to act accordingly.

deVere Group’s CEO Nigel Green has recently commented on the current energy crisis and said the only way forward is with sustainable investing.

“It will bring into sharp focus that rather than staying with fossil fuels, the longer-term answer to this and future energy crunches is ESG (environmental, social and governance) investing.”

Other ESG product launches include the Green Bitcoin Wallet announced by AlgoTrader and Peer Energy, and the ESG Data Hub launched by Nasdaq.

Most consumers, however, don’t trust ESG investment products. Still, an overwhelming majority of people expect sustainable financial services to become the norm (93%), and almost half expect this to be the case by 2025.

Lack of standardization is believed to be the biggest threat to ESG disclosures, but it is not the only one: a survey conducted recently found that indifference from business leaders, limited checks on greenwashing, and too much regulation are other issues keeping firms from proper ESG disclosure.

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