Infrastructure & Investment

Cambridge, Mass., September 17, 2020—Recognizing the critical value of scientific research and risk and policy analysis to its financial management strategy, V-Square Quantitative Management (VSQM) has joined the MIT Joint Program on the Science and Policy of Global Change as a program sponsor. A global asset management firm and a sustainability analytics platform, VSQM is headquartered in Chicago.

MIT Joint Program welcomes V-Square Quantitative Management as new program sponsor

The financial community has become increasingly concerned with two types of threats to financial and economic systems driven by climate change and efforts to alleviate it: physical risk—exposure to climate and/or weather extremes, and transition risk—the potential for fossil fuel assets to lose value in a rapid transition to a low-carbon economy.

Bank of Canada: Climate change and energy transition pose substantial economic risks

A strong focus on climate-related financial risk has emerged in the past two years. Investors, particularly large institutional investors, have increasingly sought to understand whether the companies they’re investing in are exposed to climate risk. Central banks, particularly those in Europe, have also been concerned about systemic risks. For good reason: during the financial crisis of 2008, the failure of a few large financial institutions threatened the entire system.

Assessing and alleviating climate risk

The Covid-19 pandemic could be a dry run for future impacts of climate change, with challenging and unprecedented situations requiring rapid and aggressive responses worldwide. A proactive approach to climate change aimed at minimizing such impacts will inevitably involve significant cuts in greenhouse gas (GHG) emissions and investment in more resilient infrastructure. Although current global mitigation and adaptation efforts are proceeding slowly, one emerging strategy could serve as an accelerant: the financial disclosure of climate risk by companies.

Can financial disclosure of climate risk accelerate climate action?

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