Background

Energy & Climate risks have become complex systemic risks that impact investment strategy and financial performance.

Financial markets often miss the opportunity to integrate energy & climate risks in their ratings and investment strategies. But national economy competitiveness and financial asset performance are strongly impacted by the uncertainties regarding energy prices, availability, and climate evolutions. Understanding how these systemic energy & climate risks impact economies and finance is a complex process as many dimensions need to be assessed: energy markets dynamics, government regulations and policies, emerging technologies, alternative resources, geopolitical risks, political stability, etc.

Rationale

Assessing energy & climate resilience and financial materiality on GDPs, government debt and corporate exposure provides a new investment angle to the finance community.

The reasons for the creation of Beyond Ratings are threefold:

  • To capitalize on the expertise and methodology developed by our team and R&D programme Riskergy that has enabled for a better understanding of the relations between energy, economic growth and financial debt.
  • To respond to the more global need to assess risks against their long term and systemic drivers, as well as the need to better assess national wealth in terms of sustainable development indicators (be it demography, health, governance, education, or natural resources).
  • To explore the role of energy availability as a main factor affecting economic growth (c.f. various academic findings such as World Economic Outlook 2011 (IMF, chapter 3), “High Oil Prices, 2008” by the DG Research of the European Commission and “The price of oil – will it start Rising Again, March 2013″ by the OECD)

Objectives

Beyond Ratings’ objective is to leverage energy & climate risks to grasp investment opportunities and optimize risk exposure for our clients.

Energy & Climate risks represent a series of opportunities to better perform in the financial markets and make sounder mid- to long-term investment decisions. Based on our in-house research and extended quantitative capabilities, we provide reactive and action-oriented insights and recommendations on a wide selection of countries and stakeholders.

Through our methodology and advice, investment decisions follow a more rational process. Asset managers get better insights on energy & climate events and how they can optimize their portfolio allocation. Sovereign borrowers are less likely to face uncontrolled and brisk shifts of their funding costs. Large corporate may adjust their financial exposure in countries where they do business.

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