Posted inM&A

Solactive buys stake in climate data start-up

The German index provider has acquired a minority stake in start-up Right Based On Science, which will tighten its strategic partnership with the German climate data firm.

The terms of the deal were not disclosed, but the stake will enable the information and consulting company to accelerate the development of its software.

Hannah Helmke, co-founder and chief executive of Right Based On Science, comments: “[Our] mission is to increase transparency on climate-related risks and opportunities within the market, so that capital can be steered in the right direction.”

Scenario analysis

The start up’s software can measure a company or portfolio’s impact on global warming by using science-based climate metrics and applying scenario analysis, which is one of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), but corporates and investors have been struggling to apply it.

Right Based On Science’s X-Degree Compatibility (XDC) model supports “in portfolio management, credit approval and product development processes to detect climate-related opportunities and risks of your financial products, in order to manage them in a future-oriented manner and report them in line with TCFD recommendations”, the company said.

Data calculation

Helmke explained to Expert Investor that the firm estimates a company’s impact on global warming by using emissions and the firm’s financial performance data.

“With this data, we calculate the amount of emissions a company’s value creation is associated with. The so-called Economic Emission Intensity is a key determinant of the XDC – the impact of a company on global warming,” she said.

The XDC Economic Climate Impact Model is planned to become open source by 2021 and expresses results in degrees centigrade.

The firm provides consultation services on how to apply its model for the corporate, finance and public sector.

Solactive recently partnered with US data firm ISS ESG and released two series of benchmarks that meet the requirements of planned EU climate indices.

Elena Johansson

Senior Reporter

Part of the Bonhill Group.