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Illustration: Aïda Amer/Axios

BlackRock, the world's largest asset manager, said Thursday it's acquiring a London-based consulting firm's climate modeling system.

What's next: BlackRock plans to integrate the model into its proprietary tools to help clients reduce their portfolios' climate risk exposure.

Why it matters: Its purchase of Baringa Partners' climate change scenario model is part of a broader climate modeling war.

  • Asset managers and investment firms are looking to in-house teams or outside firms to gauge their risks of climate impacts, such as sea level rise.
  • In addition, companies including BlackRock want to help clients profit off the transition to a clean energy economy — which Baringa's model is designed for.

Driving the news: BlackRock already has a set of tools called Aladdin Climate to evaluate climate risks and opportunities as the company boosts sustainability efforts.

  • It intends to blend Baringa's model with Aladdin to create broader, more accurate tools and metrics for investment managers to minimize risk exposure.
  • The model would bring to BlackRock new capacity to analyze risks of a transition to a net-zero carbon economy, which many big nations including the U.S. hope to achieve by 2050.
  • This could include, for instance, financial ramifications of oil and gas assets that can no longer be burned due to new greenhouse gas emissions limits.

The big picture: The announcement comes as U.S. financial regulators move toward mandating that companies disclose climate risk exposure, and consulting firms pop up offering their own models.

  • BlackRock has sought to make its modeling more accurate by recently partnering with or piping in data from the Rhodium Group, Sustainalytics, Refinitiv and Clarity AI, a spokesperson said.

Between the lines: The new acquisition boosts the chances that an ecosystem will develop in which more companies plug climate models into their financial planning systems — but without fully revealing what lies under their hood.

  • Earlier this week, scientists at the Woodwell Climate Research Center warned the Securities and Exchange Commission against fostering the development of just such a risk modeling ecosystem, instead advocating for more transparency.
  • Methods and assumptions in private sector models are often kept hidden from investors and the public, something that scientists have warned the SEC about as part of their likely rule-making process.

Our thought bubble: Simply by virtue of its size and wide use of its Aladdin platform, BlackRock's investment in Baringa's modeling vaults that system to the top of the list of widely used tools to help investors manage the transition to a low carbon future.

Go deeper: Prominent investors jump into the climate risk space

Go deeper

Ben Geman, author of Generate
9 hours ago - Politics & Policy

Senate Dems' tricky climate infrastructure message

Illustration: Rae Cook/Axios

We now know more about the Senate's bipartisan infrastructure plan — and Democrats' tactical approach to the advancing package that has a suite of climate-related provisions.

Catch up fast: The Senate voted 67-32 to move the $1.2 trillion plan toward debate last night. Per a White House release it includes...

Ben Geman, author of Generate
9 hours ago - Energy & Environment

SEC boss offers rough roadmap on climate plans

Photo illustration: Sarah Grillo/Axios. Photo: Chip Somodevilla/Getty Images

Securities and Exchange Commission chair Gary Gensler yesterday shared his thinking on looming climate risk disclosure rules and said he wants more coherence around climate-friendly investing.

Driving the news: Gensler, in comments yesterday, said he's tasked SEC staff with coming up with a draft regulation by the end of the year.

Updated 1 hour ago - Politics & Policy

Congress passes $2.1B Capitol security funding bill

U.S. Capitol police officers testify during a House select committee hearing on the Jan. 6 Capitol riot on July 27. Photo: Andrew Caballero-Reynolds/Pool via Xinhua

A $2.1 billion Capitol security funding bill is heading to President Biden for his signature after the House and Senate passed the legislation on Thursday.

Why it matters: The legislation provides funding for the Capitol Police, the National Guard and other agencies to cover the costs incurred during the Jan. 6 riot.