In my past life, I spent over 15 years working internationally with leading Banking and Financial Services companies including HSBC, Hang-Seng, Lloyds Banking Group and Accenture.
I spent many years assessing how economic shocks could impact the banking system (for example, what would happen if there was a trade war between China and the USA?). Climate change posed a more existential threat to the economic system – so why didn’t we spend time on assessing that too?
What if we could take the best of climate sciences and inject that directly into the financial system at scale? Would it change how we planned for things, priced assets, held capital or provisioned for losses? Imagine the impact we could have on the world.
Myself and my co-founder, Kamil Kluza, both scoured the market for data, but we struggled to find anything that made sense or could be usable for serious decision making. Everything out there looked the same – fragmented, disparate sources of data that was generally spat out of an AI driven black box.
That journey took myself and my co-founder down a rabbit hole that we never came out of. Our paths collided with some of the best climate scientists and econometricians until we found out how to create that conduit between the world of climate sciences and the financial system. Climate X was born.
Today, I’m motivated by a bold and ambitious mission, nay purpose and responsibility – to enable a more climate resilient future for everyone and everything on this planet, powered by data analytics that people can understand and trust.
This is complex – there’s not one single reason, but a multitude of different reasons why this has been, and continues to be, a struggle. Having been a prospective buyer of this type of data, I fully understand why companies have struggled to get onboard with using this data. It’s not easy on two key fronts:
Firstly, doing climate risk assessments because it’s the right thing to do was never going to be enough to get traction. Climate change as a risk measure is unlikely to help your share price – after all, it’s never been properly reflected in accounting and for most people (there are exceptions), doing so is unlikely to be a good news story. As investment in climate resilience is likely to take years, if not decades, to prove an ROI, the typical reward horizons don’t work for the types of decisions boards and c-suites need to take today to deliver strong results for the next quarter. In other words, long term strategic planning isn’t rewarded but that’s something that needs to change.
That’s all made worse by the fact modelling climate-related risks and integrating results into something that can be consumed by companies is incredibly complex. Models that have been fine tuned over decades will suddenly have a sledgehammer taken to them as analysts try to wedge in a brand new risk variable.
From a computational point of view – we’re dealing with petabytes of trillions of points of data. Creating, processing, storing, organising and distributing such a vast amount of data takes significant resources and know-how. The technological ability to do this at scale simply didn’t exist a decade ago.
All that said, things are changing and they’re changing fast. I’m incredibly proud to see change is on the horizon. We’re here to help enable that change and make our customers lives easier by delivering the best-in-class data and analytics they need.
There are several reasons. Here are the key ones according to our customers, but also my hypothesis prior to Climate X being born:
Top down. Regulations and legislation being rolled out globally means companies have no choice. Not only do they need to understand how they effect climate change, but they also need to know how climate change will affect them. To put into context the scale of change – there are 108 central banks working together with trade bodies to deploy regulations that will force financial institutions to assess and disclose climate-related risks for the first time. The UK is moving fastest, with other countries coming on board across Europe, APAC and the US. That’s in addition to thousands of large and listed companies who also need to participate in similar disclosure exercises for the first time.
Inward. Accelerating losses and disruption. Climate change brings with it significant financial costs. As locations worldwide become more exposed to extreme weather events, it’s simply too big of a problem to ignore. So big in fact, the World Economic Forum published the cost to the global economy could ride to $23,000,000,000,000. That’s $23 trillion. To put that into perspective, it would be the equivalent of the entire USA GDP being wiped out over night.
Bottom up and flanking from the sides. It’s the right thing to do. People – investors, employees and the public are demonstrating a growing social conscious. Business is no longer about just doing something because it makes money. It’s about feeling good about the impact that thing is happening on the world too.
Now is the perfect time to launch as key decision makers, boards and c-suites are sold on the idea of implementing this change and the urgency of it. For Climate X, it gives us a unique opportunity to build hand-in-glove solutions for our customers problems whilst they’re most pressing to them. We can establish very precisely what they need today, how that need might evolve in the future and ultimately work together to solve these major climate challenges.
There’s a lot of change to come and the evolution will be fast paced. It has to be – climate change isn’t waiting for us to be prepared for it before it ‘strikes’. To understand where things might go in the future, let’s start with where things are today and extend that roadmap across the next decade:
Companies are now, for the first time, appointing specific individuals and teams who will be responsible and accountable for gathering data that will enable them to lift the lid on climate change-related risks for the first time.
Data acquisition is the easy bit. That data lets you see where there are elevated areas of risk in existing owned assets and infrastructure. Before we look beyond this step – there’s a chasm that companies need to trust. All data isn’t created equally. The individuals who are looking at this data not only need to build their expertise in understanding what the data is telling them, they also need to understand how data has been transformed from the inputs they provide and why certain things are done in certain ways. This is a technical step – but an important one that enables the next step.
Once the data is understood fully, companies will integrate that data into enterprise-wide risk management frameworks. That means, for the first time, unlocking a forward looking approach to managing climate-related risks: adjusting their capital allocations and impairment provisions depending on potential future exposure to losses and asset performance. It also means, acknowledging the need to rebalance portfolios to meet overall risk appetite by reducing exposure to some geographical areas and moving that to less risky areas. This process will take time.
The next step is to push things forward into new decision making. The decisions leaders in these companies make today will affect generations to come – so it’s important to adequately price for risks (for example, reflecting physical risks in asset valuations and adjusting product offerings accordingly).
And the final step will be to ensure mitigation strategies are embedded across their operations and services to ensure resilience and safeguarding against climate risks. In some cases that might mean unlocking financing to invest in infrastructure projects that help protect against inevitable risks. In other cases, companies should look at how to insulate their customers and society from economic and psychological shocks that persistent and prolonged exposure to climate-related risks might bring.
Companies will (and should) continue to expect better quality data – higher resolution, broader coverage, and stronger validation proof points.
At Climate X, our job will be to work with companies to help make the impossible possible and be an anchor partner that helps to achieve these bold, ambitious but critical climate ambitions.
I could ramble on with the answer to this question. There is so much that could be said here. But I’ll keep this brief because there’s only one key message that matters here. Success is delivery of our mission.
Measuring success against that prospectus is incredibly difficult to summarise in any number of words – but in the end, if Climate X advances the progress of humanity’s mission to build resilience to climate change across the global economy, to deliver data that enables shifts in global policy towards a better world for all people and minimises human suffering for everyone, everywhere that’s alive today and that will ever live… and I can confidently say Climate X contributed to that journey in a meaningful way, wow. That’s when we can stand proudly behind our work and consider it a success.
Every single person on the team is obsessed with doing the right thing, for the right reasons and to unlock this possibility. It’s threaded into the DNA of our company.
I’m extremely proud that our investors, partners and customers back our vision, purpose and reason for being. We are not taking the position of a caretaker – we’re here to transform the world.
It’s a bold ambition and one that Climate X will work tirelessly to lead on.
With that said, we’re looking for the most ambitious, talented and passionate people on the planet to join us on our mission – wherever you are in the world, whatever you do – we need you. If not today, tomorrow. If you want to join us – let us know how you’ll help Climate X on our mission and submit your resumé via the Contact Us form on our website.
