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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

Tom Steyer: Private companies starting to invest more in climate solutions

Photo: Axios

The world will have to spend four trillion dollars a year to solve the climate crisis, Tom Steyer, the billionaire founder of Farallon Capital, said at an Axios virtual event on Thursday, but private businesses will play a crucial role.

Why it matters: Steyer's comments come two weeks after the billionaire launched Galvanize, a climate tech investment platform that will back companies from the seed-stage through private equity and project finance.

What "success" means at the UN Climate Summit in Glasgow

Illustration: Rae Cook/Axios

The upcoming UN climate meeting in Glasgow, scheduled to begin in six weeks, may be one of the trickiest for diplomats to navigate since such meetings began more than two decades ago.

Why it matters: The summit comes as scientists warn that the window for keeping alive the Paris Agreement's most ambitious and longshot temperature target is nearly shut, yet emissions cuts are urgently needed to prevent potentially catastrophic climate impacts.

Updated Sep 22, 2021 - Axios Events

Watch: A conversation on bold climate commitments

On Wednesday, September 22nd, Axios co-founder Mike Allen and energy reporter Ben Geman hosted a virtual conversation on the innovative approaches climate leaders are undertaking to reshape standards for sustainability initiatives in 2022 and beyond, featuring White House national climate adviser Gina McCarthy and Environmental Defense Fund president Fred Krupp.

Gina McCarthy explained the Biden administration’s recent environmental priorities, the importance of mobilizing different communities to fight climate change, and how the White House is incentivizing private industries to reduce their emissions.   

  • On addressing extreme heat problems: "I think everybody’s beginning to understand as the President tours the sites of wildfires and flooding and other really big challenges like drought, there’s this silent killer for climate change that’s called excess heat, that really doesn’t get enough attention."
  • On cross-agency collaboration on climate change at a federal level: “It’s an exciting moment where people across the federal government are working together in ways they have never done before, not just to tackle wildfires and droughts and flooding and heat stress, but also to tackle the challenge of how we motivate our business sector and send them all the signals you would want us to send that shows that President Biden is committed to achieving net zero in 2050, and knows that this decade is a decisive decade.”

Fred Krupp highlighted how companies must be held accountable to pledges to reduce their emissions, how some corporations are breaking with lobby associations to become more vocal about climate change (and others are not), and how he believes debates surrounding the infrastructure bill will play out in the near future. 

  • On how corporate lobbying has fallen short: “Right now, we don’t see enough corporations lobbying on behalf of the climate sections of the reconciliation bill. This bill that’s pending in Congress is our once in a decade opportunity to get something done on climate.” 
  • On public support for the infrastructure bill: “I see an enormous amount of support in the American public for moving ahead with a sort of clean energy economy that are going to create tremendous numbers of jobs, clean the air, make people healthier.” 

Axios VP of Communications Yolanda Brignoni hosted a View from the Top segment with GE’s Chief Sustainability Officer Roger Martella, who discussed how GE is following through on their ESG goals by investing in sustainable energy technologies. 

  • “We create some of the most technically complex and critical technologies the world needs, and we’re focused today on innovating these technologies on a path to decarbonization.” 

Thank you GE for sponsoring this event.